Terrorism Financing (Northern Ireland)

HC Deb 10 July 2003 vol 408 cc311-48WH

[Relevant documents: Financing of terrorism in Northern Ireland—Fourth Report from the Northern Ireland Affairs Committee, Session 2001–02, HC 978–I, and the Government's response thereto, Sixth Special Report, Session 2001–02, HC 1347.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Vernon Coaker.]

2.30 pm

Mr. Michael Mates (East Hampshire)

It gives me pleasure to open this debate on the Northern Ireland Affairs Committee report on the financing of terrorism in Northern Ireland. May I express my appreciation to the Minister and to those hon. Members who are not members of the Committee who are attending our debate? It is good to have their support for a debate on such an important subject. I know that it will be much appreciated in Northern Ireland.

We decided to conduct our inquiry at the start of the current Parliament. Our motivation was to explore the development of Government strategy since the Northern Ireland Office created its terrorist finance unit in 1988. Shortly after we made our decision, al-Qaeda made its attacks on New York on 11 September. By the time we came to take evidence on the subject, in the period January to May 2002, the political environment and, perhaps more importantly, public attitudes had acquired a much sharper focus on the importance of cutting off terrorists from the money that buys both bullets and bombs and subtler forms of persuasion.

We published an interim report in February 2002, and were delighted at the Government's very positive response to it. At this point, I should also express our thanks to Lord Brooke of Sutton Mandeville, my predecessor as Chairman of the Committee, who kindly assisted us by pursuing progress in implementing our recommendation in the House of Lords. Our final report was published in July last year, and the Government's response was published in November.

In spite of the ceasefires, Northern Ireland's terrorist organisations still need money. Not all of them are on ceasefire, and those that are have what might be described as asset portfolios—resources such as properties and businesses that require continuing maintenance and investment. One of our key findings was that, although those organisations continue to have substantial running costs, they also have a capacity to raise funds that far outstrip their actual needs. Moreover, they have considerable expertise in raising money illicitly and, thanks to the ceasefires, considerable time on their hands. Thus the energies of many in those terrorist organisations have been channelled into serious and organised criminal activity, providing vast profits both for the organisations and for the individuals, who often have very lavish lifestyles.

The most recent threat assessment from the Organised Crime Task Force indicates that some 700 individuals are involved in organised crime in Northern Ireland, and an increasing proportion of groups are now getting involved in more than one area of criminal activity and over a wider geographical area. In addition to old-style paramilitary fundraising activities such as extortion and armed robbery, those organised criminals are now engaging in activities such as fuel laundering, the smuggling of fuel, cigarettes and tobacco, and the production and sale of counterfeit videos, CDs and designer goods.

Such crimes are significant for a number of reasons. They are highly lucrative for the criminals involved. Their scale is significant, as evidenced by individual seizures of millions of cigarettes destined for sale on the black market. They are crimes that may help to foster the organisation's standing in the community. As the Police Service of Northern Ireland pointed out to us, some people will not have any real gripe against the paramilitaries if they can provide cheap alcohol and counterfeit designer clothes for their children. It may be worth noting that the most recent OCTF threat assessment estimates that the market in counterfeit goods in Northern Ireland may be worth as much as £135 million a year. The Government face a great challenge in tackling this deep-rooted and serious criminality. We were very pleased to discover that they were acting fully on their commitment to deal with these problems through the Assets Recovery Agency and the formation of the Organised Crime Task Force for Northern Ireland.

The OCTF operates at the strategic level to encourage joint working between different agencies, and to encourage co-ordination in the fight against the many facets of organised crime. The Assets Recovery Agency, which began its work only recently, will be at the sharp end of the fight against organised crime. It will identify criminal assets and ensure that they are taken out of the hands of the criminals. We fully support both groups in the often complex work that they must do.

In our interim report and our final report, we expressed concerns about the operation of the Assets Recovery Agency. As I said, we are very pleased that the Government recognise the importance of our request to protect the identities of the agency's staff in certain situations. They made statutory provision to that effect. However, we remain concerned that the overall resources provided to the agency may be insufficient for the scale of the problem in Northern Ireland. I am fairly certain that the Minister will argue that time will tell on the question of resources, but I want to anticipate her and advance a different argument.

During the Select Committee's inquiry, we spent a fascinating afternoon at the Criminal Assets Bureau in Dublin, and have since been there again. In many respects, the bureau is the model on which our own agency has been created. Its staff told us that it is vital for such an organisation to be feared in the criminal fraternity. That will be possible only if the agency can make a real impact from the start and hit the criminals in the wallet, where it really hurts. The Criminal Assets Bureau achieves that by very high-profile prosecutions and significant asset seizures. Although the legitimacy of its action in seizing the assets of individuals was challenged, the courts upheld its authority. In six years of operation, it has lost only one case, and that was on a technicality.

Our agency will be able to make a similar impact only if it has the necessary resources and can gain the evidence that it needs. On our last visit to the Criminal Assets Bureau, its staff also made the point that it was able to have such an impact partly because it took the criminals by surprise in the enjoyment of their criminal gains. Our agency, which has been heralded by us and by others, does not have that advantage. The organised criminals of Northern Ireland and Great Britain have had plenty of warning to move their assets out of sight. If anything, we must give our agency even more support, as its work was that much more difficult from the outset. I hope that the Minister will be able to give us assurances this afternoon that it is being given the resources that it needs and wants.

I would be grateful for a progress report from the Minister on some other matters. We raised concerns on several strategic issues, particularly the availability of data on organised crime, the development of datasharing protocols, the application of witness protection schemes in cases of extortion, and the creation of an aggravated offence relating to extortion. The Government's response assured us that these matters were receiving further consideration. If we can be told of any developments on those points, it would be valuable to have that information on the record.

In closing, I shall repeat the key message of our report.

Rev. Martin Smyth (Belfast, South)

I completely agree with the hon. Gentleman's explanation. Is he aware of the growing concern that republican terrorists are amassing far more funds than others, as our figures show, and that the latest figures from other sources suggest that they are not being targeted with the same accuracy to assess their funds and capabilities? Does he share the concern that republican terrorists are not being tackled to the same extent as loyalist terrorists? I must add that none of us has any time for loyalist terrorists—I certainly do not—and I am not asking that they be let off the hook. Has there been any self-denying ordinance?

Mr. Mates

I hear what the hon. Gentleman says. We are, of course, concerned about anyone involved in illegal activities. I know that he has the feeling that the attack is a bit one-sided, but he will doubtless make that point if he decides to address us. However, the overriding concern is that the agency may not have the assets to do its job.

Northern Ireland's paramilitary organisations continue to raise substantial sums of money year by year through criminal activities. They use those funds to consolidate their power bases. It should be remembered that the funds are available to them for use in future acts of terror should it become expedient, in their eyes, to renew that option. If we can cut them off from their funding, the threat of terrorism will be diminished and the arguments for a democratic resolution to the difficulties in Northern Ireland will become that little bit more persuasive.

I commend the report to the House.

2.40 pm

Mr. Adrian Bailey (West Bromwich, West)

Thank you for calling me, Mr. Deputy Speaker, although I admit that I did not expect to be called so early in the debate.

I endorse many of the comments made by the hon. Member for East Hampshire (Mr. Mates). The Committee was rather surprised at the integration and evolution into crime of the paramilitary activity of former terrorists. The figures that the hon. Gentleman outlined give cause for enormous concern. We are now witnessing the transformation of groups with a political ideology who carried on the sustained intimidation of local communities into groups that are specifically focused on common-or-garden criminality using techniques that they have honed to perfection over the years.

Most worrying is the fact that for a variety of reasons, several of which were outlined by the hon. Gentleman, some crimes are regarded as victimless—as an opportunity to obtain cheap petrol or to buy cheap designer goods or counterfeit materials. That is a worrying development—almost a tacit acceptance of a criminal subculture. Its corrosive effect on society and on legitimate business is difficult to quantify financially, but it undoubtedly has a huge impact. Such crime also has debilitating long-term social implications. Generations are growing up seeing known criminals engage in activities and adopt lifestyles that are antisocial—and get away with it. They see that crime pays in that context, and such people act as role models for generations to come.

A number of issues arise from the report. It is imperative that all agencies involved in Northern Ireland work together to combat criminality—it is not the responsibility only of the police. The hon. Member for East Hampshire outlined some of the problems that have arisen. Criminal groups and gangs employ highly professional people to hide their assets, and the police force alone cannot identify, locate and prosecute without the help of well-trained specialists.

There is a need to ensure protection for those who are brave enough to come forward as witnesses in court proceedings against known criminals. People must feel confident that they can speak up for law and order without being victimised as a result. That involves strengthening the procedures designed to protect potential witnesses.

