My Lords, I beg to move that this Bill be now read a second time.
The spirit of our nation includes a sense of wanting to help those in need and wanting to right an injustice. In both those characteristics of our national spirit, we are failing the victims of terrorism abroad. For them, there is no system of assistance, compensation or, in simple terms, justice. Wherever the grieving spouse of a victim or an injured person might be, they are in a country abroad, suffering mentally and physically, culturally adrift and often without the means, either financial or organisational, to remedy their predicament.
In the second war, when London was subject to savage attack during the Blitz, the Prime Minister, Sir Winston Churchill, said that it was,
“unfair for British society to place the entire burden of the destruction on those unlucky enough to be hit”.
It is equally unfair not to compensate and assist those who are killed or injured by terrorism abroad when we give that assistance and compensation if it occurs here.
Let me explain the facts. We have, over the past seven or eight years, enacted with great force and parliamentary vigour many statutes against terrorism, on the fundamental premise that it is our duty as a Parliament, as a Government and as a nation to protect our citizens against terrorism. We provide protection for those citizens here, after the July bombings in 2005, under the criminal injuries compensation scheme. If they happen to be injured in a European country, each country is now obliged to provide compensation to any citizen of the European Union injured or killed by terrorism in their own territory. There is no such system beyond the United Kingdom and Europe.
Some 10 million or more British holidaymakers travel to countries outside Europe and the United States each year. Some of those were in Bali in October 2002, when 200 people were killed, 27 of them British. Some of those were in Turkey in 2005, when one was killed and half a dozen injured, Again in 2005, at Sharm el-Sheikh, 11 were killed and many more were injured. Those people were targeted because they were innocent, because they were tourists, because they were in a club, hotel or public space with no protection whatever; and they were so targeted to intimidate and create terror. Many countries have refused to accept that kind of threat. The United States, Australia, France, Italy, Sweden, Finland and Israel compensate their citizens for the effects of injury or death from terrorism wherever it occurs, each such country considering it its national duty so to act. Present today to listen to this debate are members of the families afflicted in those incidents that I have just described. They come to listen, in the expectation of parliamentary solutions to an injustice.
Those people—our people—injured abroad live here in their ordinary lives, pay their taxes here and act as citizens here, and we should not abandon them when they are injured by coincidence other than being here. At what cost? Doing the best that one can in an unpredictable state of affairs, having regard to what has happened and what might happen, it is thought that £3 million a year would present an adequate fund to meet the needs of such people. It almost embarrasses me to have to justify the expenditure of such a sum in such a noble cause. This state of affairs is a need that we must meet. The Foreign and Commonwealth Office seeks to do it through consular assistance and advice, but not beyond that. We have just agreed to pay £1 million in conjunction with the British Red Cross as an emergency fund, and by that very agreement we have thereby acknowledged the need, which is long term and not just short term.
Also, in insurance we do not meet the need. The House of Commons Treasury Committee, in its fourth report of this Session in February, on page 20, paragraph 2, said:
“We are especially concerned that there is insufficient awareness of exclusions in areas such as terrorist acts … and in particular by evidence that around ten million United Kingdom holidaymakers in 2006 would not have been covered for medical expenses in the event of terrorist incidents”.
When people in this country pay for their holiday insurance, they mostly have no idea at all that there is an exclusion for terrorism. When the bomb explodes and their lives are split asunder, there is no insurance.
The British Insurance Brokers’ Association has recently published a survey showing, from the results that it has been able to find involving 75 per cent of the market, that 78 per cent of policies have a terrorism exclusion clause, some of which will have a write-back provision for medical expenses—but that is an enormous proportion of the market. Some 15 per cent have no exclusion for terrorism and the existence of that 15 per cent illustrates that the risk can be insured, economically and on the open market. That state of affairs identified by the Treasury Committee and the British Insurance Brokers’ Association means that the insurance market should be the basic source for this kind of advice and assistance. The Bill seeks to use insurance to achieve that objective.
Clause 2 puts on a statutory footing that which is now a convention—namely, that our consular officials everywhere in the world should have a statutory duty to advise and assist our citizens in cases of terrorist attack and that the Secretary of State should consult and publish the arrangements reached after such consultation.
