Lord Sheikh

My Lords, I welcome the Bill as there is a general consensus that greater measures are needed to assist in the fight against global terrorism. Terrorism is one of the greatest threats that we face in the 21st century. This legislation will make an important contribution to our national security by helping to ensure that funds are not used to perpetrate terrorist activities. I also welcome the Government’s strategic defence and security review, as stated in the coalition agreement. We have a duty to our citizens and Armed Forces to shoulder the collective task of formulating a robust security strategy for an increasingly dangerous world. I am confident that this legislation will contribute to achieving this goal.

In overcoming the threat of terrorism, we need clear understanding and constant vigilance. I congratulate the Government on the recent announcement of a successful conclusion to negotiations between the European Union and the United States Treasury on the exchange of information on terrorist finance tracking. One part of frustrating the evil intentions of those who inflict terrorism across the world is to starve them of resources-and this lies at the core of the Bill.

It is timely that we should be considering our approach to the terrorist threat just a few weeks after the fifth anniversary of the 7/7 suicide bombing attacks in London, which resulted in the deaths of 52 people. Thankfully, there has been no other major successful terrorist assault in this country since that day. That has not been because the threat has dissipated, and we should not allow complacency to creep into our considerations.

We should not allow a debate to take place on terrorism-and counterterrorism-without spending a moment reflecting on some of the issues that cause terrorism: alienation, grievance, demonisation, a sense of injustice, whether real or perceived, exclusion and political issues. We cannot expect to overcome the terrorist threat without acknowledging the role that these factors play in motivating the disaffected to move towards violence and terrorist atrocities. We need to examine and find remedies relating to the root causes of extremism and terrorism. Community cohesion and counterterrorism are not the same thing and they should not be confused. They are complementary and there are links. We must therefore regard the two issues in the appropriate manner.

Similarly, we need to recognise that the threat from terrorists arises from a multitude of different areas and groups. Those who are radicalised with terrorist sympathies are not restricted to one particular group, religion or region. At this stage, I should like to follow up on what the noble Baroness, Lady Hughes of Stretford, said and make the point that nearly all Muslims are law-abiding and good citizens who are against any form of extremism and terrorism. However, I appreciate that there is a problem with a tiny minority of people who do not follow the true principles of Islam. Islam forbids any form of suicide bombing. It is, indeed, a religion of peace. For example, when we greet each other, we say “As salaam alaikum”, which means “The peace of God be upon you”. As a Peer, I have a coat of arms, and on it I have two doves because I want to give the message that Islam is indeed a religion of peace.

Clause 1 of the Bill defines individuals who have been labelled “designated persons” by the Treasury. This clause is also of extreme importance in ensuring that we fulfil our obligations in implementing United Nations Security Council Resolution 1373. This provision ensures that asset-freezing measures are applied to groups and individuals who engage in or financially support terrorist activities.

Designated persons can be defined only by competent authorities. However, I feel it is important that all competent authorities in United Nations member states act in harmony to make sure that the necessary procedures are followed to combat terrorism on a global basis. It is important to achieve a degree of consistency in tackling cross-border terrorism. I should be grateful if the Minister could advise your Lordships’ House whether bodies in addition to the Treasury will gain status as competent authorities in the near future for the purposes of this legislation.

Clause 2 covers the Treasury’s power to designate persons. This includes instances when the Treasury has reasonable grounds to suspect an individual or group of engaging in terrorist activities. I am concerned by this requirement, as Resolution 1373 expressly states that the assets of those who commit, or attempt to commit, acts of terrorism should be frozen. The resolution does not extend to those whom competent authorities suspect of terrorist activity. Therefore, the burden of proof is not satisfied under this clause.

Furthermore, we must be mindful that whatever we enact could not be construed as a breach of Article 8 of the European Convention on Human Rights, which states that all individuals are entitled to respect for their family and private life in accordance with the law.

Our criminal justice system is based on the principle that individuals are innocent until proven guilty. Any attempt to interfere with this principle would be to the detriment of our society. Even if a person is proven innocent, there may be a possibility that the person will be branded a terrorist. This could be damaging to a person’s future prospects. Is there any scope for awarding compensation to those who have had their assets frozen prior to acquittal?

Clause 4 states that a designation issued by the Treasury expires within one year unless renewed. The clause gives the Treasury authority to renew a designation at any time before it expires if there are reasonable grounds for doing so. I fear that this clause may encounter the same difficulties as Clause 2. The clause states that a designation may be renewed more than once. However, there is no specification as to how many times a designation can be renewed. I would welcome greater clarification as to the powers of the Treasury concerning the duration. If these powers are wrongly used by those in authority, it could have long-lasting and devastating consequences for individuals and the integrity of this department.

