Clause 2

Terrorist Asset-Freezing Etc. Bill [Lords] – in a Public Bill Committee at 10:30 am on 23 November 2010.

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Photo of Tom Brake Tom Brake Liberal Democrat, Carshalton and Wallington 10:30, 23 November 2010

I beg to move amendment 1, in clause 2, page 2, line 1, after ‘believe’, insert

‘on the balance of probabilities’.

Amendment 1 is the first of a small number of probing amendments that relate to the report of the Joint Committee on Human Rights, which carried out legislative scrutiny of the Bill. Any members of the Committee who want more in-depth knowledge about the amendments and their purpose should obtain a copy of the report, because it is very helpful. These probing amendments provide an opportunity for the Government to respond in detail to the concerns that were raised by the Joint Committee.

Although the Joint Committee welcomed the fact that the Government were raising the legal threshold for an asset freeze from reasonable suspicion to reasonable belief, it still had concerns about the standard of proof that was to be used and whether that had been raised to the civil standard of balance of probabilities. In their response, the Government relied on the Court of Appeal’s interpretation of the phrase “reasonable belief” in the Anti-terrorism, Crime and Security Act 2001 in maintaining their view that the standard of proof did not need to be changed. The position now, therefore, is that a person’s assets can be frozen by the Treasury even if it is not satisfied of that person’s involvement in terrorism on the balance of probabilities. I hope that the Minister will use this opportunity to explain why the Government feel that that is appropriate.

If the Government were so inclined, the amendment would be a simple way to redress the problem and ensure that the standard of proof relied on had to be the balance of probabilities. That would answer the concerns expressed in the Joint Committee’s report. I hope that the Minister will also explain why such a course of action is not appropriate.

Photo of David Hanson David Hanson Shadow Minister (Treasury)

Good morning, Mr Gale. It is a pleasure to serve under your chairmanship.

The official Opposition will not support the amendment, because we do not feel it is appropriate. It might be helpful if I explain to the Committee that, as we know from the debate on Second Reading, the Bill’s genesis lies in discussions that took place under the previous Labour Government. There is a relatively good element of cross-party support, certainly from the Government and the Opposition, for the Bill’s contents.

The clause provides for the Treasury to make a designation on the basis of concern about someone’s involvement in terrorist financing, and it does so in relatively clear terms. Subsection (1)(a) refers to the reasonable belief

Subsection (2) gives what I believe are clear definitions of “involvement in terrorist activity”, including

“the commission, preparation or instigation of acts of terrorism”.

The Joint Committee on Human Rights has raised some concerns, which the Committee and the Minister will need to consider, but I think it reasonable to say that the standard of proof in the Bill as drafted is sufficient to deal with matters of such import, such that we have clarity about the purpose of the clause. We do not need to take the view of the hon. Gentleman and his hon. Friend the Member for Cambridge (Dr Huppert), as stated in their amendment.

In clause 26, the Bill includes a right of appeal to a court on such issues. If people feel that the designations are too strict or if they are concerned about them, they can appeal.

Despite the Joint Committee’s concerns, I think the Bill meets the test of protecting the public from the financing of terrorism. I speak not only as the Opposition spokesman, but as the Minister in the previous Government who had responsibility for counter-terrorism. I know that there are dangers from a range of organisations funding terrorist activity. Information will sometimes cross the desk of the Treasury or the Home Office that strongly indicates levels of proof substantial enough for action to be taken, but that should not necessarily be brought out in court immediately because of ongoing terrorist activity, or because of the need to monitor other activity or to ensure that the sources of the information are not disclosed.

If the higher level of proof sought by the hon. Member for Carshalton and Wallington was used, there would be a danger of our undermining attempts to stop terrorist activities. The clause is about trying to ensure that we do not have 7/7s or 9/11s or terrorist funding in this country. Those who are concerned, if they are subject to clause 2, have the right of appeal under clause 26; they can argue their case in court, and often do so. I think the hon. Gentleman will find, as I did when signing control orders under the previous Government, that nobody ever appeals against them, because they do not want the information to come out. They do not want it tested in court, because they know that the designation has been made for valid and sound reasons.

Photo of Tom Brake Tom Brake Liberal Democrat, Carshalton and Wallington

I hear what the right hon. Gentleman says, but does he agree that, if the Government accepted the amendment, the standard of proof that would apply would still be lower than required to charge a person with a criminal offence and, therefore, the powers could still be used in a preventive manner?

Photo of David Hanson David Hanson Shadow Minister (Treasury)

I may be slightly old-fashioned in these matters, but I do not believe the Treasury would take action under clause 2 unless it had sufficient evidence to secure a potential action, which was testable by appeal under clause 26.

I am happy to give the Minister and the Treasury the benefit of the doubt in relation to clause 2. We would support the provision if I were sitting where the Minister sits now. I do not think that we should water down the provision on proof. If we do that, we increase the  danger of terrorist funding being undertaken and of the Treasury and the Government not being able to take action against individuals who would fund terrorist activity and try to subvert the democratic processes that the hon. Gentleman, with his amendment, is trying to uphold.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

It is a pleasure to serve under your chairmanship, Mr Gale. I am grateful to my hon. Friend the Member for Carshalton and Wallington for indicating that the amendment is probing. I shall set out why the Government believe that the test of reasonable belief is the appropriate one for the circumstances.