Secondly, regarding insurance, many of your Lordships will remember the IRA attacks in the City of London in the early 1990s. That led to the creation of an insurance system backed by the state, because the risk was thought to be enormous. The result of that arrangement between the Government and the insurance industry was enacted in the Reinsurance (Acts of Terrorism) Act 1993, whereby the Government became the reinsurer. That system, called Pool Re, now holds reserves of £1.664 billion; and through a retrocession agreement, the Government have been paid from that fund, since it was established, over £200 million. I await with interest anyone who suggests that £3 million is a figure that requires some special attention in the light of numbers such as that.
This Bill seeks to create a mirror of that which we thought was necessary to protect property as being the minimum we need to protect people. Clause 3 repeats, almost word for word, the property protection provisions of the 1993 Act and allows the Government to assimilate this scheme into that. It is neat, tidy, economical, practical and there is no reason why it cannot be done.
The fallback position under the Bill is a scheme similar to that for criminal injuries in this country. It is a fallback scheme; it should not be necessary—but the Bill makes provision for it, in case it becomes so, if arrangements with insurers do not bear fruit.
The scope of the Bill is directed at British people who are ordinarily resident in this country, but I realise that there is a problem, as many noble Lords have indicated to me—a person engaged in charitable work overseas can be just as much at risk as a transient visitor. The Bill allows the Secretary of State to introduce a wider range of protection than is presently envisaged in Clause 1.
What is the conclusion? I have been sent correspondence by Members of your Lordships' House from across the political parties and the Cross Benches, and from every political party in the Commons. Nobody—I stress, nobody—has suggested that there is anything wrong with this idea. No doubt, that is why in October 2005 the Prime Minister said that the Government would consider a scheme of this kind. This was pursued by Tessa Jowell in her ministerial role. She has been very helpful and co-operative with those who have been involved in seeking to implement these changes. She says that the £1 million that the Government have given is not a compensation scheme—it is temporary relief. In a recent letter, she stated:
“I recognise that this is not a compensation scheme and that there is a disparity between the state UK compensation scheme offered to those killed or injured at home, and the financial assistance offered to those affected abroad”.
She promised that the Government would consider the issue and, I hope, might act.
I emphasise that this Bill does not make any primary call on public funds. It says to the Government, “Do for your people that which you did for your property owners”. It does, however, create substantive provisions that allow negotiation and consultation to take place, followed, we hope, by the implementation of a different insurance market covering this risk.
One of our parliamentarians, Toby Ellwood, the Conservative Member for Bournemouth East, lost his brother in the Bali incident. He is quoted as saying that terrorism has no borders and neither should our support for the victims of terrorism. It is unbecoming of our country that this state of affairs exists. We should act before it shames us. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Brennan.)
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 extending 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.
My Lords, I strongly support this Bill and hope that it will find its way on to the statute book very soon. I congratulate the noble Lord, Lord Brennan, on bringing it forward. The arguments advanced to justify it are compelling; the benefits are immeasurable and the political and financial cost to the Government appears to be virtually nil.
However, I should like to outline a case for widening some of the definitions in the Bill. I have discussed this briefly with the noble Lord, Lord Brennan, and he took note of that in his opening speech. I understand why the definitions in the Bill prevail, but nevertheless, I should like my concerns to be on the record.
The definition of a victim is to my mind unnecessarily narrow; the Bill refers to UK citizens as,
“ordinarily resident in the United Kingdom”,
which would preclude those UK victims temporarily working in the Wall Street district of New York City on 9/11, who may well have become non-resident for a matter of a few months. I therefore suggest that the legislation should apply to British citizens generally, and not only to those resident in the UK. Again, I acknowledge that the noble Lord, Lord Brennan, addressed that.
Secondly, the definition of the victim is construed so as to include only those who suffer injury as a direct consequence of a terrorist act such as the Bali bombing or that in Sharm el-Sheikh in 2005. However, we all know that immediately following such an outrage, local authorities round up potential suspects, who eventually may, and indeed do, turn out to have been completely innocent bystanders. They are detained and all too often tortured with the aim of getting a confession. They, too, are victims and could perhaps be included in the definition as individuals who have sustained injury as a direct result of an act of terrorism or unlawful counter-terrorism measures constituting crimes under international law.
If those amendments were accepted, it would be logical to replace the heading in Clause 2, “Advice and Assistance”, with “Advice, Assistance and Protection”. That implies that at times there would be an obligation to afford diplomatic protection that goes beyond mere advice or assistance.
