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Sadiq Khan (Tooting) (Lab): I am grateful to the Lord Chancellor for giving me advance sight of his statement, and I note his apology at the beginning of it.
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One must admire the mind-reading ability of senior journalists at The Sunday Telegraph and The Times. It was a huge discourtesy to the House, but it provided the advantage of 24 hours' notice of a statement to be made on the Floor of the House. I am grateful to both Patrick Hennessy and Simon Coates for their ability to do just that.

The Green Papers on cutting legal aid and reducing civil costs are among the most important that the Government have published to date. Legal aid is one of the pillars of the welfare state, and was set up by the Labour Government after the second world war. It plays a crucial role in tackling social exclusion, especially in hard times such as now. It ensures that everyone may have access to justice, regardless of their means. Under successive Governments, the legal aid budget has grown to the point where it now stands at more than £2 billion. That is not sustainable, especially in the current economic context.

I have six questions for the Lord Chancellor. The previous Labour Government had moved to cap the legal aid budget, and to reduce it. We also planned to turn the Legal Services Commission into an Executive agency. Do the Government have any plans to introduce legislation to achieve that aim?

In recent years, we brought the principle of fixed fees into civil and family legal aid cases, introduced means testing into magistrates and Crown courts, and on the very day that the general election was called we signed off on cuts to advocates' fees in the higher courts. We took these decisions because we recognised the need to reduce the legal aid budget. It is worth reminding the House that many of our actions were taken in the teeth of opposition, from both the legal profession and Conservative and Liberal Democrat Members. I am looking forward to hearing their contributions to this debate.

Let me be clear: had we been in government today, we, too, would have been announcing savings to the legal aid budget. That is a reality that we all have to acknowledge. The crucial questions are: where to make those savings, and how to spend the money that is left available. What equality impact assessment has the Lord Chancellor undertaken of the proposals? Our policy was-and is-to control the legal aid budget and get value for money for the taxpayer, while optimising services for people who need support the most. That is why we concentrated much of our investment on social welfare legal aid. Legal aid delivered has the power to change lives and save money. The housing possession court duty scheme, for example, saved thousands of people from repossession. It delivered a social and financial good. Are the Government committed to preserving that and similar schemes?

What balance do the Government intend to strike between civil and criminal cases? Can the Lord Chancellor explain why he is proposing more severe cuts in civil and family legal aid than in criminal legal aid? Can he say whether he agrees with the Attorney-General, who said that

If so, in what areas does the Lord Chancellor intend to expand the provision of legal aid?

We will carefully consider the Green Paper on legal aid and the equally important paper on Lord Justice
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Jackson's review of civil legal aid costs before we respond in further detail. I would note, however, that Sir Rupert Jackson argued against cutting the legal aid budget, and the Lord Chancellor has decided to ignore that view. In conclusion, the basic test that we will apply in both cases is whether the proposals will deliver a saving to the public purse while ensuring that no one is denied access to justice because of their means.

Mr Kenneth Clarke: Mr Speaker, if I may, let me first respond to your comments. When I finalised the statement before coming here, I realised that it was far too long, but the fact is that the subject is complex and the leaks were quite detailed but not wholly accurate, so it was necessary to go through it with some care, for those outside this House as well as those within it. I am grateful for the fact that my shadow spokesman was given a little more warning of some of the statement.

I congratulate the right hon. Gentleman on acknowledging that Labour would have been reducing the legal aid bill as well-I came well armed with quotations from him and all his colleagues about their intention to reduce the legal aid bill. Indeed, it featured in the Labour party's manifesto at the election. It is starkly obvious that the England and Wales legal aid system has become far too expensive, and it is an obvious place to start tackling deficit problems, which has to be done on a logical basis. The Labour party had taken quite a lot of decisions and had made reductions, affecting criminal as well as civil legal aid, but the effect of what it did was largely to stabilise what had been the rapid growth of legal aid before that. Legal aid expenditure exploded in this county until about 1999. Thereafter, the Government wrestled with it, trying to bring it down, but they succeeded only in stabilising it. It is right to get legal aid expenditure back to something nearer to the norm in other democratic and common-law countries throughout the world, which we are far above at the moment.

We intend to go ahead with the last Government's proposal to make an agency of Government to replace the Legal Services Commission. That will have to feature in our legislation when it comes. We have, obviously, done an equality assessment, to have a look at the impact on various sectors of the population. Apart from the fact that the decision will obviously have an impact on the legal profession, affecting both barristers and solicitors, more importantly, one has to look at what impact it will have on gender, ethnic minorities and the poor. It is inevitably the case, of course, that litigation, and legal aid in particular, tend to be focused on the disadvantaged groups in society. Some aspects of legal aid are more resourced by women, as well as men; nevertheless, we have to be mindful of that. We have done an equality assessment, and we believe that the impact of the changes is, on balance, justified by the public interest in ensuring that the taxpayer pays only where there is a public interest in having a dispute resolved.

The right hon. Gentleman referred to the balance between civil legal aid and criminal legal aid and asked why, on this occasion at least, the scope of criminal aid is not affected. First, we already spend more on criminal than civil legal aid in this country. The reason we do so is that it is absolutely essential in the public interest to see that justice is done in every case. It is an unfortunate
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feature of our legal aid system-I accept it, and we always have accepted it-that we often wind up giving it to people who turn out to be rather unattractive.

Mr Jack Straw (Blackburn) (Lab): Or criminals.

Mr Clarke: Yes, or criminals.

Before bringing the full severity of law to bear on a criminal, however, we have to make absolutely sure that he is indeed the guilty party and that he has been given every chance to claim and demonstrate his innocence to save us from making a mistake. As the liberty of the subject is at stake in all serious criminal cases, we really cannot cut back the scope of criminal legal aid.

I think the reason why we spend spectacularly more than other countries on legal advice and litigation is that we have extended the legal aid system in the past to practically every kind of civil and family issue. That is why, when it comes to cutting back the scope, the present package on which we are consulting concentrates on those areas.

Sir Alan Beith (Berwick-upon-Tweed) (LD): The Justice Committee will look forward to an early session with the Lord Chancellor on the details of his proposals. Are not the issues around education, employment, debt and housing, which he says do not require special legal expertise, those on which people do need help, which they currently get through LSC contracts, citizens advice bureaux and neighbourhood law centres? From where else will they get that help in future?

Mr Clarke: In some cases, as with housing issues where a person's home is at risk and they may lose possession, we will continue to make legal aid available. Any cases involving the risk of homelessness or loss of liberty will still be covered by legal aid. The right hon. Gentleman gave a list and I will not deal with them each in turn, but they are all addressed in other ways than through litigation. Employment issues go before a tribunal, for example, and those tribunals were originally designed precisely to avoid representation by lawyers and legalism. They were designed to be more straightforward and accessible forms of justice. Debt certainly requires advice, but much of it is not so much of a legal nature as of a practical nature-advising how to cope with negotiating with creditors and sort out the management of the debts incurred. I agree with the right hon. Gentleman that citizens advice bureaux and other such organisations are a central source of this advice. We will have to consider how far we can continue to enable such organisations to step in and give a wider range of advice, which will be needed when we stop paying people to go to lawyers all the time, as we tend to on all these issues.

Mr Straw: May I endorse what my right hon. Friend the Member for Tooting (Sadiq Khan) said in every particular, including with respect to the commitment in our own manifesto to cut legal aid. The Lord Chancellor will understand that my right hon. Friend cannot endorse every particular of what is being put before the House at this stage, but he and I will, of course, examine the proposals with great care.

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Let me ask the right hon. and learned Gentleman some specific questions about the proposals on criminal legal aid and guilty pleas. First, I have no argument with the principle, but is he certain that he will structure the payment systems to avoid giving any perverse incentive to lawyers, and therefore to defendants, not to continue to plead not guilty all the way through to the point of trial? That is a real danger.

Secondly, the right hon. and learned Gentleman says that where a case goes to the Crown court but it is judged that it should have been handled at the magistrates court, the fee will be paid only in respect of what would have been appropriate in the magistrates court. I understand that. Under the present legislation, however-I sought to change it, but the Conservatives, the Lib Dems and the other place overturned my attempt-defendants have an absolute right in either-way cases to take their case to Crown court. Unless the Lord Chancellor introduces primary legislation to change that, we are left with the odd situation in which the Legal Services Commission says that a case should not have gone to the Crown court while the defendant says that he has an absolute right to that under statute.

Several hon. Members rose -

Mr Speaker: Order. I have also been hanging on almost every word spoken by the right hon. Member for Blackburn (Mr Straw) for the last 13 years, but now I know what is meant by those who say that lawyers are paid by the word.

Mr Clarke: We are working on incentives to stop them from being paid by the word outside the House, Mr Speaker.

I am grateful to the right hon. Member for Blackburn (Mr Straw) for what he said. We both know that any responsible Government who had won the last election-any parties that had taken office-would have cut the legal aid bill. I think we should all remind ourselves of that, because, as we know, all kinds of lobbies outside who are adversely affected will start coming to us and telling us that the whole spirit of British justice is being undermined by the threat to their particular activities. We simply have to do this, and I hope that we can achieve a fair consensus on the sensible way in which to proceed.

The question of cases in which people do not plead guilty early enough is very serious. I hope we will ensure that we remove perverse incentives from the system, if they exist. The sentencing proposals that I shall present will recommend further inducements to people to plead guilty at an early stage-not only in order to save money and prevent time from being wasted, but in order to prevent victims and witnesses from fearing that they will have to attend court and give evidence, when that is actually a waste of time because the defendant will plead guilty in the end.

As for the question of either-way cases and those who opt for jury trial, I am afraid that I am one of the many Members who do not agree with the right hon. Gentleman that we should address it. I have always been a firm defender of the principle that anyone has the right to opt for jury trial, and the House has resisted any attempt to erode that right in recent years. The last Government's attempt to change the position was defeated
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in the House of Lords during the last Parliament, and my party was elected-as, indeed, were the Liberal Democrats-on the basis of a firm commitment to retaining it. It is not just that I do not want to throw myself on the spears; I genuinely agree with those who believe that we should not alter the current ability to opt for jury trial.

Robert Halfon (Harlow) (Con): Following the decision to remove legal aid from clinical negligence cases, how will my right hon. and learned Friend ensure that the most vulnerable in such cases are protected, and are not exploited by ambulance-chasing lawyers?

Mr Clarke: At present, about half the total number of clinical negligence cases are brought on a no win, no fee basis, and about half are brought on legal aid. No doubt some are privately financed. No win, no fee is a perfectly suitable way of proceeding in clinical negligence cases. We have decided that that-as amended by Sir Rupert Jackson-is likely to be the way in which people will proceed in future. What we have done completes a process of steadily taking legal aid out of criminal injury claims, which has been going on for some years, and I commend it as a logical next step.

Keith Vaz (Leicester East) (Lab): The last Government, of course, also cut legal aid. The issue is quality, and how we focus that legal aid.

This morning, by chance, I visited our old college, where I saw the portraits of former Lord Chancellors who had attended it. When the college puts up a portrait of the current Lord Chancellor-or he may even be entitled to a mini-statue in the grounds-how would he like the epitaph to read, in relation to legal aid?

Mr Clarke: The last Government made many changes to legal aid, which stopped the increase in spending throughout most of the past decade. I have tried to return to basic first principles, and to ask "What is legal aid for?" Let us now put in place a logical structure that is defensible and may last.

I have not the first idea what kind of statue or picture that the college that I share with the right hon. Gentleman might ever erect to me. I do not think that a mini-statue would do justice to my full stature, but I should be very flattered if anything at all were put up. However, I trust that the college will acknowledge that we have tried to create a logical and defensible system which can be afforded by a civilised democracy that needs a legal aid system.