Clause 20 makes reference to the need for co-operation with internal and international investigations. I strongly support this clause; it is in our best interests to work with our European and wider partners to achieve this aim. Foreign policy and national security are intertwined and should be treated as such.

The success of our foreign policy will work to promote our national interests and security both at home and abroad. The question of national security covers a multitude of areas, which is why a narrow approach to this issue has a limited chance of success. Co-operation with our neighbours in the European Union, our partners in the Commonwealth, transatlantic allies and other international organisations is vital to ensuring that we successfully combat terrorism. This threat is not just limited to one continent and therefore requires a multilateral solution. Counterterrorism is dependent on international co-operation, and a vigilance to identify the emerging and constantly altering threats to our security.

I welcome Clauses 33 and 34 as they clearly define the meaning of “funds”, “economic resources” and “financial services”. These are key terms for the purposes of the prohibition stated in Clauses 8 and 9. These two clauses make it an offence for funds and financial services to be made available to designated persons.

At this stage, I would like to declare an interest as I am the chairman of an organisation which provides insurances and financial services. I feel that companies which offer financial services as stated in this clause should be given the appropriate assistance in understanding the requirements of this legislation.

I would be grateful if the Minister could inform your Lordships’ House as to whether any guidance and information will be made available to companies which provide financial services. I wholeheartedly endorse the principles that these measures are seeking to embody in law. We need to maintain our defences and be vigilant in tackling the threat posed by terrorism. We should be robust in seeking to prevent those who cause actual terrorism drawing on the resources that they need to inflict the injury of their design.

I am, however, of the opinion that we must ensure that the provisions of the Bill do not compromise the human rights of law-abiding citizens. This country has a proud history of promoting democratic values around the world and in our local communities. Although we are in a heightened state of security in terms of domestic and external threats, legislation must not be allowed to compromise our civil liberties. It is important to strike a balance to ensure that no ethnic or social group feels as though it is the constant target of discrimination. We must co-operate internationally and focus on marginalising those who idolise or endorse terrorism. We are bound to ensure that we approach the matter in a proportionate, measured and effective manner. It is only through detailed scrutiny that this House can content itself that the Bill meets those tests.

Lord Sheikh: My Lords, I note that the Government will introduce interim guidelines and that a review of counterterrorism legislation will be undertaken. I have spoken in your Lordships’ House about the use of Section 44 powers and the fact that a very high number of people from ethnic minority communities have been stopped and searched. Can the Minister assure me that under the interim powers, people from ethnic minority backgrounds will not be targeted? Can this point be looked into when the review of counterterrorism legislation is undertaken? Can the Minister also clarify why it is necessary for Section 44 powers to continue to be applied to searches of vehicles?

Baroness Neville-Jones (Minister of State, Home Office): Let me take my noble friend’s second point first. Section 43 does not contain any powers to stop vehicles. I think that the House will understand that it would not be very sensible not to have any powers at all to stop vehicles. In many respects, the greater danger may lie in someone, or persons, trying to do something in a vehicle. So it is necessary to be able to stop vehicles. Therefore, Section 44, as a matter of law, has to remain available for vehicles. In practice, however, it will be interpreted by using reasonable suspicion, as if it were a Section 43 power. I very much take the noble Lord’s point about the need for there not to be discrimination and disproportionality in the stopping of different groups in society. I think that that is a concern to the whole House, and it is being watched very carefully.

Lord Sheikh: My Lords, as a Muslim I totally condemn any form of terrorist activity. We must appreciate that nearly all Muslims are law-abiding citizens, but I accept that we have a problem with a tiny minority. With regard to profiling, I would like to hear from the Secretary of State that Muslims are not going to be targeted with regard to profiling, about which there has been some talk recently in the press.

Lord Adonis (Secretary of State, Department for Transport): My Lords, as I said a moment ago, there will be no racial stereotyping, so the noble Lord has that assurance.

My Lords, I declare an interest as the chairman and chief executive of an insurance broking and financial services organisation.

The Government currently provide compensation for British nationals who become victims of terror within the United Kingdom. They also provide compensation to non-British citizens of terror in this country; for example, all victims of the 7/7 bombings have been compensated. Compensation is paid by the Criminal Injuries Compensation Authority and total payments amount to about £200 million annually.

Unfortunately, British citizens who are victims of terrorism overseas are not compensated unless they are in a country where compensation arrangements already exist. Over the past decade, British citizens have been killed or injured in a number of overseas territories. There is considerable hardship in these cases and there is therefore a need to set up a scheme whereby payments are made.

Although I am very sympathetic to the intention behind the Bill, I should like to raise a number of points relating to the proposals in it.

