Counter-Terrorism Bill

My Lords, I thank the Minister for his explanation of the amendments, which come rather late in the day. The House will rightly have concerns about rushed legislation and the risk that it can pose of powers being used inappropriately. That is not just a theoretical remark. We need only think back to the use of the counterterrorism legislation to freeze Landsbanki’s assets to see a case in point—and I share that kind of worry. Nothing that I am about so say should be taken as condoning inappropriate use of power. That said, we entirely agree with the Government that there is a pressing need to address gaps in our ability to tackle terrorism financing, proliferation financing and money-laundering. It is a policy objective that we on these Benches entirely share with the Government. We are therefore supportive of the thrust of the amendments. It is indeed worrying that, for some time, the Treasury has not had the powers to allow the UK to apply the full range of financial restrictions and measures recommended by the Financial Action Task Force. That has been a matter of international embarrassment to us and it is right that we should close that gap. As the Minister said, we are not at present able to require business to be aware of risks, take extra diligence or supply systematic reporting when transacting with jurisdictions of concern. Those are things that we need to be able to do. We also need to be able to limit or cease transactions with countries of concern. That is obviously a considerable power and needs to be drafted with great care. The Financial Action Task Force issued a call for member states to address the gaps in their domestic legislation in October. Certainly, my colleagues on the Front Bench who deal with foreign affairs may wish to see us able to take action to respond to that. Given its subject matter, I agree that, while the Bill is not necessarily the ideal vehicle, it is the best we have available to put these powers in place at this time, and we think it reasonable to do so. It is the only vehicle, it has to be said, that will allow us to get these powers on the face of primary legislation by February 2009, the date of the next meeting of the Financial Action Task Force. Taking all that into account, as the Minister said, we have sought to work closely with the Treasury from these Benches to secure agreement on amendments over the past week or so. In doing that, we specified a number of safeguards that were not in the original draft of the amendment that we saw. In particular, we focused on the need for annual reports to Parliament on the use of the proposed new powers. I know that the noble Baroness, Lady Miller, has tabled a probing amendment and, like the Minister, I am interested to see what information she thinks should be included in the report. We went into fairly detailed and specific points in the drafting, so that the amendment put forward here is thought through. I thank the Minister for the constructive way in which he and his officials engaged with us. Our joint work is reflected in the amendment before us and in the Explanatory Notes sent to your Lordships' House last week. I am sorry to say that something seems to have gone wrong with the circulation of the Explanatory Memorandum. I did find it, but it was in the Library rather than the Printed Paper Office, so I fear that a number of noble Lords may not have seen it. That is a great pity because it is very helpful. I commend sight of it because it is a helpful explanation of what the Government are trying to do. Given that, it is all the more important, if noble Lords will allow me, to raise a number of points and questions on the Floor and have various assurances and points on the record. The Minister has already seen these questions so they will not come as a surprise. We tabled a number of amendments based on our work with the Treasury. One is probing and I hope that the Government are able to accept the other two. My first two questions are related. When would a failure to comply with a direction from the Treasury incur a civil penalty as opposed to constituting an offence? It is important to have clarity on that. Will the Minister give the House some indicative examples beyond those included in the Explanatory Notes of what ““appropriate”” action by an enforcement authority would be? ““Appropriate”” is defined as, "““effective, proportionate and dissuasive””." That point about the action of enforcement authorities leads on to my next question. The amendment makes clear that the powers of enforcement authorities and their officers are not exercisable in relation to items subject to legal privilege. Can the Minister explain how an enforcement officer would distinguish between items that are not subject to legal privilege and those that are? This is obviously included in the PACE codes. What if an item is viewed or removed, and is later found to be subject to legal privilege? What would its fate be? On a more specific point about Her Majesty’s Revenue and Customs as an enforcement authority, can the Minister say something about the forthcoming amendment to its review procedures? What is the projected timing of such a report, and can the Minister give some indication of its likely substance? It is important that the procedures put in place are not arbitrary and do not appear unreasonable. For instance, a system currently in operation whereby no further communication from HMRC constitutes a rejection of an appeal is not satisfactory. The appellant is entitled to be actively told if their appeal is to be rejected. Will the Minster undertake to write to the House on the timetable and the substance of the review? When an appeal is lodged against an enforcement authority, can the Minister confirm why the Treasury would be able to make an order for the appeal not to be made to the first-tier tribunal? It would be helpful to have clarity on whether the regime outlined in the amendment is transitional, applicable only until the first-tier tribunal is operational, or something else. If this power is to remain permanently, what other purpose could it be put to? Lastly, on a general point, can the Minister confirm that if these amendments are agreed to, the Government will review the various pieces of legislation providing for these powers to impose financial restrictions and consider the need to consolidate them? Part of the problem of legislation being brought forward in amendments to successive Bills is that we ultimately get—no doubt unintended—inconsistency, and duplication with minor variations of language. It becomes difficult for those who must obey the law. Consolidation would therefore be good for ease of reference and the avoidance of unintended inconsistency. It would also be helpful to know the timescale of any review. Briefly, on our specific amendments, Amendment No. 61AB is a probing amendment. In what circumstances would compensation be most likely to apply? The categories in the legislation are not particularly easy to understand. Would the courts have discretion to award compensation in any circumstances that they regarded as appropriate? Are they bound to some extent by the categories, or are they free to apply their own judgment and discretion? Amendments Nos. 61AA and 61BA reflect previous discussions and assurances from the Treasury. They are nevertheless important. Amendment No. 61AA would make clear that the Treasury may not impose onerous burdens on businesses unnecessarily, and that the new powers would not be applied in an indiscriminate manner on a wide scale that would have disproportionate operational impact on businesses, but be interpreted and applied in a specific way. In other words, ““proportionate”” has regard to the risk to the UK’s national interest and—this is the important addition—to the financial cost to businesses subject to a direction. Therefore, it is a matter of being proportionate in relation not simply to the Government and the national interest but to the financial cost of a direction to the business. Amendment No. 61BA is about guidance on the implementation of Treasury directions. I hope that the Minister will explain the procedure for producing guidance. I understand that this is industry-led. We want to make sure that it is put in place so that directions can be complied with. I have refrained from tabling an amendment to the effect that the powers will not come into effect until the guidance is in place to avoid foot-dragging by industry. However, if I might say so, there is a balance to be struck here. Will the Treasury ensure that the necessary assistance is given to provide at least initial generic guidance; in other words, that the industry does not have to wait for a very long time before it understands how it is meant to comply with these amendments? We will be happy to look at their drafting and come back at Third Reading. Will the Minister confirm that the Government are willing to accept the inclusion of these two amendments in the proposed new schedule? Finally, I am sure that other Members of your Lordships' House will have views on the amendments before them. We on these Benches support calls for the Government’s amendment to the Title to be more specific. ““Certain other activities”” would much better read ““proliferation financing””. It is helpful for the scope of a Bill to be clear on its face. The Delegated Powers and Regulatory Reform Committee has not yet had a chance to look at the amendments. I understand that it will report extremely early. I look forward to receiving that report. The committee produces very sensible and important recommendations that we on these Benches tend to support. We wish to help the Government get these amendments through and we would be very grateful to have clarification on the various points that I have raised.