I should probably experience more difficulty in persuading my legal friends and the legal institutions to which I belong of the wisdom of all this than in persuading my old college.

Nick de Bois (Enfield North) (Con): I welcome the continuing support for asylum cases under legal aid, but I welcome even more the curbs on immigration cases under legal aid. Given that over the period of the last Parliament some £400 million was spent on combined asylum and immigration cases, can the Lord Chancellor confirm whether these proposals will make substantial reductions in that expenditure, and if so, can he give an idea of how much will be saved?

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Mr Clarke: Yes, we certainly intend to confine legal aid in immigration cases to those where detention or liberty is an issue, or in respect of asylum to where there may be a duty to provide asylum to someone who has been facing persecution. Other than that, we will make considerable reductions in legal aid in immigration cases involving purely personal reasons, which can include someone who has come here on a student visa and wants to transfer to a different course. Many such cases will still be brought of course, but there is no reason why the British taxpayer should pay for legal aid. I hesitate to give an estimate off the cuff of how much we will save under that heading, and I should emphasise that all the estimates we are giving of how much we will save are, indeed, estimates, because successive Governments have found it very difficult to predict how much legal aid will actually cost. Much depends on demand in particular areas, which is often unpredictable and outside the control of the Government.

Ms Karen Buck (Westminster North) (Lab): Legal aid plays a vital function in creating a level playing field between the powerful and the powerless, and, even at a lower level, it must continue to do that. There are none so powerless as children. Will the Secretary of State clarify how he believes that children's interests should be protected, particularly in respect of special educational needs in what is an increasingly decentralised school system?

Mr Clarke: Serious issues arise for parents in educational cases, and, obviously, the interests of the children should be paramount, as they are in most other cases. The difficulty is that the problem to be resolved usually relies more on educational expertise than on the law, and too often we are financing people who argue about the process that has been followed to resolve problems, instead of finding the best way of resolving the merits of how best to teach the child, where the child should be taught, or what support the child should have. We believe it is simply not right for the taxpayer to help inject an element of what is really legalism into problems that should in the end be resolved taking into account the best interests of the child from an educational point of view. Some of these cases can be turned into enormous legal battles, which seem to me to be very far removed from the object of ensuring that a child is best educated in school.

Mr David Nuttall (Bury North) (Con): One group of people my constituents in Bury North would like to see excluded from the scope of criminal legal aid are Members of Parliament. Will the Lord Chancellor ensure that, in future, legal aid is not granted to any Member of Parliament accused of wrongdoing?

Mr Clarke: Considerable adverse comment was made about the unfortunate case of our recent colleagues who succeeded in obtaining legal aid for their defence because, I think, their case was listed in a Crown court that had not yet introduced means-testing. I can assure my hon. Friend that all Crown court cases that might involve legal aid will be subject to means-testing in future, and although MPs are not paid a king's ransom, all are likely to have resources that will put them beyond the reach of full legal aid, which some of our colleagues recently obtained.

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Sir Gerald Kaufman (Manchester, Gorton) (Lab): Taking into account the Lord Chancellor's wish, stated this afternoon, to encourage more efficient resolution of contested cases, will he press the Legal Services Commission to negotiate a settlement with South Manchester law centre ahead of the scheduled judicial review next month, given that the LSC lost a judicial review to the Law Society at immense public expense on the same kinds of points? It is essential, both to my constituents and more widely, that the South Manchester law centre continues to be able to help people on low means.

Mr Clarke: I will inquire into the case that concerns the right hon. Gentleman, but I must point out that the Legal Services Commission is currently a totally independent body and is not subject to ministerial control. We propose to change its status and make it an agency, which would make it more directly accountable and would enable us to exercise more control over efficiency, but we would still proceed on the basis of having no ministerial involvement in individual applications for legal aid, as it would be quite wrong to seem to politicise individual cases. Nevertheless, I hope that the dispute is resolved rapidly and I shall make inquiries as to whether the speeding up of a resolution can be facilitated.

Tom Brake (Carshalton and Wallington) (LD): Following the question of the Chairman of the Justice Committee, my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), and the Secretary of State's very positive response about the role of the National Association of Citizens Advice Bureaux, is the Secretary of State willing to meet me and representatives of NACAB to discuss how it can carry on its excellent work in the wider fields of welfare benefits, homelessness and debt relief?

Mr Clarke: I have been considering this issue with colleagues and I shall continue to do so because we are concerned, more widely, about the present financial crisis affecting all kinds of outside bodies such as voluntary organisations and charities in many fields. Not-for-profit bodies such as NACAB are very important in giving the kind of advice and help that we are concerned with, so we will continue to look for a solution to that problem. I certainly promise the hon. Gentleman a meeting with me or the Under-Secretary of State for Justice, my hon. Friend the Member for Huntingdon (Mr Djanogly), who has put a great deal of work into producing this package.

Mr Geoffrey Robinson (Coventry North West) (Lab): The Lord Chancellor will be aware that there is widespread understanding of his statement throughout the House, and his approach to this principled and rational discussion in no way undermines the continued, vital role for legal aid in our overall legal system. He must be aware of the correspondence that my office has had with his about certain law firms in Coventry that have carried out very good legal work on many good cases within the existing rules, but find it impossible to get paid for their work and are therefore opting out of the whole system of legal aid. Will he bear that issue in mind in the context of what he has said today?

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Mr Clarke: I realise that we have had such problems. The LSC's accounting has been criticised and its performance has not always been what it might-hence the complaints of late payment. The commission seems to have been making great efforts to improve its performance, which we hope to maintain. Obviously, we hope that the transition to the new agency arrangements, as first proposed by the previous Government, will not interrupt that. We will continue to make sure that we do not face straightforward complaints about late payment for services that have been rendered.

Mr David Burrowes (Enfield, Southgate) (Con): First, I declare an interest as a legal aid lawyer. Given your earlier comments, Mr Speaker, I hope that that will have no bearing on the length of this question. Will my right hon. and learned Friend measure the success of his proposals in relation not just to the amount of public money saved but to greater access to justice, because there is not always a need for a contested hearing?

Mr Clarke: I hope to, but I hesitate to claim that we are providing greater access to justice given that we are taking quite a few things out of the scope of legal aid assistance. However, I share my hon. Friend's hope that we will encourage better resolution of disputes, of which there are plenty of examples. The president of the family division, Sir Nicholas Wall, has talked about how, in many family cases, long, adversarial conflict proves not to be the best way of resolving differences between parents and certainly is not in the children's best interests. There are plenty of other areas in which I hope definite advantage in resolving disputes will come from our proposals.

Chris Leslie (Nottingham East) (Lab/Co-op): Will the Justice Secretary try to estimate the impact of the proposals on the very poorest in society, particularly in our city of Nottingham? I know of welfare advice centres and citizens advice bureaux that will be in serious jeopardy of closing because of the way that the rules he has announced are skewed towards hitting the very poorest in society when it comes to welfare advice and housing. Can he assure us that he is not abandoning the very poorest in society to a desert in which they are left with no advice and completely without representation?

Mr Clarke: I realise the need for such services and I know that citizens advice bureaux are a particularly valuable source of advice for his constituents and mine in our area of Nottingham. I should point out, however, that not every bureau provides legal advice or gets legal aid and that bureaux have been eligible for it only since 2000, and we have moved into a situation in which some have become rather dependent on it. I can only say that I shall consider the problem. Legal aid probably never was the best way of financing such organisations and my colleagues and I will have to discuss whether some necessary measure can be introduced to ensure that wider advice is available, particularly to the most vulnerable in society. We are all agreed that the taxpayer should be involved only when people cannot reasonably be expected to pay at least a modest sum to get some advice of their own.

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Guy Opperman (Hexham) (Con): Given the restrictions that will apply in relation to education funding, can we be clear that there will be no legal aid funding, in whatever way, for special educational needs provision or other forms of education work?

Mr Clarke: Not normally, unless in an exceptional case we are under a legal obligation to provide legal aid. Education cases include all kinds of things, such as litigation regarding exclusion of particular pupils, and whether someone has been granted a place at the school of their children's preference and so on. All such disputes can be litigated. The special educational needs cases are the most difficult. I repeat what I said before: these are educational problems, and there should be a process of resolving them that does not involve going all the way through the courts. I heard that the Supreme Court was hearing a special educational needs case. Although I am sure it came to the right decision, I am not sure whether it was the best way to resolve the problems of how to educate a particular child with particular problems.

Simon Hughes (Bermondsey and Old Southwark) (LD): I acknowledge the rational and very thoughtful way in which the Secretary of State has approached this issue. As he seeks to deliver the aid, advice and mediation services as a network across the country, will he make sure that some sort of protection for the poor and vulnerable is in place so that they are not driven into the hands of exploitative private sector operators who will want to take their money for immigration advice and the like-advice that is often dud and costs far more than they can afford?

Mr Clarke: I agree with the thoughts that underlie the hon. Gentleman's intervention. Let me make it clear that legal support for mediation remains important in the family field, and we believe that it is a much better way of proceeding. I will certainly bear in mind what the hon. Gentleman said about immigration advice. We
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have all known for many years that some of that advice, usually given by non-lawyers, to those having difficulties with the immigrations authorities is not very good and that the prices charged are rather unscrupulous. People are being taken advantage of by those who are affecting to help.

David Mowat (Warrington South) (Con): Has consideration been given in this review to the further savings that may be achieved by addressing the structure of aspects of the legal profession? In particular, the criminal Bar enjoys a near monopoly in some courts, but still constrains new entrants into the profession in a way that keeps rates higher than they might otherwise be?

Mr Clarke: That question was asked more frequently many years ago. The exclusive rights of audience in the higher courts were lost some years ago. There are now quite a lot of solicitor advocates. I am not sure whether the shadow spokesman, the right hon. Member for Tooting (Sadiq Khan), was a solicitor advocate, but he could have been if he had wanted to be. The profession is not as closed as it used to be. Changes are about to take place on new business structures for legal practice of all kinds, which will produce a considerable transformation in some areas of legal practice. We are in a far more competitive situation than we used to be.

Gareth Johnson (Dartford) (Con): As a practising solicitor, I welcome this long-overdue full review of the legal aid system. Will my right hon. and learned Friend reassure the House that we will retain a key principle of the criminal justice system, which is that no one who faces the realistic prospect of imprisonment and who cannot themselves afford to pay will be refused legal assistance?

Mr Clarke: Yes is the best and most straightforward answer to that. My hon. Friend underlines an absolutely fundamental principle of justice in any civilised society, so the answer is an emphatic affirmative.

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Points of Order

5.4 pm

Hilary Benn (Leeds Central) (Lab): On a point of order, Mr Speaker. At business questions last week, I asked the Leader of the House whether it was the Government's intention, when the House considers the Fixed-term Parliaments Bill tomorrow, to provide injury time if a statement were to be made. The Leader of the House replied that it was not the Government's intention to do so. I have written to you about this, Mr Speaker. I understand that there is a possibility of a statement tomorrow. I do not know whether you have been given any indication of that, but given that on the Parliamentary Voting System and Constituencies Bill, there were clauses that we did not have the chance to reach, even with injury time, and given that the Fixed-term Parliaments Bill is an important constitutional Bill, it is important that the House has proper time, if there is to be a statement. Have you had an indication from the Leader of the House that he has had a rethink and wants to come back to the House and give a different answer?

Mr Speaker: I am grateful to the shadow Leader of the House for his point of order, and for giving me advance notice of it. Moreover, I have of course received the letter from the right hon. Gentleman of Friday 12 November. First, I have not received any indication, formal or informal, of a statement tomorrow. Sometimes by this point I would have done, but by no means always, so there may be a statement tomorrow or there may not be. I do not know.