Insurers who provide travel cover are committed to paying claims as quickly as possible, but it must be pointed out that travel insurance is not primarily designed to cover personal injury or death claims. A travel insurance policy is a package-type of insurance providing cover under various sections, including personal accident, medical expenses, baggage, cancellation and curtailment benefits, loss of personal money and personal liability. Cover in regard to death, injury and long-term care are more appropriately provided under personal accident, life insurance and income protection policies.

Travel insurance is very competitively priced, but the more you add on, the more it will cost. We believe that one-third of travellers who go abroad from the United Kingdom do not effect travel insurance and they therefore expose themselves to considerable risks if things go wrong. Insurers would like to provide as much cover as possible at a competitive price to encourage people to effect cover. Unfortunately, however, only about 66 per cent of people take out policies, which is not satisfactory.

Practice among insurers regarding terrorism varies and can be summarised as follows: first, no cover at all; secondly, only medical expenses and repatriation cover following a terrorist attack; thirdly, medical, repatriation and personal accident cover for terrorism except in cases of nuclear, chemical or biological attacks; fourthly, personal accident medical expenses sections which apply unless people travel to a country or specific area where the Foreign and Commonwealth Office has advised them not to go.

Those standard covers are available to all policyholders, but insurance is available for both travel and personal accident to people who wish to travel to countries where there is a danger of terrorism or hostilities. Insurers underwrite that separately and the premiums are high. There is therefore special insurance to cover terrorism abroad, which provides appropriate benefits.

I feel that proposals to provide insurance generally to everyone would be difficult to implement. There are several factors in this regard, which can be summarised as follows: first, there is a question of cost and how the premiums are to be assessed; and, secondly, for a scheme to be meaningful, it needs to be made compulsory. The only compulsory insurances in the United Kingdom are employer’s liability and motor insurance for third-party risks; in other words, cover is mandatory where there is a possibility of death or injury to other people. A number of drivers do not effect motor insurance, despite road traffic legislation, and payments for their liabilities are paid by the Motor Insurance Bureau, an organisation set up by insurance companies and funded by levies on the insurers.

I have already pointed out that at present one-third of people who go abroad do not take out travel insurance, and compulsory insurance requirements would therefore be difficult to implement and difficult to police. Arrangements for insuring property damage and business interruption caused by terrorism in the UK came into force in 1993. Prior to that, insurers were unwilling to provide full cover for terrorism and cover was granted with limited indemnity liability.

The Reinsurance (Acts of Terrorism) Act 1993 was enacted to address the provision of full cover, and Pool Re was set up as a response to the Act. HM Treasury is the reinsurer of last resort for Pool Re, protecting it in the event that it exhausts all its financial resources following payments.

Since 1993, Pool Re has made payments of £612 million and has reserves of £1.664 billion. Insurance cover for policyholders provided under the Pool Re arrangement is optional, and policies are taken out by property owners who can afford the premiums. Therefore, the insurance is not compulsory. However, there would be a problem of affordability with regard to overseas travel cover for the general public, and, as I said earlier, to be meaningful, it would need to be mandatory.

I have heard people say that reserves built up by Pool Re could perhaps be released to pay for injuries to people who travel abroad. As I have said, Pool Re has reserves of more than £1.6 billion, but I believe that the release of these funds would be unwise as the reserves are necessary to pay large claims following a major incident or incidents occurring in future. I may add that the damage at Canary Wharf, Baltic Exchange and the Arndale centre was in excess of £1 billion each. Furthermore, it could be argued that the premiums have been paid by policyholders who have insured their properties, and to use them for any other purpose would not be appropriate.

There is another option regarding funding, which is to apply a levy of some sort, which could be considered. If such a levy were applied, it would be considered as a tax on holidays and travel. A levy would therefore cause difficulties and not be very popular. I therefore feel that compensation for injuries for terrorism overseas can be considered as an extension of the Criminal Injuries Compensation Authority arrangements. The existing scheme is successful; matters are investigated fully and fraudulent claims are resisted. At present, payments under the compensation scheme are made under the Home Office budget, which may have been frozen by the Chancellor.

In October 2005 the Prime Minster announced that the Government were looking at setting up a separate compensation scheme to cover British victims of terrorism overseas, and perhaps this matter can be pursued further. I understand that there are compensation schemes operating in other countries, which are funded by their governments. It remains to be seen if there is the political will to arrange state-run schemes in the United Kingdom and whether funds can be made available to implement the scheme. The mechanism is, however, here to process the claims.

The cost of the scheme will, of course, depend on the scale of benefits, who will be the beneficiaries and the number of incidents involved. I understand that a figure of £3 million has been suggested, and I am not sure if this will be sufficient. I add a note of warning that, if consideration is given to extend the Criminal Injuries Compensation Authority scheme to pay for terrorism overseas, there could be a demand that the scheme should be extended further to pay for victims of all violent crimes overseas.