In addition to extending the scope of the definitions in the Bill, the question of the compensation of victims suffering injury overseas invokes some consideration of the role of the UK Government through their diplomatic representatives in not only assisting victims but preventing any possibility of abuse such as torture. Now, it may well be concluded that adding this dimension would stretch the Bill beyond acceptability—it probably will—nevertheless, I wish to take the opportunity to at least outline the kind of difficulties that victims face when caught up in arbitrary and terrifying actions on the part of foreign Governments, and in so doing I acknowledge the great contribution to this area of law by the Redress Trust.
Let me give a short and hypothetical example—hypothetical but culled from real-life experiences. A young British citizen of north African origin is arrested following a terrorist incident in Egypt. He is detained at the local police station. As a British citizen, and under international law, he has a right to humane treatment, to be free of torture and to have access to a lawyer. Under the UK rules applying to international claims governing diplomatic actions, he should be visited by a representative and his safety guaranteed while investigation takes place and before any charges are brought. The likelihood of the detainee being tortured in countries such as Egypt is extremely high; and the international standards on human rights should be the benchmark for consular or other diplomatic staff actions.
However, and here again I emphasise that this example reflects the reality of several cases, under UK domestic rules there is no obligation to protect the individual or pay reparation if to do so would be contrary to broader foreign policy needs. In other words, the interests of the state always come first. Since the UK has not incorporated the doctrine of diplomatic protection into its domestic legislation, the rules are in fact a statement of general policy and have no effect in law.
Apart from this gap, torture survivors also report a depressing litany of failures on the part of officials, including, for example, insufficient warnings to travellers about human rights violations in certain countries. In this context, I should mention that often contradictory advice is given by the Home Office or the Foreign and Commonwealth Office. There is often a failure of consular officials to make timely visits. In one case, despite having been informed, a British official visited the prison where the UK national was being held four weeks after he had been detained and, in another case, after two months. Very unfortunate things can happen in such a period.
The fundamental point is that a torture victim is in the most vulnerable position imaginable and even a day’s delay is too long. Another victim was given the name of a lawyer 11 months after his arrest. When complaints are made by UK officials they are often made to the perpetrators of torture and ill treatment, rather than to a higher level, thereby rendering the victim liable to further ill treatment.
The Bill is about proper reparation to victims of terrorist attack. Of course, I realise that I have strayed far beyond its remit. However, I believe that victims and their relatives are not the only injured; the illegally detained and the abused are also injured. In these cases the role of UK officials abroad is crucial. The more timely and resolute the action, the greater the chance that those UK citizens in countries where abuse and torture are endemic will be better protected.
My Lords, I had not intended to speak on this subject, but it is one of the rare occasions when I feel emotional about the issue and part of the reason for the debate. I know the young people in Bali very well. They are quite different from the sort of people who normally attract terrorism on this sophisticated level.
Bali does not have masses of military around, so they are not a target. It does not have many big, rich hotels. It contains one thing in large quantities: young people, water skiing and drinking. They normally do so in Gang Poppies, a lane based around a small pub set up 20-odd years ago by two Australians. They go there to enjoy themselves, and they were prime targets for terrorists of this type. It will not happen once, twice or three times; it will be done over and over again. They are not big names. Nobody knows who they are. But it brings a new edge to the evilness of those who are happy with what they have achieved through this. The upset caused will happen many times. It will not just be the children who are upset and killed in a ghastly manner.
At a little hall that I also know very well, attackers set fire to the inside and, as they came out, they blew up cars across the entrance for the sheer fun of it. The Government of that area are not particularly popular in many respects, but they tracked those people down. Within 78 hours, a large number of them were already under arrest—that was additional to insurance. Governments themselves might begin to take a rougher view of terrorism on this scale.
My Lords, the Bill addresses a real problem which the Government have addressed in other aspects of our lives: the idea that people caught up in terrorism should be compensated. It deals with a gap which we had not seen before. As the noble Lord, Lord Marsh, has said, I am afraid that the Government are once again being reactive; they have to be. We had not thought that terrorism would strike in this way or format.
The noble Lord, Lord Brennan, has therefore come up with a solution. Whether it is the best solution conceivably available might be open to question, but it is the one now before us. The noble Lord deserves credit for bringing it forward now, in the face of absolutely nothing happening elsewhere—or, if not nothing, then at least not enough.