On a slight tangent, but equally important, agencies such as the Customs service, which is a highly cost-effective organisation, should have more resources and power. One captured container of cigarettes or a hit on a large shipment of drugs can more than justify the substantial investment in the equipment needed to identify the target.

Above all, there has to be a collection of policies, backed up with investment, that will give members of the law-abiding community renewed confidence that action is being taken against criminals. People must feel that they are in a position to support the forces of law and order in ensuring that criminals are brought to justice.

I have been through the Government's responses to a number of the recommendations of the Committee and would like to highlight three on which I hope the Minister can enlighten us. The first is support for witnesses. There is a huge body of evidence to demonstrate that many cases that could be won in court are lost because the original complainant or plaintiff decides not to give evidence. We all know that that happens because of threats to potential witnesses' personal safety. It is a requisite of any law-abiding society that people who want to act on behalf of the community and carry out their responsibilities be given some sort of protection.

The Government response to the original report states that The PSNI has agreed to lead discussion within the Legal Subgroup of the OCTF The report amplifies that statement, but it amounts to an undertaking from the Government to have discussions. I accept that that is a snapshot of progress at the time of the report, but we would welcome news on whether there has been further development in that policy area.

Secondly, people need to feel that the punishment will fit the crime. One of the issues raised is the unacceptably mild tariffs that convicted criminals obtained in certain circumstances. That is demoralising for the police, who have taken the trouble to prosecute people, and it sets a bad example to the rest of the community. The point was put to the Department, whose response was: The PSNI has agreed to lead discussion within the Legal Subgroup of the OCTF on legislation surrounding extortion offences, including the suggestion of an aggravated offence and the possibility of raising the tariff. If there is a clear case for updating the relevant statutes, the Government will take the lead. The feeling of the Committee is that there is such a case. I would welcome a progress report from the Minister.

Lady Hermon (North Down)

May I draw the hon. Gentleman's attention to the fact that this Parliament—the UK Parliament—is responsible for criminal law in Northern Ireland? The Criminal Justice Bill addresses the important issue that he raises. Will he therefore bring pressure on his ministerial colleagues to ensure that stiffer sentences are imposed on those who deal in, peddle and control drugs in Northern Ireland and that they receive the same penalties as those who do the same in the rest of the United Kingdom?

Mr. Bailey

I thank the hon. Lady for her intervention. She is an expert on these matters and we respect her views. The answer to her question is yes and that is the reason that I am making these points. What she suggests is part and parcel of our approach and I am grateful to her for emphasising its importance.

The Chairman of the Select Committee alluded to the staffing and resources of the Assets Recovery Agency. Originally, there were to be only 10 staff, but subsequent discussions suggested that more resources would be put in. The Committee's investigations indicate that such an approach is potentially one of the most beneficial in terms of cost-benefit analysis: merely in financial terms, the return on investment in the agency is likely to be very substantial and most beneficial.

Also beneficial is public recognition that the assets of people whom we may not be able to prosecute in the criminal courts but who are known to benefit from a criminal lifestyle may be removed. That removes a major incentive to other people to engage in that sort of lifestyle. I should like to know the Minister's thinking on those matters.

As a native of mainland Great Britain who was not substantially involved in Northern Ireland before becoming a member of the Select Committee, I conclude by saying that I could not fail to recognise the difference between the public perception of Northern Ireland and the reality. Northern Ireland is an area within a country that has enormous potential. The report's recommendations to buck up the forces of law and order and civil society are essential and they will go a long way towards the realisation of what can be done in the Province.

2.52 pm

Mr. Roy Beggs (East Antrim)

Many outside Northern Ireland believe that in recent years we have witnessed an end to terrorism; others believe that those paramilitaries still in existence will, if left alone and given time, turn away from violence and openly embrace democracy. However, the people of Northern Ireland know that that is not the case. One only has to read the newspapers to see that paramilitary activities remain rife within both traditions: murders, threats, beatings and enforced exiles are reported almost daily. Terrorism clearly remains a feature of life for many in Northern Ireland. Furthermore, there is increasing evidence that despite the ceasefires, paramilitary activity not only continues but has expanded in recent years to include such organised crime activities as fuel smuggling and counterfeiting, which hon. Members have already referred to this afternoon. As the report states: Whether paramilitary activity is directed outwards towards society at large, or inwards towards the communities in which the paramilitaries live, these are still acts of terror. I draw hon. Members' attention to a new report by Professor Liam Kennedy, entitled, "They Shoot Children, Don't They?" It highlights many horrific cases in which children and young people have been shot, assaulted and abused by paramilitaries in the past year. One particularly harrowing incident occurred in March. It involved two youths, a 14-year-old and a 15-year-old, who were chained to a lamp post for public display and humiliation. They were stripped to the waist, chained by the ankles and the waist to the street light and oil, tar and paint were poured over them. Their crime was antisocial behaviour, but their punishment, carried out by the Irish National Liberation Army, was positively barbaric.

Paramilitary activities must be stopped. Clearly, an effective way of doing just that would be to cut the paramilitary organisations off from their coffers.

The Minister of State, Northern Ireland Office (Jane Kennedy)

I do not normally intervene, but I want to associate myself with the hon. Gentleman's comments on the report, "They Shoot Children, Don't They?" Does he accept that the paramilitaries often seek to justify those brutal attacks on young people as punishment for alleged offences when in fact they are often a way for paramilitaries to exert their power when youngsters have refused to toe the paramilitary line? The attacks are therefore a way of trying to impose an even tighter stranglehold on the communities that the paramilitaries purport to defend.

Mr. Beggs

The hon. Lady is absolutely right in every respect. Paramilitaries use such means further to dominate their group and the community in which they reside and operate. Only when we cut off their funding sources can we begin to thwart terrorist activities and move towards ridding society of their menace for good.

Like other organisations, paramilitaries have running costs. They have to buy weapons and communications equipment, not to mention pay salaries. As the report highlights, the PSNI has estimated that it costs the Provisional IRA £1.5 million each year to stay in business, but its yearly fundraising capacity is thought to be between £5 million and £8 million. Fundraising is not solely a republican practice. The PSNI has estimated that the Ulster Defence Association can raise between £500,000 and £1 million and the Loyalist Volunteer Force £2 million each year in funds. With organisations such as the Provisional IRA employing professional accountants, it would be a serious mistake to regard paramilitary organisations as in any way amateur or less than sophisticated.

The 2002 threat assessment published by the Organised Crime Task Force for Northern Ireland identified 76 organised criminal gangs, of which nearly half had links to paramilitary organisations. We need a huge increase in resources and manpower to keep tabs on these gangs, which are involved in money laundering, drug dealing, extortion and racketeering, counterfeiting goods, excise evasion, customs fraud and alcohol duty evasion. Their activities are not limited to Northern Ireland: according to the Metropolitan police, Northern Ireland paramilitaries, particularly the Real IRA, are increasingly common in mainland Britain and Europe as the economic opportunities in the island of Ireland become more limited for them.

While the continued support of the United States Government in identifying and taking action against paramilitary organisations in Northern Ireland is welcome, I encourage ongoing dialogue with the United States Government to press for the introduction of further measures to stop paramilitary organisations raising funds in the United States. It is of concern that Sinn Fein, whose links with terrorist activities are well known, was able to raise $700,000 in the United States between November 2002 and May this year. We are all aware of the use to which such money has been put in the past, and we have been given no reason to believe that things are different today. It would appear that the post-September 11 tide, when the world assumed the democratic and moral responsibility to engage in antiterrorism action by not funding terrorists, is turning once again.

Mr. Stephen Pound (Ealing, North)

Like everyone here, I have been following the hon. Gentleman's cogent argument with great interest. However, does he accept that the figure that he quoted for fundraising from the United States is in fact an historic low compared with previous years—the figure from some 10 years ago was more than twenty times that amount—and that the indications that both he and I have received are that the sums raised in this country and in the United States are, thankfully, decreasing?

Mr. Beggs

I am prepared to accept the hon. Gentleman's observation, but I still point out that $700,000 is a huge resource for a political party in Northern Ireland.

Rev. Martin Smyth

Does my hon. Friend accept that a flaw in United Kingdom legislation is causing a problem in the Irish Republic? Funds that are not allowed to go through Dublin to Sinn Fein can come through the United Kingdom, owing to our unwillingness to close the loophole on funding political parties from abroad.

Mr. Beggs

I believe that the Government will again have to consider measures to restrict the access to such funds from outside Northern Ireland.