Secondly, I think the right hon. Gentleman would testify and the record shows that where matters are within the gift of the Chair, the instinct of the Chair is always to facilitate full and thorough debate and analysis of all matters of policy and legislation. Sadly, in relation to a matter of this kind, the decision-no matter how worthy the cause-is not in the hands of the Chair. It is a matter for the business managers. However, my eye has alighted upon the Deputy Leader of the House. The Leader of the House is not present and therefore cannot respond. The Deputy Leader of the House is present and can, if he so wishes, offer a response to the right hon. Member for Leeds Central (Hilary Benn). A simple nod or shake of the head will suffice.

The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath) rose-

Mr Speaker: Ah, we have enlightenment.

Mr Heath: It is not the Government's intention to provide extra time tomorrow on the Fixed-term Parliaments Bill. It is the first day of Committee and there is at
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present no programme motion before the House for the conduct of business during that day, so I am confident that there will be plenty of time for the House to debate the important matters that will be put before it tomorrow.

Mr Speaker: The response of the Deputy Leader of the House has been noted and I am grateful to him for it.

Mr William Cash (Stone) (Con): On a point of order, Mr Speaker. I understand that a few minutes ago, in the House of Lords, the motion to refer the Parliamentary Voting System and Constituencies Bill to a Select Committee with regard to the possibility of hybridity was rejected in a vote, but I would be grateful if we could be informed whether, in this House, such a motion would be out of order on the grounds that the Bill did not affect a particular private interest. I would be grateful if we could have a note on that.

Mr Speaker: The short answer to the hon. Gentleman is that that is not a matter for today. More fully, I think I know him well enough to know that he is unlikely to rest content with what I suppose he would judge to be a holding response. I have just a smidgen of a suspicion that it is a matter to which he will return on other occasions, and if he does, so will I. I hope that is helpful.

Tom Brake (Carshalton and Wallington) (LD): On a point of order, Mr Speaker. I apologise for not giving you advance notice of this. At the end of last week, some visitors came to visit me in Portcullis House and as part of the security process, their papers-the documents that they had brought with them-were scrutinised. To your knowledge, is this standard practice? Is it something that you would expect to happen when visitors come to the House of Commons?

Mr Speaker: I do not wish to be unkind or unhelpful to the hon. Gentleman, but the stock answer to such questions or attempted points of order is that we do not discuss security matters on the Floor of the House. However, if he wishes to pursue the matter with me in other ways, of course I am open to hearing from him and I will do my best to provide satisfaction.

Guy Opperman (Hexham) (Con): On a point of order, Mr Speaker. I probably should have declared earlier that I used to work in an educational capacity as a lawyer. I have given up that profession, but I am grateful for the opportunity to correct the record.

Mr Speaker: That is a display of legendary courtesy on the part of the hon. Gentleman, and it would be an excellent thing if it were imitated in all parts of the House.

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Terrorist Asset-Freezing etc. Bill [ Lords]

[Relevant documents: The Northern Ireland Assembly Legislative Consent Resolution and the Fourth Report of the Joint Committee on Human Rights, Legislative Scrutiny: Terrorist Asset-Freezing etc. Bill (Second Report); and other Bills, HC 598.]

5.9 pm

The Financial Secretary to the Treasury (Mr Mark Hoban): I beg to move, That the Bill be now read a Second time.

The Bill makes provision for imposing financial restrictions on, and in relation to, certain persons believed or suspected to be, or to have been, involved in terrorist activities. It amends schedule 7 to the Counter-Terrorism Act 2008, and is for connected purposes.

Hon. Members will be aware that the threat to the UK from terrorist attack continues to be judged as severe, meaning that an attack is highly likely. Just a few weeks ago, intelligence agencies uncovered another plot designed to cause death and destruction to innocent people. As my right hon. Friend the Home Secretary revealed, those involved in that air cargo bomb plot were well connected and part of an international network of extremists.

It would seem that the terrorist threat that we face is developing. We see the continued emergence of a more diverse and devolved terrorist threat that is joined more by ideology than by hierarchy, and that is technologically very capable. Small networks, or even individuals acting alone, are able to use technology to their advantage, giving them the ability to wreak havoc worse than their size might suggest. It is clear that those who wish to do us harm operate on an increasingly global scale and are devising ever more sophisticated methods of avoiding detection. This is why we must continue to ensure that the tools we employ to combat terrorism remain effective. We must have the ability to take preventive action to disrupt suspected terrorists.

Keith Vaz (Leicester East) (Lab): I understand that 205 accounts have been frozen under the previous legislation. Does the Minister know whether there is any evidence of a link between any of those accounts and actual terrorist activity? I am not disputing in any way what the Government are doing, and I fully support the Bill, but I would like to know whether any connection has been made between those accounts and any kind of terrorist activity.

Mr Hoban: In regard to the Bill, and to the legislation that it will replace, assets are frozen where there is reasonable suspicion. The Bill will change that test in order to strengthen it.

Asset freezing is a tool that we can use to take preventive action to disrupt suspected terrorists, and it is used internationally to prevent and disrupt the financing of terrorism. The impact of our ability to freeze the funds of potential perpetrators should not be underestimated. By cutting off access to finance and preventing money from reaching terrorist networks, we can stop individual acts in their early stages.

Currently, around £140,000 is frozen in the UK under our domestic terrorist asset-freezing regime. That might not seem a large amount, but hon. Members will be
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aware that it takes only a relatively modest amount of money to carry out a deadly attack. By way of illustration, the dreadful attacks of 7 July 2005 cost less than £10,000 to carry out, and the air cargo bomb plot is also likely to have cost a comparatively small amount.

Keith Vaz: No one is disputing the importance of this legislation or the legislation that it replaces, or the decision of the Supreme Court that has meant that this measure has had to be rushed through in this way. The Minister has not really answered my question, however; he has just given me some information about reasonable suspicion. Was there any connection between any of the accounts that have been frozen, for whatever reason, and any terrorist activity?

Mr Hoban: May I just dispute the right hon. Gentleman's point about the Bill being rushed through? It has not been rushed through. The process, of which he might be aware, is that, following the Supreme Court judgment earlier this year, emergency legislation was taken through this House and the other place to ensure that the terrorist asset-freezing regime remained in place until the end of this year. At that point, the previous Government initiated a consultation on the way in which that legislation should be replaced. That consultation started earlier this year, and has continued. My noble Friend Lord Sassoon introduced this Bill in the other place, and further safeguards have been included in it as a consequence of the consultation process. I do not believe that anyone could say that the process has been rushed. It has taken place in the methodical and thorough manner required to balance civil liberties concerns with the importance of national security. Although I am not in a position to disclose the links between the accounts frozen and any activity, those accounts and the evidence are kept under review, and orders are lifted where it is felt appropriate.

Asset freezing is not just a domestic tool used by the UK to combat terrorist financing. We have an international obligation to freeze the assets of terrorists, and it is important to consider it in some detail. In 2001, after the 9/11 attacks, the UN Security Council unanimously passed resolution 1373, requiring states to take a range of measures to combat international terrorism and the financial flows that underpin it. The overarching objective of the resolution was to

It was clearly intended to be preventive, and it calls on states to

Those are broad provisions, and intentionally so. They reflect the Security Council's real and unanimous commitment to take all necessary measures to prevent terrorism.

Although resolution 1373 is quite detailed in its obligations, the Financial Action Task Force, the international standard-setting body for anti-money laundering and counter-terrorist finance, has helpfully provided further detailed guidance on the implementation of UN terrorist asset-freezing obligations. That guidance reflects the intention for the resolution to be preventive in its effect, which is an important consideration when we come to consider in more detail the appropriate legal test for freezing assets.

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Particularly for the benefit of hon. Members who did not participate in our debates earlier this year, I should like to explain a little of the history behind the Bill and why we need to act now. Following the adoption of resolution 1373, the previous Government took the decision to implement UN terrorist asset-freezing obligations through secondary legislation, by Orders in Council made under the United Nations Act 1946. Following litigation brought by several applicants affected by one of those orders, which went all the way to the Supreme Court, that court ruled earlier this year that the previous Government had gone beyond the general powers conferred by section 1 of that Act in making Orders in Council to give effect to our UN terrorist asset-freezing obligations. The orders were not subject to parliamentary scrutiny, so Parliament did not have the opportunity to consider how the UK should best give effect to its obligations. The Supreme Court quashed the relevant order with immediate effect.

Many Members will remember that in response to the judgment, the previous Administration rushed through emergency legislation, with cross-party support, to maintain the asset-freezing regime and ensure that terrorist assets would not have to be unfrozen. No one in the House wanted to see the unfreezing of terrorist assets, and that was why my party and others were prepared to support the emergency legislation. At the same time, there was a strong feeling in the House that the terrorist asset-freezing regime needed to be scrutinised by Parliament in more detail at the earliest opportunity, and that there was scope to improve it by strengthening civil liberties safeguards. For that reason, Parliament inserted a sunset clause providing for the temporary legislation to expire on 31 December this year. That is why we are now legislating to ensure that the UK's terrorist asset-freezing regime can be improved and put on a secure legislative footing in time for that deadline.

As the House will know, this Government are committed to striking the right balance between protecting public safety and protecting civil liberties. We believe that in a number of areas, it is possible to strike a better balance and strengthen civil liberties safeguards without undermining public safety. Terrorist asset freezing is one such area, and that is why the Bill is not intended simply to reintroduce the previous regime that the Supreme Court quashed. I shall explain that.

The Bill, as introduced in the other place, included several changes to strengthen the proportionality, fairness and transparency of the regime. Briefly, they included a narrowing of the prohibitions relating to third parties, so that a third party does not commit an offence if they did not know, or reasonably suspect, that they were breaching a prohibition; excluding payments of state benefits to spouses or partners of designated persons from the scope of prohibitions, even when those benefits are paid in respect of a designated person; and a new requirement that the operation of the regime be independently reviewed nine months after the Bill is passed and every 12 months thereafter.

To strengthen further the protection afforded to designated persons, the Government tabled significant safeguards before the Committee stage in the other place. Those additional safeguards reflect the civil liberties
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concerns that were raised in Parliament during the passage of the emergency legislation and in the public consultation conducted over the spring and summer.

First, we addressed the legal threshold that must be met before the Treasury can freeze a person's assets. Under the current Order in Council, the Treasury may freeze a person's assets on the basis that it reasonably suspects that they are involved in terrorism, provided that the Treasury considers that necessary to protect members of the public. Under the Bill, the Treasury can no longer rely on a threshold of reasonable suspicion if it wishes to make a designation lasting more than 30 days.

The Government consider that there is a good case for retaining a reasonable suspicion threshold for a temporary period of 30 days only. That will enable assets to be frozen when there is sufficient evidence to meet a suspicion threshold, but when, for example, investigations are ongoing, and there is therefore a reasonable prospect of subsequently meeting a higher evidential threshold. A good example of that is when assets are frozen alongside arrest while the police build the evidential case for bringing criminal charges, as happened with the freezing of assets in connection with the transatlantic plane bomb plot in 2006.

Dr Julian Huppert (Cambridge) (LD): The Minister mentioned tying freezing to arrest, which I agree with, but can he give examples of when we might ever want the power to freeze assets without arresting somebody?

Mr Hoban: We might freeze assets in the UK that belong to terrorists who operate overseas in a more benign environment, when it would be difficult for us to secure the arrest of individuals given where they operate. There is therefore a strong argument for those powers. The hon. Gentleman will be as acutely aware as I am that his predecessor as the hon. Member for Cambridge led for the Liberals on the emergency legislation and raised a number of the civil liberties concerns that we are addressing in the Bill.