Is it affordable? When he gave us a briefing on this, I asked the noble Lord whether he thought it was. He came up with the figure of £3 million, repeated today. If that is the case, it should be made available. Is the insurance industry as it stands capable of doing this? Probably not. If you have an exclusion against something which you think will probably not happen but could be very expensive—it is safe to say that insurers are there to make money—something else must happen to fill the gap. Normal policies will probably not provide for that.
This scheme gives us a potential way of dealing with a problem. It is less a matter of asking the Government than of asking the Treasury Bench whether they think there is another way of doing it or whether the Government have any information about another way forward. If there is an objection to the scheme or a way of extending treaties overseas, or if it is reasonable to expect potentially poor countries to provide this degree of compensation, I would be interested to hear about it. I doubt there will be an objection, but it is just the kind of question I want to hear answered. If the Government cannot give us a compelling answer why the Bill is not needed, we should accept it or something like it. It gives us a last resort.
What else could we do? We could adopt something totally unlinked to insurance, leaving it up to the Government. That is a possible answer. Unless we address this problem through some government scheme, however, we should look very hard at the Bill in front of us, or something very like it, and we should do so soon.
My Lords, the noble Lord, Lord Brennan, has made a powerful case for the victims of overseas terrorism. I do not think that anyone can fail to be moved by the plight of the victims of incidents such as those at Sharm el-Sheikh or Bali.
The Bill allows us to debate the nature of the relationship between citizens and the state in today’s world and, more specifically, what citizens can expect from their state. It is clear that citizens can expect the state to protect them from physical harm within its own boundaries, whether from hostile incursion or, in today’s world, from terrorist attacks from within. However, I do not believe it has been established as a general principle in our country that there is an absolute right for citizens to be protected from economic harm caused by those who attack our nation. In practice, the Government have provided compensation to victims of violent crime, including terrorist acts committed in our country, through the Criminal Injuries Compensation Authority.
The Bill forces us to confront the question of how far the state—or, more accurately, taxpayers—must seek to protect its citizens from economic harm if they choose to travel beyond our boundaries. Overseas travel is now affordable by many in our society; indeed, it is available on a scale which would have been unthinkable less than a generation ago. The question we have to ask is whether it is reasonable that those who travel overseas should impose a financial burden on those who do not wish to travel or perhaps do not have the resources to travel. We do not find this easy, and I do not think that there has yet been a proper debate on this whole issue. The Bill gives us an opportunity today to start that debate, and we are grateful for that, but it also raises complex issues.
There should also be a debate on whether there should be an obligation on those who travel abroad to carry proper insurance. My noble friend Lord Sheikh, who has much insurance expertise, thought that that would be difficult to achieve, and I am sure that that is the case. The British Insurance Brokers’ Association, to which other noble Lords have referred today, noted that 15 per cent of policies have no terrorism exclusion and a further 29 per cent cover medical expenses and some other costs. So, it is clear that insurance is available. Of course, part of the problem is that large numbers of our citizens go abroad without any insurance cover at all, and others go with inadequate cover. Is it then reasonable for the state to assume the role of de facto insurer for those who choose, either knowingly or through ignorance, to travel uninsured or inadequately insured?
I am not sure that Clause 3 is necessary, since cover is currently available. Does the noble Lord, Lord Brennan, know whether the insurance industry wants to enter into arrangements such as Pool Re, with the Treasury acting as reinsurer of last resort? The noble Lord said that the Treasury acted as reinsurer in those cases. In fact, Pool Re is the reinsurer, and it is a mutual arrangement for the insurance industry. The Treasury merely acts as the reinsurer of last resort. That enabled the insurance market to provide much needed and desired, though not obligatory, business cover in the wake of the attacks referred to. Is there a similar demand for terrorism cover within travel policies, which will of course have a cost, and which needs to be facilitated in this way? After all, if the arrangements for compensation in Clause 4 are brought into effect, why should anyone pay for insurance? They will see the state standing behind, ultimately, as the insurer.