Amendment 1 would change the threshold from that of reasonable belief to one where the Treasury would need to be satisfied on a balance of probabilities. As I emphasised on Second Reading, in order to fulfil our United Nations Security Council obligations and to meet our national security needs, the asset-freezing regime needs to be preventive—that is, it must be capable of being used at an early stage to disrupt and prevent terrorist acts. In our view, a threshold of a balance of probabilities would not enable us to act when action is needed.

The balance of probabilities test is applied by the courts in the context of civil proceedings and requires one party to demonstrate to the court that it is more likely than not that a particular fact is true. If that test were applied to asset freezing, it would require the Treasury to be satisfied and to be able to demonstrate to a court that a person is more likely than not to be, or to have been, involved in terrorism. That sounds reasonable, but it is in fact a high burden, because the burden of proof would rest with the Treasury. It would mean, for example, that if the picture was unclear and an equally plausible argument could be made that an individual was not involved in terrorism, that the Treasury would not be able to impose an asset freeze. In our view, because of the serious threat posed by terrorism, in such cases, where a reasonable belief standard is met, the Treasury should be able to freeze assets on a preventive basis to protect the public. The alternative is to hold back until further evidence is accumulated, but that runs the risk of an individual being able to carry out a terrorist act without preventive action being taken.

We need to be mindful that, as eminent judges such as Lord Justice Laws and Lord Rodger have remarked, the material available to the authorities about terrorist plots may often be fragmentary and incomplete, and the picture may not be clear for good reasons. That does not mean that the material available is wrong. It just reflects a number of real world facts about terrorism: that intelligence has to be gathered covertly; that terrorists go to considerable steps to disguise their activities; and that to protect the public, plots sometimes have to be disrupted at an early stage rather than allowed to run on further in order to accumulate more evidence. For those reasons, we believe that moving to a balance of probabilities test would have significant risks for our national security.

There is also an international dimension. A balance of probabilities test would also be out of line with international best practice. The Financial Action Task  Force makes it clear in its guidance on terrorist asset freezing that a legal threshold of reasonable suspicion or reasonable belief should be used. We are not aware of any country that uses a balance of probabilities test to freeze terrorist assets in accordance with UN Security Council resolution 1373. For those reasons, as I set out on Second Reading, we remain convinced that a reasonable belief test is the right threshold for making a final designation. We believe that it strikes the right balance between protecting national security on the one hand and protecting civil liberties on the other. Let me be clear: that does not result in the Treasury making decisions where it thinks it more likely than not that a person is not involved in terrorism. The point is that the decision maker believes, from a careful assessment of what may well be a complicated intelligence picture, that a person is involved in terrorism.

The threshold of reasonable belief for a decision is one used in many other contexts—for example, decisions about terrorism, such as under the Anti-Terrorism Crime and Security Act 2001 and under schedule 7 to the Counter-Terrorism Act 2008. The courts are then asked, on a review or appeal, to determine whether there are reasonable grounds for that belief. We believe that that is the right test here: it provides an assurance that a proper burden is placed on those seeking to impose a designation, but at the same time enables action to be taken to protect national security when needed. I hope my hon. Friend will withdraw the amendment.

Photo of Mike Gapes Mike Gapes Labour, Ilford South 10:45, 23 November 2010

I endorse the remarks made by the Minister and my right hon. Friend the Member for Delyn. In particular I draw attention to an interesting briefing that was sent to us by the organisations Liberty and Justice, which points out that amendments were made in the House of Lords following the judgment in January, which brought in the current wording in the Bill. Therefore, there has been a change. I would like to ask the hon. Member for Carshalton and Wallington, when he responds, to clarify his position. In the briefing from Justice and Liberty, they call for the removal of clause 2, to be replaced with something completely different. They argue that the Bill is

“inconsistent with the coalition Government’s promise to ‘reverse the substantial erosion of civil liberties’ under the previous Government.”

Given that both the Lib Dem and the Conservative parties are part of the coalition and the hon. Member for Carshalton and Wallington has said that the amendment is probing, I want to be clear whether the coalition position is probing, whether it is a pledge, or whether it is the position just expressed by the Minister.

Photo of Tom Brake Tom Brake Liberal Democrat, Carshalton and Wallington

That may be a matter to which I or my hon. Friend the Member for Cambridge may want to return on Report. However, I am sure the hon. Gentleman will read carefully what the Minister had to say, particularly about the UK being out of line with best practice elsewhere. Unfortunately, it was all too often clear that the counter-terrorism legislation introduced by the previous Government was out of line with best practice in other countries, in that we adopted a position with which other countries felt much more uncomfortable.

In response to the comment from the hon. Member for Ilford South, the coalition Government are at one on the need to review our civil liberties legislation. That  is why we are in the process of carrying out a counter-terrorism review, which I understand should be reporting early next month. I am confident that that will start to roll back some of the more draconian measures that his Government introduced. The coalition Government’s position on terrorist asset freezing will be the one we arrive at in Committee, at the end of our proceedings and the progress of this Bill through the House of Commons. The hon. Member for Ilford South may laugh, but I am afraid he is having to accommodate himself to something that he will not have experienced in the last 65 years—because there has not been a coalition Government in 65 years—but I am sure he will get used to that process, if he is able to adapt, in the next few months.

I have listened carefully to what the Minister had to say. He raised some pertinent points and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.