Mr. Hugo Swire (East Devon)

Is not everyone making the hon. Gentleman's point for him? Thankfully, we have seen a decrease in recent years in funds raised in the United States. The fact that the paramilitary organisations have become institutional in their fundraising means that they will have to look closer to home as well as to mainland Great Britain to expand their markets. Although we are seeing a decrease in the amount of money raised in the United States, such groups still need to raise money, which is why other activities, such as extortion, are on the increase.

Mr. Beggs

The hon. Gentleman points out clearly that both paramilitary organisations and those organisations that are inextricably linked to terrorist organisations still require significant funds. If they do not get those funds from one source, they will find others.

The establishment of the Organised Crime Task Force and the Assets Recovery Agency has been a positive step in the right direction. I particularly welcome the provision for statutory protection of the identities of agency staff, which will ensure that they are able to work more effectively and safely. However, the Government must also look more closely at the extent of the protection given to witnesses in trials involving terrorist activities. Only 10 per cent. of extortion cases in Northern Ireland are reported to the police: in simple terms, that means that 90 per cent. of extortion cases are never prosecuted. The proportion prosecuted could be increased if measures were in place better to protect the anonymity of witnesses and their families.

The Committee was staggered to discover that Assistant Chief Constable White was highly critical of the resources available for witnesses. As reported on page 38, in paragraph 131, he told the Committee that it … is a very money-pinching way in that the individual … is moved in to a council estate, given a minimum sum of money in terms of what he would be entitled to as an unemployed person. If he is a businessman he gets absolutely no money to re-establish himself and is required to sell his own business within the Province if he can and he must employ his own lawyer to do that. His house will be taken off him under the emergency provisions … so he gets the bare minimum for what that house is worth … if you … go on the run leaving behind your whole social fabric and getting nothing to replace that, you do not really have much of a choice as a businessman. When you do the sums in your head you just roll over and pay. The issue is being addressed, but I encourage the Minister to do as much as she can to increase the number of witnesses who are prepared to come forward to help us to establish law and order. If we are truly serious about combating organised crime, we must do much more to encourage witnesses to come forward. Financial measures must be introduced to enable members of the business community in particular to come forward with confidence.

It is vital that the facts and dangers of organised crime are effectively communicated to the public. There is something alarming about children and teenagers looking up to paramilitary godfathers as their heroes and role models. Many children grow up idolising what they see as a glamorous lifestyle, and the general attitude is that crime does pay. Recent publicity campaigns by Customs and Excise to target fuel laundering and tobacco smuggling are excellent examples of how public perceptions can and should be changed. I trust that the Minister will do her utmost to ensure not only that such campaigns continue but that they are introduced in schools and youth clubs, so that our children and young people are made aware of the extremely negative impact of paramilitary organisations, paramilitary activities and organised crime on their communities.

The recovered assets fund provides a means of returning the spoils of crime to the victims, as well as to the communities that are most affected by paramilitary terrorism. However, it is important that the fund is publicly associated with the Assets Recovery Agency if support for the agency's work against terrorist fundraising is to be truly fostered. Care must be taken, however, to ensure that grants provided by the fund are not only community based and fully supported but appropriately monitored as they are spent. It has come to light that members of paramilitary groups may still be lining their pockets with funds that various Government and European Community sources gave to ex-prisoner support groups that were established after the 1994 paramilitary ceasefires.

According to a recent BBC "Spotlight" documentary and reports in The Irish News, the Shankill Prisoners Aid and Post-Conflict Resettlement Group employed former Ulster Defence Association leader Johnny Adair as a community worker for five weeks until 13 September 2002. During that time, Mr. Adair was paid with funds that came indirectly from the Department for Social Development. Although that case has been uncovered, it may only scratch the surface of the close relationship between ex-prisoner support groups and the paramilitary organisations to which former prisoners were inextricably linked. Clearly, the Government have not adequately administered and monitored the spending of EU funds by ex-prisoner groups, and they are unable to tell us which groups have received money under which EU measures; nor can they tell us how much of that money has been used or for what purpose. I therefore call on the Minister to carry out a full audit of all EU Peace I money received by ex-prisoner groups.

The Government have undoubtedly taken significant steps to combat organised crime in Northern Ireland. We welcome that and we encourage the further development of the strategy against terrorism. It is important that such advances continue to be followed through. If the Government are serious about tackling paramilitary activity, the PSNI and other agencies must have the resources and support to do the job.

Lady Hermon

It would also be extremely helpful if Ministers in the Northern Ireland Office discussed the implications of legislation that was going through the UK Parliament with the Chief Constable of the PSNI and the police ombudsman. I refer in particular to the Crime (International Co-operation) Bill, which will help to freeze assets in the Republic of Ireland that are used to finance paramilitary organisations in Northern Ireland. When legislation is passing through Parliament, Ministers in the Northern Ireland Office should discuss its implications with the Chief Constable and the police ombudsman.

Mr. Beggs

I have no doubt that the Minister has noted my hon. Friend's every word. She gives sound advice, which should be followed.

When it comes to the global war on terrorism, the Government must be careful not to make a distinction between fighting domestic terrorism and fighting international terrorism. Terrorism is terrorism and must be dealt with in the same way, whether it is on the global stage or in our own backyard. Cutting off paramilitaries' sources of income is central to the success of the Northern Ireland political process. Both traditions must cease all paramilitary activity.

As the Select Committee's report concluded, we must have evidence that spying, targeting, gun running, intimidation and brutal physical assaults by paramilitary organisations have stopped for good. Only when the paramilitaries have gone away for good can Northern Ireland and all its people live in peace, without the fear of terrorism.

3.11 pm

Mr. Harry Barnes (North-East Derbyshire)

Certain forms of terrorism can be carried out cheaply. Fanatics give freely of their time and learn inexpensive techniques to produce explosives. Northern Ireland has experienced, and continues to experience, pipe bombs and fertiliser bombs. Some terrorist acts are highly cost-effective. Dr. Silke, whose work is mentioned on page 12 of the report, points out that for every pound that paramilitary organisations spent in 1993 they achieved £130 of damage. That damage had to be paid for by the United Kingdom and Irish Governments. We should be aware not only of the problems of finance, but of other activities that may not require much expenditure. Tackling one might have a great impact on the other.

Paragraph 14 of the report states that: access to money enables organisations to increase the sophistication and impact of their activities. Rocket launchers, arms shipments, hidden stockpiles and so on are expensive. When high-tech communications systems, safe houses, transport networks, training in bloodthirsty techniques, wages for those in the front line of terrorism and their back-room support, and welfare costs to support families are added, the cost of the terrorists' horrible activities increase considerably. Tackling the financial aspects of terrorism is important to limit terrorist activities to those of fanatics who use cheaper methods.

We have seen old terrorism being subsumed by new terrorism. Unfortunately, for many paramilitaries, full-time terrorism or preparedness for that has become a way of life. When the peace process came along, some would not accept it and breakaway organisations were established; other people, some of whom were not involved with peace movements, stayed with their organizations. Many members of groups such as the Provisional IRA could not give up the lifestyle and turned to criminal, mafia-type activities, which hon. Members have described. The old, distorted political tactics of terrorism were replaced with new methods such as kneecappings, shootings and the maintenance and control of territories by acts of fear and engaging in crude forms of "community justice".

The financing of terrorism, which is described in the report, is highly relevant. As far as finance is concerned, terrorism has not gone away. Page 18 of the report contains a table, which shows the PSNI's estimate of the annual finances of paramilitary bodies. Paramilitary bodies require approximately £4 million for their running costs and have the capacity to raise £15 million a year. The issue is serious because it distorts Northern Ireland's development and the peace process, which many of us firmly support. It has already been mentioned that the main source of finance is the extortion from businesses. The hon. Member for East Antrim (Mr. Beggs) said that only a tiny proportion of extortion is reported because of the business community's fear.

The Northern Ireland Affairs Committee has investigated fuel laundering and smuggling—there have been two reports on the matter—which cripples the petrol industry in Northern Ireland and has a distorting effect on the economy.

Mr. Swire

Does the hon. Gentleman agree that whereas tobacco and fuel smuggling result in lost revenue, extortion, particularly from larger companies, is more damaging to the economy of Northern Ireland in the long term because it dissuades inward investment, which creates jobs and economic opportunities?

Mr. Barnes

I agree. My attitude to the smuggling of alcohol, tobacco and fuel is that we should move towards the harmonisation of fuel duty and other taxes in order to create a level playing field across the border, which will begin to destroy the opportunities to make money. The difficulty is that Northern Ireland's population is a third of that of the United Kingdom—

Mr. Pound

Give us time!