We are concerned about the scope of the Bill in Clause 1. The definition of “overseas terrorism” is wide. On my reading of the Bill, it would cover businessmen or contractors who were working in, say, Iraq and were caught up in the attacks that happen there all too frequently. It seems that, as Clause 1 is drafted, they would be within the Bill’s scope, but should they be? Those who choose to go to Iraq know the risks that they run, and, as we heard earlier, specialist insurance is available for that. The Bill will also give favoured treatment to those who can show that terrorism, as defined, is the cause of what has happened to them. But is there a logical distinction between someone injured as the result of a terrorist attack and someone who is injured, for example, as a consequence of a hit-and-run accident or of some other kind of violent crime while on holiday abroad?
We understand and sympathise with the starting date of 1 January 2002 although, as a general principle, we do not like retrospection. The plain fact is that terrorism did not start on that date. Since the insurance arrangements by definition cannot have retrospective effect, the Bill in effect creates a special class of victim qualifying for compensation on a retrospective basis. We are not sure if that is a proper legislative principle.
The core of the Bill lies not in the advice and assistance in Clause 2, which may not need to be provided in statute at all. It is certainly not in Clause 3, because insurance will not in any event be compulsory under the Bill. The heart of the Bill is in the compensation arrangements, which are called an “awards” scheme but are plainly a compensation scheme. Here, the crucial issue is cost. The noble Lord, Lord Brennan, has referred to the cost of £3 million per annum, which seems modest. The criminal injuries compensation scheme currently costs around £200 million a year. While terrorist incidents to date may not be so numerous, the average cost of those incidents must be high. I find it difficult to see £3 million as the likely cost of such a scheme if it were introduced. We cannot go forward with the scheme unless there is a clear understanding of the costs that are to be imposed on the taxpayer.
Last year the Government announced a donation of £1 million to a fund to be administered by the Red Cross to assist victims of overseas terrorism. Clearly that would not match the kind of payouts envisaged by the noble Lord, Lord Brennan, but it was something positive. I hope that the Minister will say something about that fund today.
There remains the possibility of seeking compensation in the relevant overseas courts for loss or damage or under local compensation schemes. Perhaps the Minister will say something about the opportunities that exist for victims to seek compensation abroad, and whether the Government intend to support victims in that endeavour.
We have tremendous sympathy with and compassion for the victims of terrorism, wherever it takes place. But we have to temper our sympathy and compassion with realism. In today’s global world, should we look to the state—and therefore its taxpayers—to keep its citizens free from economic harm without geographic or other limit? That is a question I cannot answer today, but I welcome the debate that the noble Lord’s Bill has allowed us to have.
My Lords, I join all noble Lords who have thanked my noble friend Lord Brennan for introducing such an important Bill today. It has led to productive debate upon an issue about which we are all concerned. He was right when he indicated that the support for the principle behind his Bill would extend across all parts of this House, and indeed in all parts of the other place too. If one had doubted that for one moment, the noble Lord, Lord Marsh, testified to that effect with an unscripted and unheralded speech in which he indicated that these issues are of great concern to us all. My noble friend made his case with his usual eloquence and skill, and those whose cause he is seeking to advance should be suitably grateful to him for his concern about this area. They could not have a better advocate in this complex and important matter.
I also thank the families of the victims and the survivors of previous overseas terrorist incidents, who have done a great deal to bring this issue to public attention and to ensure that the Government address it. I shall respond to the Bill and indicate where it will need improvements, but also indicate just what the Government’s thinking is and how we hope to be productive in this area.
In recent years UK citizens have been affected by terrorism overseas, and we have to respond to that. It raises new issues for us. After the 7 July bombings, it became obvious that to enable a seamless and co-ordinated response from Government to the short-term and longer-term needs of those affected, we would have to address this issue in much clearer terms than we had done in the past. That is why we established a new Humanitarian Assistance Unit within the Department for Culture, Media and Sport to address these needs, and to ensure that the work is grounded in the direct experience of those who have suffered in previous tragedies. A great deal of that work is inevitably with other government departments, particularly the Foreign and Commonwealth Office, ensuring that the Government continue to offer assistance to victims of overseas disasters once they return to the UK, and improvements are continually being made to the provision of clear information and practical support to all those who are involved.
In addition, the charitable fund creates a base for some financial assistance to victims of overseas terrorist attacks. We recognise that there is a very clear disparity between the financial support available to overseas victims and that available to those who suffer from terrorist attacks within this country. We announced last year that we would contribute £1 million to the charitable fund for overseas victims, an issue that the noble Baroness, Lady Noakes, raised. The fund will be run by the Red Cross, and it will be ready to launch formally very soon.