The Government do not believe that assets should remain frozen on the basis of a reasonable suspicion threshold for longer than 30 days. That is why the Bill makes it clear that to make a final designation-meaning one that lasts for up to 12 months-the Government can act only if we have a reasonable belief that a person is or has been involved in terrorism.

Dr Huppert: As I am sure the Minister understands, I am now trying to represent David Howarth-he is my constituent. What is the test of reasonable belief compared with, for example, the civil standard of the balance of probabilities? Is reasonable belief essentially the same, or is the Minister arguing for a lower standard?

Mr Hoban: The reasonable belief test is less than the balance of probabilities test, as I am sure the hon. Gentleman's constituent is aware, but the Government believe that the measure strikes the right balance. The Bill is preventive, which explains why we have chosen a reasonable belief test rather than a balance of probabilities test.

The second major civil liberties safeguard that we have introduced involves strengthening judicial oversight of decisions to impose asset freezes. Under the current legislation, a court can review a decision to impose an
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asset freeze only under the judicial review procedure. The House of Lords Constitution Committee recognised that judicial review gives the courts a significant power of scrutiny, particularly when decisions have been made in a national security context. However, there were concerns that although the courts can use, and have used, judicial review as an effective power of scrutiny in control order cases, there is a lack of clarity about how the courts would operate judicial review in the context of asset freezing.

To address that and to provide clarity-we expect the courts to apply rigorous scrutiny to asset-freezing designation decisions-the Government have provided in the Bill that decisions to freeze assets will be subject to a full merits-based appeal procedure. By providing a full merits-based appeal, we can ensure that the same degree of scrutiny that is given, for example, in control order proceedings-effectively such proceedings are equivalent to a full merits-based review-is afforded to individuals subject to a designation. I wish to inform the House that I have put a schedule of the changes I have highlighted in this Bill in the Commons Vote Office, and I hope that will help hon. Members during today's debate and in Committee.

I wish now to deal with the content of the Bill, beginning with the provisions under part 1. The effect of a designation under this legislation is threefold: to forbid dealing with a designated person's funds and economic resources; to forbid making funds or economic resources available to such persons; and to forbid funds or economic resources being made available to a person when the designated person will consequently obtain a significant financial benefit.

Part 1 sets out the provisions allowing the Treasury to make a final designation, necessary to protect the public, where it reasonably believes that a person is or has been involved in


It also sets out the provisions where the Treasury may make an interim designation, necessary to protect the public, where it reasonably suspects that a person is or has been involved in the commission, preparation, or instigation of acts of terrorism, or conduct that facilitates such acts. An interim designation expires at the end of 30 days, unless a final designation is made. Part 1 provides that the prohibitions are contravened only when someone knows, or has reason to suspect, that the person whose funds or economic resources they are dealing with, or to whom they are providing funds, economic resources or financial services, is a designated person.

The Bill also provides for licences, which permit exemptions to the freeze. I should like to point out that the Treasury's policy is to issue an individual licence to designated persons straight away to enable them to carry on paying for their ordinary, everyday expenses. That minimises the immediate impact of an asset freeze on a designated person and their family. Any further licences, or amendments, can be applied for by the designated person, or by any person affected by the prohibitions, at any time. The Treasury has also issued a number of general licences, which allow certain transactions
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to occur without the need for a separate licence application to be made-for example, to ensure that a designated person can have access to legal aid without delay.

Part 1 also sets out the reporting obligations on the financial sector in relation to these provisions, and the Treasury's general information-gathering powers to monitor compliance with, and detect evasion of, the regime.

Dr Huppert: Perhaps the Minister could help me. Nothing in the Bill makes it clear that the Treasury is required to make reasonable licences available. Is there an expectation of what the Treasury would allow?

Mr Hoban: Yes. As I have said, we have issued a number of licences, which I understand run alongside the regime that is in place. That is why I do not think the hon. Gentleman will find reference to a general licence on legal aid in the Bill. This runs in parallel to the legislative framework in place.

Tom Brake (Carshalton and Wallington) (LD): The Minister will be aware that Lord Wallace of Tankerness said that

Does the Minister think there any circumstances in which a licence would not be granted to cover legal costs?

Mr Hoban: I do not want to get into giving hypothetical answers to hypothetical questions. If the hon. Gentleman has a particular concern and wishes to write to me about it, I shall be happy to respond appropriately.

Finally, part 1 sets out the obligations on the Treasury to appoint an independent reviewer and the penalties attached to breaches of the asset-freezing provisions. Part 2 makes minor amendments to the Treasury's financial restrictions powers under schedule 7 to the Counter-Terrorism Act 2008. Those powers are an important part of the Government's toolkit to deal with risks posed to the UK by money laundering, terrorist financing and the development or production of chemical, biological, radiological or nuclear weapons. They also enable the Government to take action where the Financial Action Task Force advises that counter-measures should be taken because a country poses a money-laundering or terrorist-financing risk. The risks that those powers address are of a serious nature and it is imperative that we have effective financial tools to tackle them. We have identified a small number of technical amendments to these powers.

First, we are introducing a prohibition on the intentional circumvention of any restriction issued under the powers in order to ensure that a restriction cannot simply be bypassed. That will prohibit anyone in the UK financial services sector who has to comply with the requirements of a restriction from intentionally rearranging their business to circumvent those requirements.

Secondly, we are introducing a provision to allow restrictions to be targeted against subsidiaries of companies based in the country of concern. Thirdly, we will clarify the point that, when the Government direct a UK financial or credit institution to implement a restriction, that restriction can apply across its branches, wherever located. Fourthly, we are making provision for the
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transfer from the Department of Enterprise, Trade and Investment in Northern Ireland to the Financial Services Authority the responsibility for ensuring the compliance of Northern Ireland credit unions with the requirements of a restriction.

This Bill, when passed, will create a secure legislative footing for an important and necessary counter-terrorism power. The Government recognise that such powers are not to be created lightly, and I am confident that the safeguards in the Bill strike the right balance between national security and the rights of the individual. This is the right course of action to protect our national security, to protect the freedom of our citizens and to prevent future attacks, and I commend this Bill to the House.

5.30 pm

Mr David Hanson (Delyn) (Lab): For the avoidance of any doubt, I should say that the Opposition support the aims and objectives of the Bill, are grateful for the Minister's explanation and will not oppose the Bill this evening. Indeed, as the hon. Gentleman said, the Bill had a considerable genesis in the work of previous Governments on these matters. Its purpose is to continue the asset-freezing regime that the previous Labour Government put in place, and to put it on a more secure legislative platform. It is an aim that we support, and one that, but for the election, we would have progressed ourselves.

At the heart of the Bill is the ambition to maintain a strong, effective and proportionate system in order to tackle the continued threat of terrorism, which the Minister mentioned. The legislation has been sent to us from another place, where it has been carefully scrutinised, and some amendments have been made to ensure that the actions remain proportionate to the threat that we face.

As the Minister said, the Bill had its genesis not only in our international obligations, but in our own assessment of how we tackle the international terrorist threat. There have been a series of United Nations Security Council resolutions, demanding that states take action, including by asset freezing. In response to 9/11, the Security Council passed a further set of resolutions, requiring states to take greater steps to freeze the assets of those involved in terrorism. The Minister mentioned resolution 1267, which, in 1999, provided for the freezing of funds and other financial resources derived or generated from property owned or controlled by the Taliban; and resolution 1333 took that further by stating that states should freeze the funds of Osama bin Laden. In the aftermath of September 2001, the Security Council broadened its approach, requiring that action be taken against everyone who had committed or attempted to commit terrorist acts or facilitated their commission.

As the Minister said, the United Kingdom gave effect to those and other resolutions through Orders in Council under the United Nations Act 1946, and he also mentioned the decision on the challenge to those orders in the case of Ahmed and others v. HM Treasury. Indeed, it was the first ever hearing of the Supreme Court, which is just over the road. The Minister will know and the House should know that, on behalf of the Labour
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Government, the former Minister and Member for Portsmouth North, my then hon. Friend, Sarah McCarthy-Fry, brought forward fast-track primary legislation to restore the UK's asset-freezing regime. We intended to go on and produce a piece of permanent legislation, of which the Bill before the House is a part, after consultation.

We know that, because the existing terrorist asset-freezing legislation that the then Labour Government introduced is only temporary, new legislation is required, and we welcome this attempt to put the measures on a more secure and durable footing today. That is not to say that we will not fulfil our constructive role as an Opposition and scrutinise the measures in Committee and on the Floor of the House. I hope that the Minister would expect nothing less. I am sure that he would have done the same- [ Interruption. ] He says that he is used to it. The Minister and I have had a number of constructive run-ins over the past few weeks on Bills, and we have a few more to come. On this Bill, I can assure him that there will not be the conflict that we have had in previous discussions, but I am sure that he would want us to test it in Committee.

Indeed, the Committee stage will give the Minister the opportunity to comment on this week's report from the Joint Committee on Human Rights, which is on the Table of the House. The Joint Committee has looked at the Bill in detail and raised a number of issues, including the need for a higher standard of proof, the need for transparency on the use of closed material and the proposal that the reviewer should be appointed by Parliament rather than by Government.

I say to the Minister that those suggestions do not necessarily have the support of the Opposition; indeed, we may not have supported them in government. However, it is important that they are considered and that the Minister responds to them, so that there is clarity about the Government position and the Opposition position on this issue, and so that we do not just ignore the concerns that have been expressed but at least respond to them in due course.

Dr Hywel Francis (Aberavon) (Lab) rose-

Mr Hanson: I am pleased to see that the Chairman of the Joint Committee is in the Chamber and I will certainly give way to him.

Dr Francis: I thank my right hon. Friend for giving way and for his warm words of support for our report. Can he elaborate on why he would not necessarily support our proposed amendments?

Mr Hanson: My hon. Friend has raised a number of issues in the report, and those need to be examined. However, regarding the three points that I have mentioned-including a higher standard of proof-it is my view that the key issue for the Government and the Opposition is to ensure that we take action to stem the flow of funds to terrorists. That means that there are potentially some issues whereby that lower standard of proof would achieve that objective and is still open, as the Minister himself said, to challenge and review. On closed material, very often information crosses Ministers' desks-I was the Minister with responsibility for policing and terrorism in the previous Government-that they
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are aware of and act upon, but the disclosure of which could potentially compromise the security of the United Kingdom.

There is a debate to be had-I thank my hon. Friend the Member for Aberavon (Dr Francis) for raising this point-about who the reviewer of this legislation is accountable to. In the Joint Committee's report, he suggests that the reviewer should be accountable to Parliament rather than Government. We currently have a reviewer of terrorist legislation that is independent of Government but accountable to the Home Office.

We need to have some clarity on those issues, and I think that they are worthy of debate. I am not closing the book on any of them, but I do not wish to come to final conclusions today based on the Joint Committee report, which was produced only over the weekend.

Dr Huppert: On the subject of the standard of proof, is the right hon. Gentleman saying that it is the Opposition's policy that we should be applying measures to people where we think it is more likely that they were not involved with any terrorist activity than that they were? That is the implication of what he is saying.

Mr Hanson: The official Opposition's view is the same as that underlying the Bill that is before the House. We have always held the view that there is a need to take action, as set out in the clauses in the Bill that indicate that, when there is information, the Minister can bring forward an order and designate the individual according to a standard of proof that may not be a conviction standard of proof but responds to a level of concern that leads the Minister to want to take action. We support that.

As I said to my hon. Friend the Member for Aberavon, we will look at the suggestions that were raised on Friday in the final draft of the Joint Committee's report. However, there are proposals in the report that I suspect I would not have supported as a Minister and that I will therefore not necessarily support as an Opposition spokesman. Nevertheless, we will give them due consideration; indeed, I may even table amendments that reflect the Joint Committee's deliberations while ultimately allowing the Minister the opportunity to respond to them, so that there is a debate. I may not even necessarily force those amendments to a vote.