Mr. Barnes

Sorry, I meant to say 3 per cent. of the United Kingdom population. It is difficult to consider the interests of 3 per cent. of the population when determining taxation policy. However, the circumstances of the 3 per cent. should be to the fore when we make decisions on Treasury problems. Cutting the ground from under people who are involved in smuggling operations is of great importance.

Armed robbery is still used as a money-raising technique. There were 120 attacks on cash transits in 2001. The counterfeiting of currency and goods, such as CDs, clothes and videos, is also a major market. The report pays attention to ways to persuade the public not to purchase those goods, because they have serious consequences for the lives of people in Northern Ireland that need to be recognised. Although the lines between those who are ideologically motivated and those who are simply into organised crime have become increasingly blurred, to use the words in the Government response, the consequences remain much the same in terms of the disruption of life in Northern Ireland.

The hon. Member for East Antrim referred to Professor Liam Kennedy's report "They Shoot Children, Don't They?" He will remember that Professor Kennedy gave evidence to the Northern Ireland Affairs Committee in relation to the final report produced before the last general election, the report on relocation following paramilitary intimidation and the problems of people being forced into exile. Professor Kennedy's words are given serious consideration. He has a high standing and a good reputation in the field in which he has been involved. His current report was produced in conjunction with the Northern Ireland Committee Against Terror. It is the third and final report to be produced on that topic.

When the hon. Gentleman cited material from Professor Kennedy's report, I noted his remarks carefully. They referred to action taken by the INLA. For the sake of balance, given that that was a case on the republican side, I will cite a different case. Generally, the report analyses those aged 17 and under, but this case involves a slightly older age group. The report states: A 23 year old man, Harry McCartan, who had previous convictions for joy-riding' … over a long period of time, was attacked by the UDA in the Seymour Hill estate, outside Lisburn. The gang used six-inch nails to impale his hands to a wooden fence and beat him mercilessly with nail-studded baseball bats about the head, arms, hands and legs. When received at the Royal Victoria Hospital later that day he was so badly bloodied that his father could only identify him by a tattoo. The incidence of such cases is considerable. There has been an increase in shootings in recent years: the highest figure is for 2001 and there was only a slight decrease last year. There were so-called loyalist paramilitary shootings of 13 children aged 17 and under in 2002, and republicans were involved in the shooting of 12 such children; in addition, there were, respectively, nine and 13 assaults on children. Threats of shooting, beatings, systematic mutilation and the exile of children abound, some of those are in addition to the figures that I cited.

Children have been caught up in action against their parents, like the six children of Joseph McCloskey. When we debated paramilitary intimidation in this Chamber, Joseph McCloskey and his mother Bridie McCloskey were present. Luckily, by bravely raising the issue, they have been able to return home. We need many others to do that just as bravely, and associate with organisations like Maranatha, which assists the process of returning people to their homes.

The cutting off of finance to paramilitary groups is one of the best means of destroying this network of evil, and the report stresses that. We have already heard about the need for co-ordinated action and the developments carried out by the Organised Crime Task Force that are already taking place. That is to be encouraged, and it is important that the necessary resources are provided.

The Northern Ireland Office's lack of data on organised crime is a problem, and we hope that that is being tackled. In addition, we want information to be shared easily between the different organisations involved. Sometimes there are technical reasons for information not being supplied. Improving information flow is one of the measures that will help.

We need to win the hearts and minds of the public, so that they do not purchase smuggled or fraudulent goods. It is not victimless crime: businesses and jobs are lost because of such activity. There is also the matter of poor-quality goods being sold on, especially fuel that may have been laundered and may damage people's tanks. The matter is one of self-interest.

Mr. Pound

Is there any evidence of reluctance on anyone's part to purchase such goods? Does my hon. Friend feel that the Government could do more to underscore the implications and dangers of what may seem an innocent purchase at a car boot sale?

Mr. Barnes

There is a problem throughout UK society of getting people to turn away from cheap opportunities to buy goods at car boot sales, or wherever. The dominance of individualistic values and concerns helps to create that problem. Some concern for the well-being of others would help, and it ties into people's self-interest because society would generally be better as a result. However, getting one person to change when others are not changing is very difficult. The Government have been involved in running campaigns in the area, and they are dedicated to developing those further.

Lady Hermon

I am sure that the hon. Gentleman will share my view that we have an excellent Home Secretary in the right hon. Member for Sheffield, Brightside (Mr. Blunkett). He has made it quite clear that sentencing policy will restore public confidence in the police service and the justice system in this country. We have to have clarity and certainty in sentencing. The way to deal with counterfeit goods is to send a clear message to those who make and supply counterfeit goods that the sentence will match the crime.

Mr. Barnes

First, there must be an attempt to get people to understand the problem. We need to report on developments and to encourage reasonable and decent behaviour. The "Jane and Reg go shopping" campaign in which the Northern Ireland Office has been involved is part of that activity. It may be extended in future.

The Select Committee was concerned that effective prosecutions should take place. There should be better witness protection, as has been mentioned, and a toughening up of sentences when the offences are known to be related to paramilitary activity. However, there are indications of a reluctance to go down that road because of the progress in the peace process. There is a feeling that if extra bits are added to sentences because of links with residual paramilitary activity, that might lead to the paramilitaries digging their heels in. I raised that in questions with my hon. Friend the Minister during our inquiry.

Mr. Pound

The Select Committee and the House—nay, the country—need to be reminded at regular intervals of Jane and Reg's shopping trip. I am not bitter, although they certainly did not bring me anything back.

My hon. Friend will be aware of the enormous markets at Nutts Corner and Jonesborough, where there is a cross-border dimension. Does he feel entirely confident that our links and relationships with the guards are having an effect in that area? In effect, such places are becoming a money mill in an increasingly unaccountable area.

Mr. Barnes

We are increasingly told that the relationships between the police forces in Northern Ireland and the Republic involve the closest co-operation, yet there are difficulties in the border areas, which are probably the areas where they find it most difficult to engage in the sort of connections that are required.

Mr. Beggs

Does the hon. Gentleman agree that there should be no need to make a distinction between criminals who are freelancers and criminals who are linked to paramilitary organisations, and that sentences should fit the crime? Does he further agree that, just as individuals are likely to be prosecuted if found to be holding stolen property, so those who purchase counterfeit goods should have to face the risk of prosecution at some future time?

Mr. Barnes

I do not deny that we need to be tough on crime. If the crime is seen to be connected to paramilitary activity, it could well provide a reason to take stronger action. Such activity is an extra element that needs to be deterred for the sake of Northern Ireland.

The final matter that we deal with is the work of the Assets Recovery Agency. Hon. Members have referred to it and no doubt it will be stressed further, but we were quite impressed by the Criminal Assets Bureau in the Republic. It was interesting that some of the people who were impressed by that were Committee members from the Ulster Unionist party and the Democratic Unionist party. They saw that the Republic was doing something from which we could learn.

World events have hit one source of funding: Noraid money from America. Hon. Members have referred to that. When we went to America, we met policemen and firemen who had helped to organise funding in the past, but who said that they would never again be involved in that type of activity. Home-based action must also be taken to ensure that those activities wither.

Although the report deals with the financing of terrorism in one set of circumstances—Northern Ireland—it seems to me to have much wider implications. It was said that the years that they had spent operating in Northern Ireland meant that the British troops in Basra used different techniques from the Americans, and that those techniques were helpful in that situation. Likewise, some of the points that the report makes about grappling with the financing of terrorism, undermining terrorists' financial position and dissuading people from pursuing those avenues, should be used on a much wider basis. The report might have much relevance to the example I quoted of Iraq, and unfortunately it applies to many other areas of the world.

Mr. Deputy Speaker

Order. We now have one hour and 55 minutes left, and I advise hon. Members that we should allocate 45 minutes of that time to the three Front-Bench speakers. Hon. Members contributing to the debate from now on might bear that in mind in tailoring their contributions, so that everyone present has the opportunity to take part.

3.36 pm

Mr. Nigel Dodds (Belfast, North)

I welcome the opportunity to take part in the debate, and begin by commending the Select Committee on its thorough work and investigation into this area. I know that on one occasion this debate was postponed for reasons beyond the control of the Committee, but none the less we are debating the report some considerable time after its publication—almost a year to the day. However, the issues that the report raises remain relevant.

