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Terrorist Asset-Freezing (Temporary Provisions) Bill

My Lords, this has been a stimulating debate, one that I approached with considerable trepidation given the contribution we could expect from Members of the House with great experience in matters of the law. As the whole House recognises, the threat to the UK today from international terrorism is very real and significant. Terrorists need financing to be able to carry out attacks, the costs of which, as we have seen, do not have to be great. Terrorists also need financing to maintain their infrastructure; for training, equipment and recruitment, and to promote their ideology. The capabilities of terrorist groups are severely constrained without access to funds. The asset-freezing regime, implemented in good faith under Orders in Council, has proved over the years to be a valuable tool for disrupting and preventing terrorist financing. The Supreme Court ruled that the Terrorism (United Nations Measures) Order 2006 and the Al-Qaida and Taliban (United Nations Measures) Order 2006, implemented in good faith, were beyond the scope of the power provided by Section 1 of the United Nations Act 1946 and quashed both orders. This had effect from 4 February. National security and public protection continue to be an absolute priority for the Government. Our aim is to prevent a gap in the asset-freezing regime and ensure that suspected terrorist funds cannot be diverted and used for terrorist purposes, and that suspected terrorists do not get free access to the UK’s financial system. That is why this legislation is being moved today. We considered it necessary to the UK’s national security to act swiftly to restore the asset freezing on a temporary basis under primary legislation, while we introduce permanent legislation with time for Parliament to fully scrutinise our proposals in great detail. I welcome the many points made by Members of the House. I will deal first with the points raised by the noble Baroness, Lady Noakes. The noble Baroness kindly offered support for the intention of the legislation, and we welcome and greatly appreciate that. At the same time, the noble Baroness quite correctly lost no opportunity to point out what she regarded as the Government’s failings, which led us to have to introduce this legislation on a fast-track basis. No doubt there were warnings which could have led many to believe that primary legislation should have been introduced from 2001. The noble Baroness referred to the work produced by the noble Lord, Lord Newton, in 2003 in that respect; and also, as the noble and learned Lord, Lord Mackay of Clashfern, referred to, the actions taken in primary legislation in New Zealand and Australia. However, I remind your Lordships’ House that the Government were acting in good faith and under advice that it was correct and proper to rely on Section 1 of the United Nations Act 1946. We cannot rush to Parliament every time a piece of legislation goes through some form of court challenge, certainly not in a situation where the Court of Appeal found in favour of the line that the Government had taken. However, the judgment from the Supreme Court required us to take the necessary action to protect the country and our people from the risk of terrorism facilitated by the use of financial assets and access to the financial system, while at the same time putting in place detailed legislation that can be subject to intensive scrutiny as it makes it way through the House. The noble Baroness is correct in observing that the decision of the Supreme Court to reject a stay in respect of its decision led us to require urgent action. The Supreme Court in its judgment directs us towards the need for fairer scrutiny, which is precisely what we are going to achieve by the process of putting forward two pieces of primary legislation—one to be adopted through the fast-track mechanism and the other through the very detailed scrutiny that this House and others will apply to the legislation, as we wrestle with reconciling the need to preserve security against the risk of terrorism while not encroaching unreasonably or disproportionately on individual freedom and rights, which we regard as of the highest possible importance. The noble Baroness in her various questions demonstrated why we need a very serious debate and scrutiny of the permanent legislation, which is precisely what we plan to ensure. The noble Lord, Lord Pannick, referred to the undoubted urgency to validate orders and asked why the Joint Committee on Human Rights and the Constitution Committee had been circumvented. The House will be aware that the answer is simply the lack of time. The Bill was introduced only on Friday, and the Joint Committee on Human Rights does not meet until tomorrow, and the same applies to the Constitution Committee. Both committees will have a very full role to play in scrutinising our permanent Bill, and we very much welcome that. The noble Baroness asked why we were not using the Anti-terrorism, Crime and Security Act 2001. The answer was provided largely from her own Benches by the intervention from the noble and learned Lord, Lord Mackay of Clashfern, in referring to the answer given in the other place yesterday by the Exchequer Secretary to Dr Cable. I might respond also to another point that the noble and learned Lord, Lord Mackay, made, relating to what he described as the patchwork of legislation. There is much to commend his observation that we should at an appropriate moment review the myriad pieces of legislation which deal with terrorism—to go back to the earlier intervention in my opening speech from the noble Lord, Lord King—to satisfy ourselves that the interface with other forms of legislation, particularly those relating to serious organised crime, is looked at in its totality to ensure that they are comprehensive and complete and that there are no inconsistencies or gaps. I have had the opportunity already to discuss this matter with my noble and learned friend the Attorney-General. It is a matter on which we will no doubt reflect—but we can rest assured without any doubt that the permanent legislation that we propose to follow this temporary Bill will receive very close scrutiny. The noble Baroness asked why we did not simply amend the Anti-terrorism, Crime and Security Act 2001. The Act covers a wide range of threats but is primarily aimed at countering threats from overseas and is framed appropriately. Amending it to allow for a meaningful terrorist asset-freezing regime that could be used to tackle threats within the UK would substantially change the nature of the Act, and we judge that this would not be an efficient way of addressing our particular concerns. I will go back to answer some more points made by the noble Lord, Lord Pannick. He expressed concern about the speed with which the Bill is being rushed through. I fully sympathise with his comments, and I think everybody on the government Benches and elsewhere in the House would rather we never had to use fast-track processes. However, the House also recognises that this is not necessarily a case, as the noble Baroness, Lady Hamwee, suggested, of a hint of panic; rather we are acting expeditiously and with appropriate urgency in the light of developments. We are not, of course, asking noble Lords to accept permanent asset-freezing legislation on such a fast-track basis. This Bill simply restores the existing regime for a temporary period to provide time for Parliament to consider permanent legislation more fully. Concern was also raised about our use of reasonable suspicion tests, and whether this exceeds our international obligations under United Nations Security Council Resolution 1373. I accept that UNSCR 1373 does not spell out precisely that action should be taken on the basis of reasonable suspicion. However, it is clearly intended to be preventive, and the international Financial Action Task Force has made it clear that, in its reasonable view, suspicion is a proper standard for implementing UNSCR 1373. I suggest to your Lordships’ House that this is also an area where one operates within the framework of UN thinking but according to the particular circumstances as they are perceived to apply in one’s own territory. I am afraid we know from very painful and tragic experience that the United Kingdom is a country in which the threat of terrorism is particularly pronounced, as indicated by my right honourable friend’s decision recently to raise the security level. That ability to form a judgment as to the particular circumstances that will apply to our situation in this country, within the framework of 1373, is a reasonable way of proceeding. The noble Lord, Lord Pannick, also said that he was a little puzzled as to why Clause 2 gives retrospection to the banks only back to 4 February, and raised the question of what would happen if banks were to be sued for having maintained frozen accounts on 27 January, after the first Supreme Court judgment. We believe that retrospection should be used only where absolutely necessary, especially in a fast-track Bill. The reason we do not provide banks with retrospective cover predating 4 February in this Bill is that the Supreme Court judgment did not take effect until 4 February. Prior to that date, the banks were therefore in a position where they could reasonably argue that they properly thought they had a valid legal base to freeze terrorist assets. The noble Lord also expressed concerns about why we—