In the mean time, the Red Cross has already made payments to all those bereaved or seriously injured by overseas terrorism since the fund was announced in March this year. So far 21 payments have been made from the fund: one bereavement payment and 20 payments relating to injuries from attacks in Egypt, Turkey, Jordan and Thailand. Those payments were not intended to meet the longer-term needs of those involved but the immediate financial needs that we recognise arise, such as the immediate need to meet mortgage or rent payments and telephone calls and travel to the affected areas. We recognise that the charitable fund is not a compensation scheme; it will never purport to be that, and it does not meet the issue of the disparity between what is available in this country to victims of terrorist attack and what is available to those overseas, which is the burden of the Bill. I recognise the importance of our response to that.
We have therefore been looking at the financial options available for victims of overseas terrorism. We understand the argument put forward for a new compensation scheme, but there are important issues to consider. First, should we look for compensation for UK citizens from the country where the attack occurred? Many countries offer their compensation schemes and my noble friend Lord Brennan indicated the extent of that in European Union countries. The problem is that they are only some of the countries which are visited by British tourists and that recent attacks have been outside Europe.
The principle at stake is whether the Government should fill the gaps or whether we should look to other Governments to do so. I respect the point made by the noble Lord, Lord Addington, that some countries and Governments may be ill placed to make such provision. However, others are directly comparable with the states of the European Union and it would be reasonable for them to adopt the same strategies.
Secondly, should we treat victims of terrorism differently from victims of other violent crime? I am afraid that there are victims of horrific, life-changing crime committed overseas and the significance of its impact on them and their families is as bad as terrorist incidents. The Criminal Injuries Compensation Authority does not treat victims of terrorism differently from victims of other violent crime committed within the UK, nor does the separate Northern Ireland scheme. They are treated equally. Therefore, to do so overseas would mean taking a different approach and we are not confident that that would be the right decision.
Neither of those issues would prevent us establishing a compensation scheme if we decided to do so, but it is clear that we need to examine them in close detail before reaching a conclusion. We are committed to solving these problems and we do not pretend that they are anything other than difficult to tackle. We must define who would be eligible for compensation; we must define “British”, “injury” and “terrorism”; and we must define how a scheme would work alongside the existing domestic Criminal Injuries Compensation Scheme and the reciprocal schemes in Europe.
We are therefore not in a position to be as categorical as the Bill requires us to be. Although I am offering my noble friend the Government’s commitment to tackling this issue, we are not in a position to say that the Bill provides the solution that we need. It certainly goes some way towards it and it advances the cause, as shown by the contributions to today’s debate. Furthermore, there is the issue of travel insurance, commented on by the noble Lord, Lord Sheikh, and dealt with in considerable detail by the noble Baroness, Lady Noakes. It is essential that when people choose travel insurance they understand exactly what they are covered for. Travel insurance is designed to provide immediate assistance to individuals when travelling abroad. It is not designed to compensate them for loss or suffering, although some policies pay out for some personal injuries.
As the noble Lord, Lord Sheikh, indicated, there is a range of policies on the market at different prices offering consumers different levels of cover. We do not think that it is the Government’s role to compel insurers to offer cover. The noble Lord, Lord Sheikh, deployed arguments against compulsion which raised philosophical and political decisions about the nature of compulsion on our society. Decisions on price and coverage are ultimately commercial ones for the insurer. However, cover is available for terrorist attacks and it is important that our people are aware of it and take advantage of that. We do not believe that there is a market failure which warrants government intervention to compel insurers to provide cover or to set up the Government as an insurer of last resort. That is not the position that confronts us.
However, we believe it is necessary that my department and the Treasury continue to work closely with the insurance industry to ensure that terrorism cover is readily available and that where exclusions exist consumers are all too well aware of them. A recent Treasury Select Committee report recommended that the Government and the FSA should work together to develop insurance policies that are clear, in plain English and effectively promoted to ensure that holidaymakers know exactly what is included. We are about to respond to its recommendations.