I noticed the other day in the Belfast Telegraph that the Chief Constable of the Police Service of Northern Ireland had updated and reconfirmed the figures for the funds raised by various paramilitary organisations per year and the running costs associated with each of those organisations. The figures are quite staggering, and have already been referred to by several hon. Members. Not long ago, the political wing of the Provisional IRA was in the Government of Northern Ireland—part of the United Kingdom—with two of its members as Ministers, despite the opposition of those of us from the Democratic Unionist party. The Provisional IRA raises between £5 million and £8 million a year, whereas its running costs are £1.5 million. One therefore must ask what it is doing with those substantial amounts of money, and the Committee helped us by outlining what such money is used for. The report pointed to the fact that some of that money will be used to prepare for future military action, if we can use that term, and we should note that the IRA has shown no hesitancy in using military action against its own community and, along with other paramilitary organisations, is still responsible for a reign of terror in the areas that it purports to control.

I welcome the fact that, as reported by the Press Association yesterday, the chief of the Assets Recovery Agency, Alan McQuillan, was able to report that progress has been made in the Government and the Agency's offensive against racketeers and drug smugglers in Northern Ireland, with which many of those paramilitary organisations are closely entwined.

We often see leading members of paramilitary organisations on our television screens, hear them on radio programmes and read about them in the press purporting to deprecate the drug trade and condemn those involved in it, yet we know that they are intimately involved in the entire control and business of drugs in Northern Ireland. I welcome the fact that Alan McQuillan has announced that progress has been made. He said that 25 cases in the current financial year will be adopted by the agency, which is an increase on the target of 15. He said that in its first four months of operation, the agency has adopted 11 cases with assets in excess of £2 million. Alan McQuillan said that the agency had been to the courts for several disclosure orders, search warrants and production orders, and that one injunction has been issued freezing the assets of an individual believed to be involved in organised crime. That is welcome. When the Assets Recovery Agency was set up, many of us wanted it quickly to establish its authority and to inspire confidence in the community that action would be taken against known individuals who were seen in the local communities driving about in flashy cars and living in fancy houses with substantial assets that could not be accounted for.

I am reminded of an individual who, when asked how he could afford his fancy Mercedes, country house, town house and so on, said that he had carefully saved the money that he had received in prison and had taken up craft production. A person would have to be in prison for a substantially long time to afford a Mercedes on those proceeds. Such behaviour continues. People are frequently described by the press and officers of the law enforcement agencies as well-known drug barons and paramilitary leaders. Time and again constituents have said to me, "If that is known, why cannot something be done about it? Why are such people still walking the streets? Why are they not charged with membership?"

The report refers to evidential difficulties. We accept that, but something must clearly be done to bring confidence to people in Northern Ireland that these guys will not be allowed to get away with it and that action will be taken. I welcome the start that has been made. I hope that such a process will continue and that it will lead to high-profile cases being brought to court, as a result of which people will be stripped of the illegal assets that they have gained through drugs, counterfeiting, racketeering, intimidation and extortion.

Lady Hermon

I have been critical of the Government—and justifiably so—but, in fairness to them, the one part of the Criminal Justice Bill that has been extended to Northern Ireland deals with new and compelling evidence. Does the hon. Gentleman, like me, welcome the fact that DNA evidence is now often available about people who have traded and possessed drugs, especially those in paramilitary organisations? Does he agree that such people need to know that they run the risk of a retrial in Northern Ireland?

Mr. Dodds

Yes. Such a measure is a useful addition to the armoury of the police and others in combating serious crime and illegality in Northern Ireland. I hope that that power will be used, and that criminals will be brought to justice.

The extensive report into the financing of terrorism shows that terrorist organisations in Northern Ireland are still powerful and have the capacity to raise substantial amounts. They are involved in a range of illegal activities and impose their authority on vulnerable people who feel intimidated and are often unable to speak out against such a reign of terror. The report highlights the fact that terrorist organisations are becoming ever more sophisticated in their dealings. As one avenue of operation closes down, another opens up. It is important that the pursuit of terrorists is taken to the nth degree and everything possible is done to bring them to justice. I hope that what is regarded in Northern Ireland as a softly, softly approach in dealing with paramilitary organisations that subscribe to the peace process will not continue—although that is perhaps a perception, if not a reality.

I have listened carefully to hon. Members' contributions. It is almost as though our discussion is taking place in the context of an unchanged situation in Northern Ireland. Under the Belfast agreement, we were told that many paramilitary organisations were observing a ceasefire and were committed to peaceful and exclusively democratic means. Although that has not been referred to today, it has been said previously that those organisations should be brought into government in Northern Ireland, that they could be trusted and that it was time to take a chance on them.

It is hard to divorce what we are talking about today from a political context, given that, in addition to the financing of terrorism and extortion, which has been mentioned, the main activity of these organisations is violence and has been for 30 years. Even on that front, figures show clearly that violence has increased over the past five years compared with the five years running up to the signing of the Belfast agreement. I have the figures in front of me. They are not my figures: they are the Government's and were produced in response to a parliamentary question. They show clearly that, between 1993 and 9 April 1998 there were 1,155 shootings, and between 10 April 1998 and 2002–03 there were 1,348, which is an increase of 16 per cent. That is clear evidence of paramilitary activity on both the loyalist and republican sides.

There were a total of 534 bombings in the period 1993 to 9 April 1998 and 861 since the signing of the Belfast agreement—an increase of 61 per cent. In recent days there was a massive increase in the amount of money allocated by the Government to pay for people to move out of their homes as a result of paramilitary intimidation and threats. Last year, £11 million was spent by Government on the special purchase of evacuated dwellings scheme, which is designed to get people out of their homes in an emergency when they are threatened. In the year ending 31 March 2003, the figure was £33 million. Previously, it had run at an average of £4 million or £5 million.

Those statistics show that we in Northern Ireland are still living with sophisticated, dedicated and determined paramilitary organisations. For that reason, many people in Northern Ireland ask how it is credible to argue that the organisations responsible for those activities and that violence can be trusted again to be part of the legitimate, democratic Government of part of the United Kingdom.

I listened carefully to the speech by the hon. Member for East Antrim (Mr. Beggs). He made many comments with which I agree. He said that there needed to be sentencing for people, regardless of whether they were linked to terrorism or ordinary criminality. That point was also made by the hon. Member for North Down (Lady Hermon). Yet, if I recall rightly, it is still the law in Northern Ireland—a law that emanates from the Belfast agreement, which was supported by the two hon. Members and the section of their party that they represent—that if the perpetrator of a crime committed prior to April 1998 is associated with a certain paramilitary organisation, he does not have to go to prison. Indeed, under the proposed legislation, if he is on the run, he will not even have to show up in court to answer for his crime. It is a bit rich to talk about the sentence matching the crime when support has already been given to the principle that crimes can be differentiated, depending on whether they were carried out for political or paramilitary reasons by certain organisations, and thus on whether the perpetrators have subscribed to what is called the peace process.

Lady Hermon

I am sorry that the hon. Gentleman did not pick up on the previous intervention, which was to do with new clause 10 of the Criminal Justice Bill. In extending the provision to Northern Ireland, the Home Office Minister responsible for the Bill explained that new and compelling evidence will lead to the retrial of people who escaped the first time round, so as to ensure that Northern Ireland does not become a safe haven for those who want to escape prosecution. That was put to the Home Secretary, with a plea for some joined-up thinking to prevent terrorists on the run from escaping in such circumstances. If the hon. Gentleman were in the Chamber more often, he would have heard it.

Mr. Dodds

I shall take that last point with a pinch of salt: my record is as good as anyone's from Northern Ireland. The hon. Lady tries to justify her indefensible position. She has supported a position whereby the murderers of a police officer in Northern Ireland—a murder carried out on behalf of an organisation that is on ceasefire and which supports the peace process—will not have to serve the full sentence. The fact is that she is on record as supporting that, as is her party.

There is a clear difference. If the murder of a police officer in the United Kingdom took place prior to 1998, the whole weight of the law would be brought to bear on the perpetrator, and the full sentence would be meted out. In Northern Ireland, it will not be. The hon. Lady and her colleagues supported the Belfast agreement, thereby helping to bring that situation about. That position is totally indefensible.

I move on. I agree with other hon. Members that the Assets Recovery Agency should have all the resources and staff that it needs to carry out its job properly. The point was made in the report that a substantial amount of money can be recovered. The more work that can be done, the more assets that can be recovered, the more everyone will benefit. It would be a shame if, for the sake of a few extra staff and some extra resources, the agency could not do the work that it has been set.

In that context, I urge the Government to look again at the issue of police numbers. The report speaks of the necessity to devote proper resources to tackling that problem, yet in another Government initiative—the joint declaration, which was published recently—they talk explicitly about reducing police numbers. Although, in the report and in today's debate, we have emphasised the sophistication and determination of those organisations, the figures show a rising level of terrorism and an increasingly frequent use of the bomb and the bullet.