Keith Vaz: Although I obviously accept the thrust of what my right hon. Friend says, there seems to be something of a love-in going on between the two Front Benchers on this issue, and it always worries me when Front Benchers are in agreement over everything.

I am concerned about those who have had their assets frozen and who have now had their orders revoked; there are 13 people in that situation, according to the written ministerial statement. What do we say to them? They have had their bank accounts frozen and, in a sense, someone has believed that they have in some way been linked to terrorism; there is a reasonable suspicion of that. It will be pretty difficult for them now, will it not?

Mr Hanson: First, may I assure my right hon. Friend that there is no love-in between the Minister and myself? We have been jackets-off for the past week and a half in a Committee dealing with another Bill, and I suspect
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that we will be jackets-off next Monday dealing with the same Bill. However, where there is agreement on this issue, we will maintain that agreement, and I think that the Minister and I agree that the powers before us are proportionate. In the cases that my right hon. Friend mentioned, people will have an opportunity under the Bill to appeal, and there will be independent oversight. Those are important safeguards.

Ultimately, the most important liberty of all must be people's right to live in a society free from the fear of terrorist attack and from incidents such as those that we have seen not far from the House of Commons in our capital city of London in recent years. We need to ensure that we take action, but that it is proportionate in cracking down on those who look to perpetrate acts of terrorism.

Having said that, I did not intervene on the Minister and I would still welcome some clarification. It is particularly important to know how the role of the independent reviewer of asset freezing will be constituted, and such clarification might, indeed, help my right hon. Friend. I would like to hear from the Minister about certain issues at some point-I give him due notice that these are issues for Committee. How will the independent reviewer be appointed? Will he or she be the same person as reviews terrorism legislation? Currently, that is Lord Carlile, but the appointment of David Anderson QC, was recently announced. Will this be a completely different role or a parallel role? What will the budget for the office be and how will the office work?

We need to look separately at some of the considerable powers that the Bill gives the Treasury; for example, in clause 31, which deals with appointing the reviewer, and in clause 3, on the notification of final designation. Clause 3(3)(iii) gives the Treasury powers to do things that are

but that term can be defined quite widely. I will therefore be testing the Minister in Committee, not out of broad opposition to the proposals, but so that he can clarify these issues. Those who ultimately read the proposals that we make in Committee and on Second Reading will then understand the powers that we are giving the Treasury and, in particular, how the Treasury will disclose matters and use those powers. I give the Minister notice that although we are giving him a free ride today, we will still look in Committee at how powers such as those in clause 3 are intended to be used, what

means, what we define as being

and what

actually means. Although we support the Bill, we will continue to look at such issues.

The Minister gave us a powerful reminder of the types of terrorist attacks and actions that individuals and groups have undertaken, and will continue to undertake, as they attack not only our way of life, but innocent individuals across the United Kingdom and, indeed, abroad. The recent discovery of an explosive device on a courier aircraft that had landed at East Midlands airport en route from Cologne to Chicago powerfully brings home to us again the fact that that terrorist threat remains in the United Kingdom.

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The Bill will impose severe financial restrictions on those whom Treasury officials "reasonably believe" have

I support that test, which will give us the opportunity to use asset freezing as a tool across the international community to prevent the financing of terrorism. We know how devastating and indiscriminate terrorist attacks on our shores and abroad can be.

It will be of interest to the House to know that the attack in London in 2005 cost less than £10,000 to carry out. As of July, as the Minister said, about £150,000 remained frozen in the UK under the regime. If freezing assets intended for terrorist purposes can prevent attacks and potentially save lives, and if blocking the flow of money and working alongside our international partners can disrupt international terrorist networks, we should, quite frankly, do those things. We should do them while cognisant of the human rights implications that my hon. Friend the Member for Aberavon and his Committee have raised, but do them we should.

Any measures that we take forward in the House must delicately weigh up national security and civil liberty implications. We will discuss that in Committee, but I will look at the debate in the other place and the changes made there. I recognise that those are important, but ultimately our purpose is to protect citizens in the country whom terrorists would attack.

Interestingly, in another place, Members raised concerns about how the Bill will fit into the wider counter-terrorism review, which raises further concerns that we will need to explore both this evening, including when the Minister responds, and in Committee. I confess again that I have concerns about the coalition's position on the counter-terrorism strategy generally. Having been a terrorism Minister in the last Government, I know that things such as section 44, control orders and CCTV usage are important and help to prevent terrorist attacks. That is a debate for another day, but I note the concerns that the Bill might be subsumed by some of the outcomes of the review. I would therefore like to know either in Committee, or even this evening, whether this is stand-alone legislation or whether it will be further amended in light of any review coming out of the counter-terrorism strategy as a whole. I do not wish to waste the time of the House or the Committee discussing issues only to find that the noble Lord Macdonald throws up concerns that have to be incorporated in another Bill dealing not just with this issue but with those to which we might return, such as section 44 and control orders.

The Commercial Secretary to the Treasury said in another place that

Presumably that also means that if Lord Macdonald says that they are disproportionate, proposals might be introduced watering down the Bill's provisions. The Minister needs to reflect on that and indicate clearly in his winding-up speech whether the Bill is separate from, or part of, the review.

It would also be useful to know the time scale of the ongoing general review. Under tonight's programme order, we will complete the Committee stage of the Bill
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in short order-by 25 November-and will be returning on Report shortly after that. If Lord Macdonald's report has not been completed by then, will we go immediately to Royal Assent? I need some indication from the Minister of the time scales in order to know the product and concerns we are dealing with.

I want to raise another matter-I hope that I am being supportive-that Ministers need to reflect on. Again, it is something we will return to in Committee. There is a grey area between terrorist financing and some aspects of organised crime. I noticed that my hon. Friend the Member for-

David Simpson (Upper Bann) (DUP): Upper Bann.

Mr Hanson: I worked in Northern Ireland for two years, but my mind went completely blank then. My hon. Friend the Member for Upper Bann (David Simpson) will know that there is a great deal of linkage in Northern Ireland particularly between organised crime and terrorist financing. We need to be clear about the Bill's purpose in relation to that activity. There might be areas where financial activity under organised crime, while being an organised crime issue, ultimately goes towards financing terrorism. Particularly in the Northern Ireland context, it is worth while our examining that area and whether there will be any consideration downstream of reviewing and harmonising asset freezing in those areas as a whole. I think of the case of Mr and Mrs Chandler today, where allegedly money might have been passed to those who kidnapped them. I do not know whether that is true, but it relates to potentially criminal, terrorist or other activity where these powers could be used. Clarity there will be important in our Committee discussions, so that we are aware of those things in due course.

My only potential criticism of the Minister over this proposal is that it might lead to a state of limbo in the asset-freezing provisions after the counter-terrorism review. It would be helpful if the Minister clarified those issues when winding up today, and in Committee.

In general, as I have said, terrorism is a still a real threat in this country, and although people have a statutory and historic right to civil liberties and freedoms, they also have a right to go about their daily lives without fear of serious threat to their safety. The key test for the Government is to balance those liberties with the actions that we must take to ensure that we secure those liberties for the future.

The Opposition support the Government's attempts to maintain an effective, proportionate and fair terrorist asset-freezing regime that meets our United Nations obligations, protects national security by disrupting the flow of terrorists' finance, and safeguards human rights. We believe that the Bill is necessary to help to combat the terrorist threat in this country, and we look forward to scrutinising it. I have indicated to the Minister the sort of areas that will need discussion during its passage through the House, but in broad terms, we wish it well and we will support it this evening.

5.50 pm

Matthew Hancock (West Suffolk) (Con): I think that hon. Members on both sides of the House recognise the importance of the Bill, of implementing it and of a legislative structure for freezing terrorist assets. The
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ministerial statement says that 205 people currently have assets frozen up to a value of £290,000. Most importantly, the measure is part of a global system of freezing assets, which is crucial in this interconnected world.

I do not believe that I need to declare an interest, but I have a history in this area because I worked in the Bank of England on the freezing of assets under the jurisdiction of EC and UN orders. It is surprising that we are talking about this in November 2010, because it has been clear for a while that we need substantive legislation on the statute book to provide a framework for the freezing of terrorist assets. I am glad to be speaking in this debate, but it is a shame that that has not already happened.

I am glad that the Bill has all-party support, but I was surprised by the comment that it is being rushed through. There has been widespread consultation and the Bill has been through the full process in the other place, which included a day of debate on the Floor of the House. It is now going through the full process in this place. The suggestion that it is being rushed through is odd. What is more, it was clear earlier this year, during the previous Session, that there would be a Bill to put asset freezing on a permanent basis. The shadow Minister said that if the Labour party had won the general election, it would have introduced such a Bill.

The system that is now in place is based on UN resolutions 1267 in 1998, 1333, which specifically targeted Osama bin Laden, and 1373, which went through very quickly after the 9/11attacks. As those resolutions were being passed, it was clear that the structure of terrorist asset freezing was becoming more comprehensive, and more important to our national armoury against terrorism. That was supported by terrorism orders in 2001, 2006 and 2009, so the process has been ongoing for many years. In 2002, New Zealand put on its statute book permanent legislation covering a formal structure, which was based on modern statutes for dealing with terrorist financing. Australia has introduced similar legislation.

Over the past decade, we have had many opportunities in terrorism and crime Acts to put such legislation on the statute book. The Ahmed case was started in 2008 on the back of 2006 terrorism orders. It is surprising that anyone can say that the Bill is being rushed through. What is more, for the Opposition to say that it is too soon to put it on the statute book because we need first to know the conclusions of the Home Office's broader review does not take into account the importance of doing so by the end of December, when the temporary measures will lapse, and we will be back in the same position as when the Supreme Court struck down the previous legislation. It is at least timely, and perhaps too late to be standing here discussing the matter.

A broader question arises about the Supreme Court's action. It concluded that the United Nations Act 1946 did not intend to support actions on terrorist financing, such as were then carried out under UN and EC structures. We all recognise that it was appropriate for the Supreme Court to give the then Government the ability to put through temporary legislation to ensure that assets were not unfrozen. It is important to note that because of the widespread public policy need for such freezing the Supreme Court recognised the importance of continuing to freeze assets, even while the formal legislative structure was being put in place.

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My final question concerns the standard of proof. I am particularly interested in the extent of cross-party support for changes to the standard of proof. I have previously argued that the balance between civil liberties and protection against terrorism in this country has swung too far in favour of autocracy and away from civil liberties. I am pleased to see the new threshold of over 30 days of reasonable belief, rather than reasonable suspicion. I am also pleased that an appeal process is being put in place. However, I was surprised to hear the shadow Minister say that that may not have the support of the Opposition and that they need clarification of the position. The Home Office's review will look into a much wider array of issues, including control orders, CCTV, border controls and indeed terrorist assets, and I hope that it will ensure that we can go forward and that the freezing of assets will continue to receive cross-party support.

Mr Hanson: For the sake of clarification, my right hon. Friend the Member for Morley and Outwood (Ed Balls) will look closely at those issues. As a Government, we obviously had in place the section 44 regime on control orders and CCTV, and we were introducing legislation. We will examine all those matters, but the balance between civil liberties and the protection of individuals, and securing action against terrorists must be right. That is the balance that I hope the review will seek.

Matthew Hancock: I am sure that the review will seek that balance. My question is whether the Opposition will have a position when the review comes out. I am glad that the Opposition believe that the measures are proportionate, and that at this stage there is cross-party agreement.