Clause 5 of the Bill requires that sums paid by the compensation scheme following injury or loss resulting from an act of terrorism overseas take into account an insurance payment made to the injured person in respect of that injury or loss. However, as I have noted, travel insurance is designed to provide immediate assistance, not to provide compensation for long-term suffering and loss. Such a clause might well act as a disincentive to individuals to take out terrorism insurance cover and there would be the danger that insurance cover, if stretched too far, might be unattractive because of the inevitable rise in premiums. It is important that consumers purchasing travel insurance are able to make informed choices about what they are, or are not, covered for. Insurance covering individuals for terrorism in certain cases is available on the market and we see it as the task of government to raise people’s awareness of what they are purchasing in travel policies.
There are aspects of the Bill which, my noble friend Lord Brennan will recognise from today’s contributions, raise difficulties. A brief reference was made to the retrospective aspect of the provision, which is an important issue. Government schemes do not operate retrospectively because we are concerned that that can cause unfairness as regards existing schemes. My noble friend will recognise that that is a significant argument that he will need to confront when piloting the Bill further in this House and during its passage in another place.
We recognise that the Bill reflects the considerable work undertaken by a large number of people in tackling this issue. Where we are able to give support, we intend to do so and we are giving our support to the Red Cross scheme. However, there is another aspect of the Bill which raises interesting issues. My noble friend Lord Brennan mentioned consular assistance being placed on a statutory basis and that has significant implications for government. The noble Baroness, Lady D’Souza, indicated where she wants to see an extension of such activity and that certainly fits within the desired aims. However, it will be recognised that putting consular assistance on a statutory basis is a profound legal proposition. It may be a modest aspect of the Bill, but it raises substantial issues for the Government. Once it was in statute, it would mean that all the consular service’s actions in respect of incidents abroad would potentially become subject to litigation. We are all too well aware that consulates do their best and work constructively under enormous difficulties and in a vast range of circumstances. The House will recognise how significant it would be if such actions were potentially subject to litigation in this country about their effectiveness.
I recognise the enormous amount of work that has gone into the Bill, which addresses an issue that needs urgent action. I assure the House that it is part of the process to which the Government are responding. We intend to respond in the very near future about how we tackle these issues because there is a clear obligation on us. However, as my noble friend will recognise, these are not straightforward or easy issues. Even within the framework of the Bill, there are issues that raise fundamental difficulties. The Government regard the Bill as a contribution to the debate and a pressure upon us to effect solutions, but we are not convinced that it provides the solution that the whole nation is looking forward to the Government providing.
My Lords, the Minister’s closing words were that we are dealing with an issue that needs urgent action, and I welcome them. I agree. It would be most unwise of the Government, the leaders of other political parties and civil servants to assume that the people can be ignored on this issue because it is too complicated. We do not expect that kind of longer term debate about something that needs an urgent solution.
I shall make four short points. First, I talked about compensation, but it would be infelicitous to treat that as synonymous with economic harm. I am talking about people who are killed, who have their arms shredded or who lose their eyes. They have to pay for their medical expenses, their rent and their families. That is what I mean by compensation, not something that so many in the country deride, but the simple means of keeping a family on its feet.
Secondly, I am gratified that the issues that have been raised as creating difficulties were entirely predictable and, in my view, entirely soluble. The question is the intent, not the capacity to overcome detail.
Thirdly, there is the question of cost. I, and those working with me, sought to produce a cost. Those who oppose my cost can produce their own, and we can examine it. Nobody has yet done so.
I shall make two points about the insurance industry. If there are 10 million holidays to countries that do not have systems of compensation that we can call upon and we say that the average premium is £15 or £20, that is touching £100 million for the two-thirds of the 10 million who might take out a policy. Out of that £100 million, our Government takes 17.5 per cent insurance premium tax, which is £17.5 million. They are acutely aware of the value of the travel insurance market. There are six national insurance firms providing cover, and they must be doing so on the basis that it is economic, it covers the risk and there is a reasonable premium to be charged. So this is a case not of insoluble complexities but of a meeting—I am happy to propose one—between the insurers, the Government, the British Insurance Brokers Association and all interested parties in order to come up with a solution.
My last point is that if an American, an Australian, a Frenchman, an Italian, a Finn, a Swede or an Israeli was sitting in the Public Gallery, he would say to himself, “My Government provide me with this, either through insurance or through government schemes. Why doesn’t it happen in the United Kingdom?”. Are our complexities different from theirs? I think not. It is time for action. The Bill will pursue it, and I invite your Lordships to give it a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.