Notwithstanding that, there is a proposal on the table that will reduce the number of police officers even further from the current level. Many of our constituents rightly argue that that level is already far below what is needed to tackle ordinary crime. At a time when the main parties in the House are vying with each other to show who can put more police on the streets and more bobbies on the beat, it seems that in Northern Ireland the Government, in concert with their partners in Dublin, are doing their best to reduce the number of police. That situation should be examined carefully.

I reiterate the view that a witness protection scheme is needed. It is important that we back members of the public who come forward: we should give them every possible assistance. The evidential issue, to which the Minister will no doubt refer, has been one of the obstacles to bringing cases to a successful conclusion. What chance have we of addressing it if nothing is done to protect witnesses? The hon. Member for East Antrim rightly referred to the statement that was made by A.C.C. White in his evidence to the Committee. He graphically illustrated how impossible it would be to expect people—especially those who run small businesses—to come forward, giving up everything and receiving little or no protection in return. I have seen that too often in my constituency.

I recently had occasion to bring to the Minister's notice the case of a man who had been intimidated and forced to give up his business, having spent many years building it up for himself and his family. He was in an impossible position, given the risk to himself and his family—little protection could be offered to him as a witness—and there was no compensation available to him. His business and the property from which he ran it are virtually worthless, yet the Minister has told me that nothing can be done under the present compensation scheme for such cases. I urge her to reflect on the situation. Cannot something be done for people such as my constituent? He is entirely innocent and blameless. Could not compensation be payable or forthcoming?

In closing, I ask the Minister to give us more details of the grants and the way in which money will be paid out of the recovered assets fund in Northern Ireland. It is important that people see that money is coming back into the community, having been recovered from illegal activity, paramilitary organisations and organised crime. The Government must monitor carefully money that is distributed to organisations such as community groups in Northern Ireland. When the Government hand money to third parties or intermediary funding bodies that are given the task of spending it according to certain criteria—as happened in the case to which the hon. Member for East Antrim referred—some of it goes to people to whom it should not go. Government Departments want to distribute money in such a way that those who allocate and spend it know where it should go and how it should be applied, so they need to ensure that they retain control and prevent it from being misspent.

Recently, many representatives of victims groups have come to me to complain about the substantial imbalance between money allocated to organisations that help victims and those that are concerned with, for instance, ex-prisoners. That is the responsibility of the Northern Ireland Office, and the Office of the First Minister and Deputy First Minister. Something needs to be done, and I make a plea to the Minister to investigate the matter in order to ensure that victims and organisations dealing with them are properly funded. They should not be made to feel that they are being put in a subordinate position to that of organisations that deal with those who perpetrated the crimes against them and their families.

3.59 pm

Mr. Quentin Davies (Grantham and Stamford)

I very much agree with a great deal of what the hon. Member for Belfast, North (Mr. Dodds) said. On his point about the peace process, whatever view one takes—he knows that I take a different view from him—about whether on balance it was right to override some of the fundamental principles of our legal system for essentially pragmatic reasons in concluding the Belfast agreement, no one should be under any illusion about the momentousness of that decision, the importance of the principles that were overridden and the inevitable anomalics created as a result. He is right to remind the Chamber of that.

I am particularly grateful to you for calling me at this stage in the afternoon, Mr. Deputy Speaker. I apologise to the Chamber that I will be unable to remain until the end of the debate, because I have a deputation coming to see me, which was arranged a long time ago. I could not put those people off, because of the rest of their schedule in London, so I find myself, as we all find ourselves sometimes, being forced to be discourteous in one direction or another. I hope that the Chamber will bear with me.

I shall not speak for too long, not only for that reason but because I am very impressed by the number of Members who are not on the Committee—particularly those from the two Unionist parties from Northern Ireland—who have turned up this afternoon despite the fact that outside it is one of the most glorious days that one could wish for, and despite the fact that there are no votes in the main Chamber. We are familiar with the assiduousness shown by those who represent both Unionist parties, but we do not take that for granted, and it is right to draw it to the attention of anyone who might read our the report of our proceedings.

I want to make a few brief points. First, I congratulate my hon. Friend the Member for East Hampshire (Mr. Mates) and the whole Committee for the work that they have done. It is a characteristically thorough piece of work on an important subject, and there is no doubt that for a long time it will be the locus classicus for anyone taking an interest in the financing of terrorism in Northern Ireland. It corrects many of our assumptions. It always takes a while for us to adapt to changes, and our impression, even of important situations, can sometimes be out of date.

Many people have the impression that terrorism in Northern Ireland is mainly funded by contributions from the United States and from extortion in Northern Ireland. We all know about the endemic scandals in the building trade in Northern Ireland, in particular, which has always been subject to extortion from paramilitaries on both sides. Neither of those funding sources has anything like disappeared, but as a result of the report, we can see the increasing importance of two particular sources of illegal criminal funding for paramilitary organisations: drugs, and the smuggling of petrol and diesel.

I make my second point not in a party political sense, but because it is a fact—an extremely important, salient fact of the situation. There cannot be any economic activity in this world unless there is both demand and supply. The supply, so far as the new smuggling of fuel and diesel is concerned, has been provided by paramilitaries on both sides. There is no doubt about that, and the report is very graphic in its description. That is very important; but demand has been gratuitously created by the Chancellor of the Exchequer. He decided that we should have by far the highest fuel prices in the European Union, and has thereby inevitably created enormous pressure to import illegal, smuggled fuel—both petrol and diesel. The consequences are highly regrettable.

We should not hide our eyes from the fact that although Customs and Excise does a valiant job trying to build dams against the tide, that tide was created by the Chancellor. What he has done is deeply resented in the whole of the United Kingdom, and perhaps particularly in Northern Ireland, because it already has the highest prices for electricity—another important source of energy—in not only the UK but the European Union. The people of Northern Ireland feel that they have been insidiously picked on, and so there is an unfortunate moral climate in which there is not as much opposition to the concept of smuggling as one might hope.

The figures in the report are graphic. I do not have the second section of the report; I was hoping to find it on the Table, but although documents are always put on the Table in the Chamber and in Committee, that does not seem to happen in Westminster Hall. However, I can remember the figures clearly, because they are striking.

Consumption of taxed fuel and diesel in Northern Ireland has approximately halved since 1997. Anyone would recognise on common-sense grounds that consumption must have increased since 1997, because there has been considerable economic growth, and the end of the violence and the periods of ceasefire have led people to travel more freely, which is desirable. It is therefore fair to assume that less than half the fuel consumed in Northern Ireland is taxed. The report estimates that about half of the untaxed fuel is perfectly legal personal imports obtained by people driving cars across the border. The second and third cities in Northern Ireland, Londonderry and Newry, are just a few miles from the border. I suppose that everyone automatically goes across the border to fill up. The other half is smuggled. We should not hide our eyes from the obvious source of that smuggling or the market that has unfortunately been created, from which some very unpleasant and ruthless people profit.

My third point, which has been mentioned by my hon. Friend the Member for East Hampshire, is on the connection between the smuggling and the peace process. We in the official Opposition are committed to the peace process as, I think and trust, are most of us in this House. We all deeply regret that, since the Government's disastrous decision to call off elections, the process has completely stalled. We hope that it can get back on course before too long.

If the peace process it is to make any progress, there will have to be a clear distinction between organised crime and political movements that have embraced violence and various forms of criminal activities to raise money in the past, but which we hope will adopt a purely peaceful and democratic course in future. There is a sharp distinction to be made; we do not want any ambiguity. Those who choose the criminal path and decide to turn from paramilitary organisations to organised crime syndicates must know that there are considerable penalties for doing that.

In the next few months, it is important that the Assets Recovery Agency and the police and so forth establish that there is a considerable price to be paid, and that the law enforcement mechanisms are effective, because people will be making that choice when or if the peace process reaches its consummation, as we hope it will. It is important that they make that choice 100 per cent. They will all be calculating where their interests lie, and smuggling involves considerable cash flows that people will be reluctant to give up. We want to make it absolutely plain that the penalty of going down the criminal path will be considerable and enforcement will be likely. That is a key point.

I endorse what is said on page 38 of the report about the witness protection scheme, to which reference has already been made. I have had occasion to raise the matter with the Government before. From anecdotal experience, in the past two years, I have often come across people who have seen acts of violence or who have been reluctantly involved, in that their cars have been borrowed by paramilitaries who have carried out an act of violence or a crime. Of course, when I hear such stories, I ask, "Did you call the Police Service of Northern Ireland about it afterwards?" Every time, I receive that sympathetic smile which is always addressed to some poor fellow who comes from across the water and does not understand the reality in Northern Ireland.