That brings me to my conclusion that far from being rushed through, the Bill is timely, and far from its being introduced too soon, given that a review is under way, it is important that it is enacted within the timetable, no matter the Macdonald review's timetable. No doubt it will suggest amendments to many pieces of legislation from the previous decade that have been too autocratic and have not sufficiently respected civil liberties, but we must ensure that any amendments are part of that much bigger picture, rather than criticising the timing of this important legislation, which I would argue is about 10 years too late.

5.59 pm

Keith Vaz (Leicester East) (Lab): It is a pleasure to follow the hon. Member for West Suffolk (Matthew Hancock), who is obviously knowledgeable about the internal workings of these issues. He is also right that we need to look at the big picture more than at the immediacy of some of the things we are doing. One problem in the past was that we did not think carefully enough about counter-terrorism legislation until some great event occurred. Then there was a great hoo-hah-quite rightly-and Members in all parts of the House became concerned and wanted to pass legislation. He is right that the Bill is not being introduced with that immediacy, which means that we have an opportunity to look carefully at what is being proposed.

I have always welcomed the unity of the Front Benches on terrorism issues, although in my 23 years in this House I have found that, with one or two exceptions,
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whenever the word "terrorism" appears in any order or other legislation, there tends to be cross-party support. The exception was when the previous Government rather hastily marched some of us through the Division Lobby in support of 90 days' detention. On reflection, we realised that that was not the right thing to do.

Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC): The right hon. Gentleman will recall the unanimity of view on the Dangerous Dogs Act, but it was not very good law.

Keith Vaz: I think that was 1874, which was before even I entered the House, but I understand what the hon. Gentleman is saying.

Mr Llwyd: No, I meant the Dangerous Dogs Act 19-

Mr Deputy Speaker (Mr Nigel Evans): Order. Shall I vacate my seat while you two have a chat? Please can we have no sedentary interventions?

Keith Vaz: I give way to the leader of the Welsh nationalists.

Mr Llwyd: I was referring to the latest Dangerous Dogs Act, which was passed in 1991. The right hon. Gentleman will recall that there was unanimity across the House on that legislation, but it was thoroughly bad law.

Keith Vaz: The point that the leader of the Welsh nationalists makes is absolutely right. Even though there is unanimity of purpose, it is important that we look carefully at the legislation and scrutinise it, for the reasons that all those who have spoken so far have set out. My right hon. Friend the Member for Delyn (Mr Hanson) is no longer in his place, and I am not sure where he has disappeared to. However, notwithstanding the support from the Opposition Front Bench, I am sure that when he gets to Committee and takes off his jacket-as the Minister will do too, in these dramatic confrontations that occur in the Committee corridor-they will be able to discuss the finer detail of the Bill.

We have not had a substantive debate about counter-terrorism on the Floor of the House of Commons since the new Government were formed. It is certainly the intention of the Select Committee on Home Affairs to look at counter-terrorism when Lord Macdonald has finished his review and when Charles Farr, who is conducting the review in the Home Office, completes his consideration of the Home Office issues. I see in the Chamber the hon. Member for Cambridge (Dr Huppert), in whose constituency I spent most of the morning. He and the House will know that those issues have to be discussed in great detail. We need to look at control orders, and see whether the legislation passed so far has been adequate to deal with, first, the terrorist threat and, secondly, the civil liberties implications, of which the hon. Member for West Suffolk rightly made mention. That is why what the leader of the Welsh nationalists said is so important. We hope that the Home Affairs Committee can look carefully at those issues, and therefore give a considered view to Parliament when Parliament chooses to discuss the matter.

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The figures in the Minister's written statement, which was helpfully released this morning, I think, applied to the amount in accounts that have been frozen-£290,000- and to the number of people who have had orders revoked. I do not know whether it is just me, but I was surprised at the small figure, given that the City of London and this country in general must have trillions of pounds in bank accounts. Bearing in mind the fact that international terrorism is a global crime-taking into account the concern that we have about our tough legislation on people seeking to come into this country and depositing money here to be used to finance terrorism-I thought that the figure given was, frankly, a bit on the low side. When the Minister-or perhaps his junior Minister-winds up, perhaps he will say whether he agrees, because £290,000 does not sound like an enormous amount to be funding international terrorist activities.

Similarly, on the 205 accounts, it is not clear whether we are talking about 205 people with 205 different accounts, or a smaller number of people with 205 accounts between them. Although we do not want to know who they are-it would be inappropriate, as we know, to discuss individual cases on the Floor of the House-it would certainly help the House to have as much information as possible. Are we talking about fewer people with many accounts, or are we talking about 205 people?

The second issue to do with the figures concerns the number of people who have had their orders revoked. I have not had the pleasure of reading the Joint Committee on Human Rights' report into the issue, but I hope to do so as soon as possible. I do not know whether the report looked at the revocation of orders, but I am concerned about those who have had their assets seized, because somebody had reasonable suspicion that they were involved in, or were funding, some kind of terrorist activity, but who have had their cases reviewed and, as a result, had the orders revoked. What happens to those people? Do they get compensation if they had to pay their bills and continued to have living expenses, despite having their accounts suddenly frozen? Do we explain why their accounts were frozen? I am not sure, so I would be most grateful if the Minister told the House what procedure is adopted once an order has been revoked.

I welcome the fact that orders have been revoked: it shows that the system works. If no orders had been revoked, I would have been extremely worried, because people can have reasonable suspicions, but when they look at a particular case, they may come to another view. I welcome the new appeal process in the Bill-there should always be an appeal process in such circumstances-which will presumably mean that more people might challenge the system. It would be helpful to know what kind of information they would have during that process.

Those may seem to be points of detail, but they are terrifically important to anyone who is caught innocently in the system. Indeed, I would also be keen to know whether there had been any complaints by individuals about the way the system operates currently. If there have been legitimate complaints, do the Government propose to ensure that the legislation covers those complaints in some way or another? People might be pretty delighted that their accounts were suddenly frozen, but then suddenly released. However, I would imagine
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that if any of us in the Chamber did not have access to our bank accounts, for whatever reason, we would be pretty upset. Therefore, it is important to know whether any complaints under the current system have been addressed.

My final point concerns the Macdonald-Farr review. I know that it is not a matter for this Minister, but he will no doubt talk to the lead Minister on counter-terrorism-that is, the Home Secretary-or other Ministers. It is important that we have a timetable for concluding the review that the Government have set up. I recently wrote to the Home Secretary asking for that timetable. It is important that we know precisely at which point the internal review being conducted by Charles Farr is drawn up and when the views of Lord Macdonald come into any consideration. Do they prevail over what has happened? Those are not issues for this Minister; they are issues for the Home Office. However, in the overarching discussions that are no doubt taking place in Government, they are issues to be considered by all.

The leader of Plaid Cymru reminded us-certainly me-that Parliament legislates in haste and repents at leisure. The hon. Member for West Suffolk said that the Bill was not being rushed through, which we welcome, but a timetable in which the legislation has to return to us in seven days is quite fast. I am not sure how many sittings the Minister intends for scrutiny. It is sometimes considered that those who speak on Second Reading wish to sit in Committee, so I would like to make it clear to any Whips who might be present that I have no desire to sit in the Public Bill Committee. If we are to scrutinise the legislation carefully, however, and if it is going to be with us for some time, we should take into account the concerns of the Plaid Cymru leader and ensure that we scrutinise this Bill very carefully indeed.

6.10 pm

Dr Julian Huppert (Cambridge) (LD): It is a great pleasure to follow the right hon. Member for Leicester East (Keith Vaz), who chairs the Home Affairs Committee, on which I also have the privilege to serve. He did indeed visit my constituency of Cambridge this morning and he will doubtless have understood something of the expertise of some of my residents and constituents. He did not on this occasion meet David Howarth-he will be known to most hon. Members as a great constituency MP and an expert on these issues-who worked hard on this legislation and I pay tribute to him for what he did.

The aim of the new revised Bill is clear, and I suspect that no Member would have any problem with it. We need to control terrorism and we need to control the flow of funds for terrorism. We support, of course, UN Security Council resolutions, particularly resolution 1373, although others are also relevant. We all share those aims, so the question is how best to go about achieving them.

Earlier this year, the order was held to be ultra vires in respect of the United Nations Act 1946. Lord Phillips used strong phraseology when he said:

I suggest to right hon. and hon. Members that what he meant was not that these were draconian because they were orders, but that they were draconian because of
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their content. So we need to be careful before reintroducing measures that are very similar to those orders.

There was a Terrorist Asset-Freezing (Temporary Provisions) Act 2010. I shall not enter into the argument over whether this particular Bill is being rushed through, but the temporary one clearly was in an effort to catch up with what happens when Government do not take account of legal processes. This Bill is better than the previous temporary one. I have no hesitation whatever in saying that. I am grateful that a number of amendments were accepted in the other place, which have significantly improved the Bill.

I nevertheless have a number of concerns about the Bill, and these are echoed by organisations that are familiar to us all: Liberty, Justice, the Equality and Human Rights Commission and the Joint Committee on Human Rights, on which I also have the pleasure to serve. I urge Members to look at our short and simple report, which makes a number of clear suggestions and proposes amendments, which I, if nobody else, will table. The key issue is that we must not treat those people whose assets we freeze as effectively "prisoners of the state", as Lord Hope of Craighead said. That is not the correct intention; we should be careful about that.

I do not wish to detain the House for long, but I shall speak briefly about the amendments that I wish to table. I hope that the Minister will be able to respond to many of the issues tonight, which will save time later on in the proceedings. Before I do so, I want to point out a few areas that I believe are missing from the Bill, which is a shame. I would not go so far as to mention the whole counter-terror review, but the Bill does not deal with the parallel asset-freezing powers in the Anti-terrorism, Crime and Security Act 2001 or the terrorist financing provisions of the Terrorism Act 2000-despite the fact that the Privy Council recommended in 2003 that these be rationalised. Surely it makes sense to bring legislation together and make it clearer.

I am also concerned that the Bill fails to deal with those designated by the European Union. Under this legislation, such people have no right to appeal or review a decision to put them on the list. I find that disappointing. I am sure that some hon. Members, particularly Conservative Members, would naturally be wary of any instruction from the EU. In this case, although not in many others, I agree with them. We should find a way to safeguard British citizens from this process and provide them with some form of appeal or review. I believe that amending provisions could be added to clauses 26 and 27.

There is a fundamental issue at the heart of the matter, which I do not believe has been properly discussed-at least not in this House. It comes down to who should decide whose assets should be frozen. Should it be the Government or the Treasury, as in the Bill; or should it be a court? Do we want punishments-that is what these provisions amount to-to be dealt with by Government or by the judiciary? The appeals process is, I acknowledge, a significant improvement on what obtained before.

Matthew Hancock: I am trying to follow the hon. Member's argument, but does not the concept of a judicial implementation of asset-freezing contradict the fact that this is a global system? Whether it is done
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through the EU or the UN, the designation is done at that global level and then executed in the UK. The decision is not made in the UK, so while the right of appeal is important, it is crucial that the Executive can freeze assets rapidly in response to a global proposition.

Dr Huppert: I am afraid that the hon. Gentleman is not correct about that. There are cases where the Treasury designates and it is that act of designation that counts. The provisions could be changed simply-I will propose the wording later-so that the Treasury requests the courts to designate; there would be nothing amiss in so doing.

The present situation is that there is a freeze and then there is an appeal. One problem with that cycle-not to mention the problem of where the power lies-is that the onus is on the affected person to find a way to make an appeal. They will have to get legal advice first and get clearance to secure the funds in order to pay for such advice. I hope that we will have absolute clarity from the Minister on whether they will always be able to get access to the funds necessary to clear their name. They will then have to apply and have their case heard. As I will explain in more detail later, they may not even know the case against them.