I make no apology for asking that question; we should continue to ask such questions, even if people simply open their hands in exasperation and say, "You must be joking. No way would I risk telling someone." That has happened often, and I have taken up the matter with the police and the Government. I have received the usual bureaucratic soft soaping; people say that they are doing something about it, that they are very aware of the problem and that things are much better now than they were.

I am delighted that the Select Committee has used its full moral and political force in expressing a view on behalf of the House and on a bipartisan basis, and in drawing the Government's attention to the fact that the witness protection scheme is not functioning as it should. Improvements need to be made, and I hope that the Government pick up on that. If I am not here when the Minister responds, I shall look forward to reading Hansard. She might want to make one of her vituperative attacks on me—she occasionally does that when she feels provoked—so I look forward to reading her speech. I apologise if I am not here to hear the response in person.

Lady Hermon

The problem is more than just witness protection. My concern is not just for the witnesses but for those who serve on juries. The concern is that pressure is brought to bear on juries and their families if they take part in the trial that we hope will be shortly forthcoming. Will the hon. Gentleman give some thought to the possibility of non-jury trials where there is sufficient evidence to prompt concern about jury tampering?

Mr. Davies

The hon. Lady is suggesting an extension of the Diplock court system to non-terrorist related offences. That is a serious minefield. Going back to the point that I made in response to the hon. Member for Belfast, North, we should all be conscious in this place when we make derogations from the norms of justice to which we are all attached—in this case, a jury system. I do not share the admiration of the hon. Member for North Down (Lady Hermon) for our Home Secretary; I think he is a deplorable Home Secretary. The levity with which he attacks the jury system is thoroughly to be deprecated. I hope that the hon. Lady has not allowed her evident admiration for the right hon. Gentleman to carry her away. She is a distinguished academic lawyer, and her instincts probably lie in rather sounder areas.

I agree with what the hon. Lady said initially: there is a climate of intimidation, especially in inner-city areas of Northern Ireland, including Belfast, and on both sides of the interface. All colleagues in Northern Ireland know that even better than I do, and they have lived with it. In those communities, people live for generations with the certain knowledge that, if they want to survive, the one thing that they should never do is cross the local gang or paramilitary boss. People think that no one but a lunatic would breach that code.

The only way to get rid of that climate of intimidation—the hon. Lady is right to say that it affects juries as much as witnesses—is to remove these people. The only way to remove them is to get convictions; the only way to get convictions is to spend a bit of money and provide a much better form of witness protection. We should not provide an incentive, as we should not incentivise people to give testimony in court, but we should provide a greater counterweight to the intimidation, which is the first thought that people will have when faced with the prospect of giving evidence against criminals and terrorists. I hope that the Government take that on board, especially as my latter remarks have been implicitly endorsed by the hon. Lady, who seems to be such an admirer of other things that the Government are doing. Sadly, I cannot follow her in her admiration.

Lady Hermon

I am most grateful to the hon. Gentleman for taking a second intervention. I know that the following might cause him to have a sleepless night, but I refer him to the Criminal Justice Bill, which has passed through our House and is in another place at present. It makes provision for the prosecution to apply to a judge of the Crown Court for the trial to be conducted without a jury if there is real and present danger that jury tampering would take place. That is already in the Bill, and it is already extended to Northern Ireland.

Mr. Davies

I thought that I had terminated my remarks. The hon. Lady is referring to a text that I did not draft: the Government provided it, so it would be proper for the Minister to respond to that point.

4.15 pm

Mr. Andrew Hunter (Basingstoke)

I shall be brief because the salient features of the debate have been established and there is no need to develop again arguments that have already been made.

First, I shall inject a note of caution. I entirely agree with what my hon. Friend the Member for Grantham and Stamford (Mr. Davies) said about the Government having created the circumstances in which smuggling has prospered. The hon. Member for North-East Derbyshire (Mr. Barnes) made a comparable point when he talked about new and old terrorism and new and old methods of raising funds for terrorism. However, that distinction can be overstated.

If one looks back over the years, one finds that there are few means and methods whereby the paramilitaries now raise funds that were not being used in the mid-1980s. There is an evolutionary consistency in the way that terrorists have raised funds. What is alarming is that successive Governments have failed to come to terms with that. The fact that the Northern Ireland Affairs Committee rightly conducted this inquiry and published the report is indicative of the failure of successive Governments to address the funding of terrorism.

My next point relates to the background against which the report was composed. Paragraph 6 rightly states: Paramilitary activity remains a feature of life within both traditions in Northern Ireland. Individuals are still being murdered, threatened or forced into exile from their families and communities. Beatings occur almost daily. However, paragraph 8 may raise some eyebrows: Much of what we have learned has been very positive. We have been encouraged by the evidence we have received that the Government is tackling these issues, and developing powerful and effective strategies to counter them. I find it hard to equate the Select Committee's optimism and confidence on that point with the evidence on the ground. My hon. Friend the Member for Belfast, North (Mr. Dodds) made that point.

The simple fact is that, for instance, there have been 200 more shootings and bombing incidents in the five years after the Belfast agreement than there were in the five years before it. That is most regrettable. That increase is even more alarming when one considers the statistics regarding so-called devices: a "mere" 258 were defused in the five years before the Belfast agreement; more than twice that number have been defused in the five years since. I mention those statistics to make the point that the evidence on the ground does not suggest that the Government are tackling these issues with powerful and effective strategies, although that is what the report states.

So far, the debate has focused on three main deficiencies in the Government's handling of terrorist funding. Several hon. Members referred to the underfunding and under-resourcing of the Assets Recovery Agency. I will not rehearse those arguments. I wish simply to emphasise that this matter is of concern to many hon. Members of different parties, and the Government should take it on board seriously.

Likewise, consideration has been given to the weaknesses and inadequacies of the witness support and protection regime. It is interesting to note that testimony to that effect was given by the police to the Committee during our deliberations. We also had an exchange about the proposition put forward by the Committee that there is an inadequacy of deterrence in sentencing. Again, as my hon. Friend the Member for Belfast, North said, that is a bit rich coming from hon. Members and a Government who so undermined and compromised the independence of the judicial system in Northern Ireland by making it subject to political influence and interference.

Those points have been covered in debate. I would not for one moment deny the importance of addressing the issue of terrorist funding. It is an aspect of terrorism that must be covered. But we should throw in for good measure some considerations that are barely covered in the report or in the testimony and evidence that the Committee received. In the first place, of course, there is the issue of the utterly demoralised police force. The implications and consequences of that for all aspects of law and order are horrific.

We also have in Northern Ireland a society that arguably is more divided and polarised than ever before as a consequence of an appeasement process that has institutionalised sectarianism. Then, of course, we have the indisputable fact of the concessions that have been made to the unreconstructed terrorist organisations and their political representatives. All in all, it is not surprising that there is widespread despair in the Province.

4.20 pm

Mr. Alistair Carmichael (Orkney and Shetland)

First, I place on record what a pleasure it is to be the last Member to speak before the Minister. That privilege is normally given to the spokesman for the official Opposition. The hon. Member for Grantham and Stamford (Mr. Davies) has already spoken and has extended his customary courtesy in explaining why he cannot remain for the entirety of the debate. His is a position that I will be pleased to occupy after the next election. I am grateful to the hon. Gentleman for giving us all a little taste of things to come.

Mr. Quentin Davies

If the hon. Gentleman achieves that ambition, it will not be at the expense of the Conservative party. He will simply replace the Labour party spokesman. I wish him the best of luck.

Mr. Carmichael

With the best will in the world, I thought that I had my tongue firmly in the cheek. The hon. Gentleman, in talking of another Conservative Government, indulges in flights of fantasy which, if time were not so readily available, might be ruled out of order by a stricter Chairman than you, Mr. Deputy Speaker.

First I congratulate and commend the members of the Committee on a thoroughly well-researched and thoughtful consideration of the issues, particularly the hon. Member for East Hampshire (Mr. Mates), who gave such an able exposition in opening the debate this afternoon. The importance of funding to the continuation of terrorism in Northern Ireland is self-evident. The exchange between the hon. Member for East Antrim (Mr. Beggs) and the Minister earlier was an excellent analysis of what we are dealing with and the subtext of the report. Terrorism is about control of communities. The financing of terrorism is essential to enable paramilitary groups to maintain their current control over the communities that they represent.