That highlights the real questions over who should make these judgments. I think it should be a court that determines the freeze and that it should be done ex parte. I absolutely accept that the courts should be able to go through the process without warning the accused in advance, because if they can simply move the money or assets somewhere else, it will not work, but the courts need to be involved and the people accused must be given a chance to make their case fairly.

I would also like to deal with the issue of standards of proof. I have put the issue to both Front-Bench teams and I have asked a number of colleagues-legal and otherwise-what the standard of proof should be before we take an action like freezing someone's assets. Should it be the criminal standard of proof or should it be the civil standard? I have been fascinated by the number of people who think that they are somewhat illiberal in believing that it should be a bit below the criminal level. I have heard that from a number of colleagues.

Should things be done separately? Should we require people to have been convicted, tried or just arrested before we apply the provisions? When I asked him earlier, the Minister referred to the problem of arresting non-UK people, and I accept his point, which was well made. I nevertheless seek an assurance that the people involved will at least have been through a process of arrest-for people in the UK, where that is appropriate-and that at least consideration will have been given to taking the person through the full legal processes of trial and conviction. Security Council resolution 1373, with which we are trying to comply, requires us to deal with those who

It does not say anything about those we "suspect" of committing such acts, so the Bill goes beyond what is required by the Security Council.

I understand the argument for having a slightly lower standard for the interim powers, although I would ask
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why it was decided to go for 30 days and whether "reasonably suspect" is the appropriate provision. I am very concerned, however, about the idea of "reasonable belief" for a final designation. That means treating people below the civil standard, which is essentially a 50:50. We are saying that it is just as likely to be one way as the other. That is the civil test. The Government are seeking to freeze people's assets in circumstances where they believe that it is more likely than not that those people were not involved in terrorist activities. I find that alarming. If we think people were probably not involved, we should not freeze their assets. In the Government's defence, I have to say that the Opposition seem to think that the degree of involvement in terrorist activities could be even less before these provisions are applied, which I find significantly worse.

These are draconian powers and we should be sure, to a reasonably high standard of proof-I could even accept a balance of probabilities-that the people are likely to have been involved with terrorist offences. I am also concerned about what is meant by a "terrorist offence". Many concerns have arisen over a number of years where actions have been described inappropriately as terrorist offences. I am sure that Members are aware of the figures relating to section 44 of the Terrorism Act 2009. According to the latest figure that I have seen, 101,248 people were stopped and searched and none was arrested for terrorism-related offences. Does that constitute involvement in terrorism? How do we define the term?

Keith Vaz: Does the hon. Gentleman share my concern about the amount of money that has been seized-about £290,000, although the figure varies according to the fluctuations of currencies? According to a note attached to the Minister's speech, the amount could actually be less than £290,000, as it depends on the value of the pound. That is approximately the cost of a one-bedroom flat in Westminster North.

Dr Huppert: I am not entirely sure how that is relevant to what I was saying, but I do indeed find it astonishing. I suspect that the public, if they thought about the matter, would imagine very large sums, although that might be a result of their having watched too many James Bond films. I certainly find it surprising that we are concerned with the net sum of roughly a quarter of a million pounds.

Matthew Hancock: I understand the figure of just under £290,000 to be the amount that is currently frozen, rather than the amount that has been frozen over time. Past figures have been much higher.

Dr Huppert: Indeed, but I still consider it to be a relatively small amount. It is certainly a smaller amount than I would have expected if I had not seen any of the data.

Let me return to the question of what constitutes a terrorist offence. We know of specific instances of arrests using anti-terrorism powers that have been deeply inappropriate. I am sure that Members will recall the case of Walter Wolfgang, who was ejected from a Labour party conference and arrested-under anti-terror legislation-when he tried to return. I do not think that we should pass Bills allowing us to deal in such a way
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with people like that-or indeed Iceland, which was also subject to anti-terror rules, or the BBC photographer Jeff Overs, who was stopped while taking photographs of St Paul's Cathedral in November 2009 and arrested under the same rules. Surely that is not what the Bill ought to be about.

I should welcome a stricter definition of terror offences from the Minister. As ever, we are seeing an expansion of the present definition. Another recent example, which is highly topical at present, is that of a gentleman called Paul Chambers, who was recently convicted of sending a menacing tweet that threatened a terrorist activity. It read:

I should add at this point, for reasons of which some Members may be aware, that I am Spartacus.

The tweet led to a conviction under section 127 of the Communications Act 2003 for

Surely that is not appropriate. The tweet did not actually threaten terrorist activity. It led to legal fees of £3,000 and the loss of the gentleman's job, which is utterly ridiculous. We need to be careful about allowing these powers to expand and take in more cases. I need hardly remind Members that Jean Charles de Menezes was also "reasonably believed" to have been involved in terrorist activity.

We must also be clear about the reasons for which someone's assets are being frozen. I fear that the Bill currently allows far too little information to be given to individuals to enable them to defend themselves. I would propose an amendment suggesting that as much information as possible must be given to the relevant person. We must bear in mind the possible public interest in non-disclosure, but, except when it simply is not possible, the balance should be in favour of openness, so that people can genuinely defend themselves.

Similarly, we should require a fair trial and a fair hearing. I would propose an amendment making it clear that the accused must have enough information to be able to instruct the defence. That is an essential part of a fair trial. The report from the Joint Committee on Human Rights contains a detailed case analysis, drawing a comparison with control orders. Many of us are concerned about the impact of excessive powers when victims have had no opportunity to defend themselves properly, and advocates in closed courts do not enable them to know what is going on.

The Government rely on a very thin distinction to avoid some of the legal hearings that have resulted from control orders. They argue that judges have commented that control orders do not apply to terrorist asset-freezing. I do not buy such arguments. I urge the Government to adjust the Bill now so that it works, rather than doing what the last Government did so often: waiting until an expensive court case arose, then being forced yet again to amend legislation in an ongoing cycle.

The role of Parliament is important. I am pleased that reports are to be made, but I believe that they should be made to Parliament rather than to Government. We have a responsibility to the people to verify that the
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powers are being used. The independent reviewer should be confirmed by Parliament, and should report to Parliament. It should not be up to the Treasury to vet reports before passing them to us; that should be our responsibility.

As I said to the Minister earlier, I am concerned about the licences that are dealt with in clause 17. It should be made absolutely clear that the Government will ensure that there are sufficient funds for reasonable living. As far as I can see, no such requirement currently exists. According to Lord Wallace of Tankerness, there is a "general presumption" that more is needed.

I am also concerned about the level of information that is required by clause 20. It may be very onerous to provide that level of information if the Treasury chooses to make it so. In the case of Ahmed, the Supreme Court noted the extraordinary burden that the requirement could place on a designated person. For example, the wife of one of the designated persons was

Is that really what we want, and what we expect from the Bill? Designated persons will have limited funds anyway. Do we actually want the Treasury to go through itemised lists of toiletries, sweets, school books and bus tickets? The Bill should make clear provision for no account to be taken of very small amounts.

Clause 22 raises the issue of self-incrimination. Article 6 of the European convention on human rights includes a privilege against it, but the Bill does not. According to the Government in the other place,

It would form a reasonable excuse, that is, to refuse to comply with a request for such information in clause 22. I think that that should be made clear in the Bill. The onus should not be on the accused to make the case after being prosecuted for providing the information.

Another fascinating part of the Bill which I hope can be changed is clause 25(1), which states:

There are a couple of exceptions, but I find that very concerning. It appears that the Bill is exempt from all rules that might apply to it except the two that are listed in the clause. That might catch, for example, the Human Rights Act. I see nothing in the Bill suggesting that the Act applies to it. Indeed-although I am sure that it would be tested in court-it could be argued that the clause expressly states that the Bill is exempt from the Act's provisions. I hope that that is not what the Government intend. Similarly, what about common law torts? What about negligence? What about defamation? Nothing in the Bill secures any of those aspects of common law. I hope that the Government will replace section 25(1) with a provision that actually states what they probably intended. At present, it is dangerously unclear.

Asset-freezing is a very strong power, but a very necessary one. Because it is so strong and because it can be so draconian, it must be fair and properly controlled, and it must be applied only to those who are actually involved with terrorist activities.

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6.28 pm

Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC): I believe that we need a system of asset freezing. It would be idiotic for anyone to argue that that is not necessary in this day and age, given the link between organised crime and terrorism. It occurs not just in Northern Ireland but, I am sure, throughout the United Kingdom. I take it as read that every Member in the Chamber believes in the principle of asset freezing. The next issue that arises is how we arrive at that position and ensure that it is compatible with people's civil rights. That is important. I am not a bleeding-heart leftie as such, but I do believe that we have basic human rights and that we need to observe them. Indeed, we are obliged to do so by international law, and by domestic law too now.

I referred in my discussion with the right hon. Member for Leicester East (Keith Vaz) to the apparent unanimity between the two Front-Bench teams, and I mentioned the Dangerous Dogs Act 1991. It was introduced following some terrible incidents involving Staffordshire bull terriers maiming people and, in one instance, killing a child. The rush to legislate was understandable, but the measures were not properly scrutinised and, to this day, the Act is unworkable.

Another such Act has passed through the House during my tenure and that of the right hon. Gentleman, namely the gun control legislation following the Dunblane massacre. Everybody was appalled by that massacre, but we rushed to legislate without adequately scrutinising the measures we were putting in place, and I am afraid that the resulting Act did nothing to control the use of illegal firearms. My point is that scrutiny is vital, and that unanimity of purpose between both the Front-Bench teams, and, indeed, all Members, does not matter, because at the end of the day every one of us has a duty to ensure that our constituents live in a safe environment and that we can deal with the terrorism that might threaten them.

There is clearly a terrorist threat; only a fool would deny that. Having said that however, let us examine the Bill. The Financial Secretary to the Treasury referred in his opening speech to United Nations Security Council resolution 1373. It includes a requirement that UN member states must prevent the financing of acts of terrorism, including by the freezing of funds and economic resources

and that they must prohibit

available to such persons. I submit that there is a world of difference between that requirement and what is being proposed in the Bill.

Initially, the Bill stated that its powers could be used if there was a suspicion that a person might be involved in some form of terrorism. That has now been strengthened somewhat: there must now be a reasonable belief that they are involved. That is quite different from what the UN is calling for, however, and in my view it does not strike the appropriate balance between protecting national security and preserving civil liberties. It is vital that we do that, and this is precisely why so many pieces of anti-terrorism legislation have been struck down by the courts. That has happened not because there is all-out
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war between the courts and Parliament, but quite simply because we have not been getting that essential balance right.

I believe that if we subject the Bill to proper scrutiny, we can work towards ensuring that we get the balance right. I do not want us to have to argue the same points again in a few months, after the Supreme Court has knocked some of the Bill's measures on the head a second or a third time because of a perceived lack of respect for human rights.

As the hon. Member for Cambridge (Dr Huppert) mentioned, this Bill gives powers to the Executive, not the judiciary, and those powers are potentially harsh and punitive. As has been said, it is a form of punishment for someone to have all their assets frozen-one might argue that it is almost as bad as dealing with the Independent Parliamentary Standards Authority, but perhaps we should not go there, folks. There is a right of appeal, which is welcome, but these measures deal with persons about whom it has not been established that they have ever been involved in terrorism, but when there is just a reasonable belief that they could be, or might at some stage have been, involved in some act of terrorism.

I have concerns about the Bill, therefore, and I know that Justice and Liberty also have grave concerns. Let me repeat that I want a proper framework set up. I am not arguing an empty case-I am not saying that I oppose just for the sake of opposing. I want the legislation to be workable and to be seen to be acceptable, and for it to be tested by the courts and to be found acceptable to them. If we ensure that that is the case, we will have done our duty as parliamentarians in that we will have introduced good law.

Allowing the Executive to designate individuals as suspected terrorists is unacceptable. As the deputy president of the Supreme Court has said, these people are

Those are strong words from a Supreme Court judge, and I do not think he would have said them unless he felt strongly about the issue.

The Bill goes much further than is required by UN Security Council resolution 1373, a resolution that the UN's own special rapporteur on terrorism, counter-terrorism and human rights has said

I also believe the Bill fails to address the UK's asset-freezing obligations under UN Security Council resolution 1267, recently criticised by the General Court of the European Union as "particularly draconian".

Sajid Javid (Bromsgrove) (Con): The hon. Gentleman is making some fine points, but does he accept that global co-operation is required to combat global terrorism and the financing it utilises, and that that is the intent behind the UN's actions on this, following the terrible events of 11 September 2001? Does he also agree that for that reason global organisations, such as the committee the UN has set up, must issue orders internationally to all countries to freeze assets? The UK is absolutely key in implementing such orders given the role we play in international finance, and bringing courts into this would make any orders terribly difficult to implement.

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Mr Llwyd: I do not disagree with that. We are a member of the UN, and we need to co-operate, and I do not disagree with the need for a framework. All that is understandable, but what I am saying is that we want a fair framework, and one that will stand the test of time and not be struck down because of some perceived illegality. That is all I am saying. I am probably ad idem with the hon. Gentleman on the whole issue. I appreciate that this is a global problem. That is why it is, quite rightly, being tackled by the UN, but my point is that we need to be careful about how we introduce any measures.

Lord Phillips, president of the Supreme Court, has said that the basic rights to which I am referring are a "vital part" of the fight against terrorism. He said:

As I have said in respect of resolution 1373, we are going further than required, and by imposing the freezing of assets we could be in breach of article 1 of the first protocol to the European convention on human rights. We must also consider the right to respect for family and private life under article 8, and the right of access to a court under article 6. People who will be subject to these freezing orders will not necessarily know the case against them, which is a clear breach of article 6.

The deputy president of the Supreme Court, Lord Hope, described the effect of designation by the Treasury in the following terms:

So there it is. The hon. Member for Cambridge described the powers as "draconian", and they are certainly strong and punitive by nature.

In the Ahmed case, the Supreme Court held that the United Nations Act 1946 did not give the Treasury the power to make such a broad order and the asset-freezing regime was immediately voided. Rather unusually, the Supreme Court refused to grant a stay of execution of its judgment. In the Ahmed case, Lord Brown noted:

I have made the point that there should be better safeguards. I appreciate that the appeals procedure and the change from reasonable suspicion to reasonable belief are steps forward, but the argument that the imposition of these coercive orders is best undertaken by Ministers rather than the courts seems to misunderstand the separation of powers and the role that the courts already undertake. In particular, it ignores several decades of practical experience in the courts, which have been making ex parte asset-freezing orders in a wide range of civil and criminal proceedings for the past 35 years or more and so are quite used to the procedures.

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As regards national security, it seems highly implausible that the judges who sit in the specially constituted division of the High Court that hears financial restriction cases under part 6 of the Counter-Terrorism Act 2008 are somehow less capable than their colleagues in the commercial division of hearing an emergency application for a freezing order. Freezing orders are just one of many orders that the courts are much better placed than the Executive to make. I agree with a point that the hon. Member for Cambridge made in an intervention that if the measure were operated in conjunction with an arrest warrant, people might be a bit less concerned about what the Bill might mean in due course.

I hope that amendments might be proposed requiring that designation-making powers should be in the hands of the courts and not simply the Executive and requiring the designation regime be brought into the criminal justice system when designations are made against an individual, rather than a group. Applying those coercive powers on the basis of suspicion of or belief in people's involvement in terrorism will inevitably lead to people who have never been prosecuted having orders imposed on them. The right hon. Member for Leicester East has pointed out that those who have had orders lifted are still in a precarious and highly embarrassing position because they have at some stage been suspected of terrorism, which is hardly going to place them in good standing with anybody.

I should like there to be a requirement on the courts, when making a designation, to grant a licence to enable an individual and their family to have access to such funds as are reasonably necessary for their subsistence and travel and fees for legal representation if that need arises. That would ensure that a licence was made when the matter kicked off. I should also like the Bill to reflect and uphold the basic principles of a fair trial by ensuring that any person who is subject to the regime knows in full the case against him or her and is able to present a full defence. That would involve removing the powers for special rules of court that allow for secret evidence, hearings that the interested person is barred from and the use of special advocates.

The report of the Joint Committee on Human Rights has been mentioned. The Committee would like to table useful amendments on the standard of proof. Its report states:

The report also deals with the right to a fair hearing, recommending that

There are one or two other useful suggestions, but this is Second Reading so I shall not go into great detail.

I should like to finish with two quotations. First,

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the law being the Human rights Act 1998. The quote continues:

Those were the words of Mr McNulty, an old sparring partner of mine, who was the Minister for Security, Counter-Terrorism, Crime and Policing from 2006 to 2008. He has come to the view that we have to reconsider the balance in deciding how to proceed.

Finally, I sincerely hope that the Bill will be drastically improved in Committee, because I do not want to see another example of what is becoming a regular occurrence-the Supreme Court having to do our duty for us. We are the legislators, so let us get it right. If we do not, we must heed the words of Edmund Burke:

6.47 pm

Guy Opperman (Hexham) (Con): I remind the House of my former profession as a barrister, and I compliment the hon. Member for Dwyfor Meirionnydd (Mr Llwyd) on his outstanding contribution to the debate. I could agree, in broad terms, with much of what he said.

In the case of re M, Mr Justice Ognall stated:

Those sentiments encapsulate the difficulties and predicament that we face today. How do we fulfil the UK's duty to be at the heart of the international fight against terrorism, while protecting the basic human rights and freedoms that Britain has always prided itself on advocating in both theory and practice? We know that the legislation derives from United Nations Security Council resolution 1373, a European directive and the decision in Ahmed v. HM Treasury. Experience shows that most individuals who are engaged in or intent upon serious offending can often live with the authorities taking away their guns or explosives, or with their liberty being taken away, but what hurts them is taking away their money, because that is what fuels so much of the offending and allows the criminal or terrorist to operate.

The Bill goes a long way towards fulfilling that duty: it enables the Treasury to freeze the assets of those suspected of involvement in terrorism, with such decisions being made at national level on the basis of advice from specific law enforcement, security and intelligence agencies. Of course that means that much will rely on the accuracy of the advice received, but I suspect that the vast majority of the British public will not find such a proposal fundamentally objectionable. It should be borne in mind that many of these decisions have to be taken rapidly in circumstances where the stakes are high and the potential consequences for both sides are catastrophic.

UN resolution 1373 specifically states that we should "freeze without delay". I suggest that the specific content of the resolution is such that there is a real desire to move at great speed. However, that must be seen in the context of our commensurate duty to be at the heart of
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the international effort against terrorism. Secondly, it must meet the expectations of the British public, by making the work of the terrorist organisation that much harder.

Although other anti-terrorism measures may be already on the statute book, they do not fulfil the obligation set out in resolution 1373. There will be-and this is accepted-an improvement. There are rights of appeal and judicial review that give safeguards to those caught by an order. It should give some confidence to the wider public that a specific individual has his rights properly preserved. It should also be noted that legislation such as this should never be judged by specific statistics. The right hon. Member for Leicester East (Keith Vaz) quoted specific statistics in his speech, but this type of legislation acts as a preventive measure that dissuades individuals involved in terrorism from using the UK banking system. Prevention is clearly better than cure.

The new Bill provides the power to freeze assets on a preventive basis on a reasonable suspicion of involvement in terrorist activity. Where that threat is involved, it is difficult to envisage how any other test could effectively be applied. The test is also subject to the safeguard that even if the Treasury considers there to be reasonable grounds for suspecting a person to have been involved in terrorist activity, that person's assets can be frozen only when it is considered necessary for public protection.

I want to deal with three final points in relation to the legislation. I will not go into the detail that others have in the past. First, how will designated persons fund their appeal? At present, they are in a position whereby their ability to fund their appeal is effectively non-existent. Such legislation has cropped up in other matters of asset freezing down the years.

Secondly, and most worryingly, the definition has gone from "reasonable suspicion" to "reasonable belief". That is, at best, a marginal change. Many a good lawyer would argue that there is almost no difference there. What is quite clear is that that is less than 50%. Something that is less than 50% always concerns any lawyer-it does not matter whether we are talking about a human rights lawyer or someone who is against the whole idea of terrorists in every particular way. When we talk about less than 50%, we have to ask what we are dealing with. Are we dealing with something that is 49%, 40%, 30%, 20% or 10%? That discrepancy is a concern, and I hope that it is addressed when it comes to the individual protestations of change that will be put before the House at a later stage in consideration of this Bill.

Finally, there must be a more wholehearted review of all these matters. We keep enacting piecemeal legislation after individual Acts have been passed over a period of time. It is not a good situation to have specific Acts dealt with on a specific short-term basis. My concerns are assuaged by what the Supreme Court said in the Ahmed case. It quashed the terrorism order on the grounds that the inclusion of "reasonable suspicion" as a threshold was not necessary or expedient. It noted that "reasonable suspicion" was not specifically referred to in UN Security Council resolution 1373, and it concluded that the general words of section 1 of the United Nations Act 1946 did not give anyone the authority to make an order that interfered with fundamental rights on the basis of a "reasonable suspicion" threshold. However, and I suggest that this is the key point in relation to why the Government are going ahead on this
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basis, the Supreme Court did not condemn the terrorism order on wider grounds of incompatibility with human rights. Those members of the court who commented on the arguments in the Ahmed case suggested that the Terrorism (United Nations Measures) Order 2006 was disproportionate and dismissed such arguments. I hope that we will go forward with a greater sense of will so that when the Macdonald report and other such reports come before the House, we are in a position to consider everything together.

6.56 pm

David Simpson (Upper Bann) (DUP): The Bill is a sincere attempt to deal with important issues. As such, I give it a very general welcome, but I have a number of issues that I should like the Minister to respond to when he winds up. The shadow Minister, the right hon. Member for Delyn (Mr Hanson), made reference to Northern Ireland. As a former Minister in the Northern Ireland Office, he will be aware that in Northern Ireland we had the Assets Recovery Agency, which was amalgamated into the Serious Organised Crime Agency, so we are somewhat familiar with the freezing of terrorist or criminal assets.

As my hon. Friend the Member for Dwyfor Meirionnydd (Mr Llwyd) made reference to UN Security Council 1373 and some of its elements, I will not go into that now. Suffice it to say, the resolution makes it the duty of Government actively to prevent the financing of terrorist acts. Secondly, it makes it the duty of Government actively to prohibit, and not just prevent, their own nationals and those within their territories from making funds, financial services or economic resources available to such persons.

This Bill deals with important matters. All of us who live within the United Kingdom, live at a time when those elements of that resolution are very relevant in every corner of the country. Those of us who live in Northern Ireland are all too well aware of the fuel laundering, the cigarette smuggling, the illegal sex trade and a host of other money-making activities that have been used to finance, in the past, the Provisional IRA and other terrorist groups. We are also aware of the way in which such activities continue to be employed as a financial engine for dissident groups. It is important that every possible step is taken not only to close down such operations and prosecute those involved in them, but to clamp down on anyone who would facilitate or enable the accumulation of resources by such groups, the attempted concealing of such financial arrangements, and any attempt to put assets to deadly use in the pursuit of terrorist goals.

On a general level, I welcome the intentions of the Bill and I wish it well, although I have some concerns. On the detail of the provisions, the Bill applies to designated persons-that is, those who have been designated as being liable to fall within its constraints and to feel the full force of its provisions. There are two kinds of designations. I apologise if I am repeating some of the material that was mentioned earlier, but that is probably the luck of being the last speaker.

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