The peace process is about normalisation, and as long as questions of social or antisocial behaviour are dealt with by paramilitaries rather than the proper forces of law and order, clearly there has been no normalisation. That is why the very subject of the report is so important. The report went straight to the heart of that issue. In its introduction, it says: Terrorism is about gaining power through violence, and money is a means to that end. The money raised by paramilitaries is used in many ways to sustain terrorist campaigns and, increasingly, to fund political ones. The most obvious use of their finances is for explosives, weapons and communications systems—all the practical tools needed to carry out a terrorist attack.

We must also take into account the cost of planning an attack and of ensuring that members are properly trained. Financial support has also been given to those who carry out attacks, and to provide assistance to their families in the event of their imprisonment. That has been a useful tool in maintaining support and sympathy in local communities for organisations and their aims. Propaganda and political campaigning have been used more in recent years to maintain that support. An aspect that concerns me is the potential for, if not the practice of, cross-fertilisation between money provided to paramilitary groups and to some of the parties on the fringes of democratic politics in Northern Ireland that have very close links to them.

At this point, it might be appropriate to place on record my appreciation of the Government's speed in accepting the need for compensating political parties when the Northern Ireland elections were cancelled on 1 May. The easiest way to squeeze out small parties that do not have access to such support, or even the larger parties that are solely part of the democratic process and do not have those links, would be to leave them high and dry, and I am very pleased that the Government did not do that.

The report clearly sets out the estimated annual running costs for each of the paramilitary organisations in Northern Ireland, their estimated capacity for fundraising, and the ways in which paramilitary organisations have raised money over the years, including armed robbery, extortion, smuggling, counterfeiting goods, drugs, fraud and the use of legitimate businesses for laundering some of that money.

Several hon. Members referred to funds coming from abroad. The hon. Member for Ealing, North (Mr. Pound) quite properly brought to our attention the fact that the amount of money coming from the United States is decreasing, but as the hon. Member for East Antrim said, it is still significant and far too large. People in the bars of New York must wake up and smell the coffee. They must realise that whatever romantic notions they may have about a struggle of the oppressed back in their homeland, the money that they are putting into collecting tins is buying guns and bullets used for knee-capping innocent people and for intimidation, to which the hon. Member for East Antrim referred. I hope that we will miss no opportunity in the House to ram home that message to those outwith the walls of this building and, indeed, the shores of cur country.

Mr. Dodds

Would the hon. Gentleman say that that advice should apply whether or not the political wing of an organisation happens to be part of the Government of the United Kingdom?

Mr. Carmichael

I assume that the hon. Gentleman is referring to Sinn Fein. The point will come when that issue must be addressed. Unfortunately, I believed that the crux for that organisation would come at the point of election. The decision to cancel the election let Sinn Fein and the IRA off the hook in so many different ways. It would have been the point at which they had to say whether or not they were part of the democratic process.

The other point that has been made repeatedly in relation to the report was about petrol or fuel smuggling. My hon. Friend the Member for Montgomeryshire (Lembit Öpik) has had several meetings with the Northern Ireland association that deals with petrol retailing, and it has raised that problem as its principal concern. The detrimental effect on the Northern Ireland economy of fuel smuggling is a growing concern, combined with legitimate cross-border shopping, so-called, because of the price differentials between petrol in the north and in the Republic.

In an intervention on the hon. Member for North-East Derbyshire (Mr. Barnes), the hon. Member for East Devon (Mr. Swire) said that he felt that extortion was the principal concern and that the question of smuggling fuel in that way was perhaps of secondary importance. The hon. Gentleman might have a good point there, but it is not particularly helpful to try to construct a hierarchy of such ills, if I may put it that way, and it certainly does not serve anyone well to diminish the impact of smuggling, which excludes people with normal business interests at heart from a legitimate business practice. Simply regarding the problem as a loss of revenue understates the true significance of fuel smuggling.

Mr. Barnes

Is not one interesting characteristic of fuel smuggling and the involvement of paramilitaries, with people acting on licence from such organisations, that when the fuel comes over the border republican paramilitaries are involved who have links with loyalist paramilitaries, often selling it on in Belfast and other areas? That is a sign of a move away from military forms of political activity into a purely criminal, mafia approach.

Mr. Carmichael

Yes, the hon. Gentleman reminds me of an important point, for which I am grateful. His comment serves to illustrate the fact that republican pararriilitaries, so-called, and loyalist paramilitaries, so-called., are just opposite sides of the same coin: they are thugs and crooks. To dignify them with terms such as loyalist or republican does not serve particularly well. At the end of the day, they are operating as crooks, and one has to ask what has happened to their great principles when they can operate in the way that the hon. Gentleman has outlined.

On the whole, the Government's response to the Committee's report has been welcome. Reading the report, I have been particularly concerned that the Northern Ireland Office has had difficulties in accessing or locating data on organised crime. I know that the Police Service of Northern Ireland has now established a central statistical collection point that will ensure that data from the different taskforce partners is comparable. The Northern Ireland Office is also storing court activity data in a new database, but when the report was produced that was said to be a complex task; indeed, it was stated that the data would not be available for some time. As the hon. Member for Belfast, North (Mr. Dodds) said, it is almost a year to the day since the report was produced, so I wonder whether the Minister is in a position today to say how those new systems are working. What impact have those systems had on the police's ability to identify and deal with organised crime?

Further, in response to the Committee's recommendation that the Northern Ireland Office and the Organised Crime Task Force should jointly consider the development of an information strategy, the Secretary of State said that a serious organised crime desk would be created within the intelligence structures of the PSNI and that that would be in place by late 2002. Again, can the Minister say what impact that has had, if it is now up and running?

Concerns about the operation of the Assets Recovery Agency were raised in the report and during the debate. I pay tribute to the Committee for the work that it did on this subject, which produced one of the most thorough examinations of the issues that I have seen. I served on all 39 sittings of the Standing Committee that examined the Proceeds of Crime Bill, as did the hon. Member for Ogmore (Huw Irranca-Davies)—we can compare our scars later on. It is for that reason that I am interested in the operation of the agency.

I share the Committee's unease about the resources that were allocated to the agency in Northern Ireland. The point was well made that the Criminal Assets Bureau in Dublin serves as an excellent example for us. That demonstrates that if the resources follow the necessary powers, which have now been provided under the Act, their combination can have a significant impact on serious and organised crime.

The Government presumably want the Assets Recovery Agency to be as effective and respected as the Criminal Assets Bureau in Dublin. I accept the Secretary of State's response, in which he says that the resources allocated to the ARA must be assets in the round and that the agency in Northern Ireland is able to pull in support from the agency elsewhere in the UK. However, the Committee made a strong case for ensuring that the agency in Northern Ireland is properly resourced.

A large proportion of organised crime in Northern Ireland is related to paramilitary groups. In my view that makes it considerably more dangerous and sinister than the ordinary organised crime—if I may use that term—that we deal with on this side of the water. We have a duty to ensure that the proceeds of crime are recovered, and that that is done efficiently and effectively. It is more likely that the agency will receive support from politicians and the public if it is seen to be making a real difference.

The Secretary of State said: The Government will ensure that the Agency, including its Northern Ireland branch, has the staff and resources that it needs in order to make the required impact. Will the Minister indicate what resources are being dedicated to the Northern Ireland branch?

We all recognise that it is important to cut off paramilitary organisations from their sources of income. That will impact not only on the peace process, but also on the Northern Ireland economy and, most importantly, on those who have suffered at the hands of those organisations. I welcome the report's recommendations and I hope that the Government will deal with some of the minor concerns that I have mentioned.

4.37 pm

The Minister of State, Northern Ireland Office (Jane Kennedy)

We have had an interesting and worthwhile debate. I am grateful to those who took part, and I shall deal with as many of their points as possible. I cannot use the excuse of there being too little time available.

The many Members who were present at the start of the debate was a fact not lost on me. I appreciate the great interest in this subject on Government and Opposition Benches. I also appreciate that due to the non-contentious business elsewhere in the House—in the sense that it cannot be divided on—other hon. Members may have chosen to manage their time differently. That would explain the absence of various Members at this stage of the debate.

As we said in our response to the Committee's report, the Government are fully committed to bringing all paramilitary violence to an end as soon as possible. Various hon. Members made strong, powerful speeches about the threat that paramilitary organisations pose to Northern Ireland. The continuation of paramilitary activity is standing squarely in the way of political progress. It is also preventing the development of the sort of society for which most of the people in Northern Ireland voted in 1998, which they fully deserve. We will continue to pursue the political path while giving law enforcement agencies the support that they need to fight criminal behaviour.

The Organised Crime Task Force was created in September 2000. It reflects our determination to tackle all forms of organised criminality, whether paramilitary or not. It is also a manifestation of our commitment to help Northern Ireland make the transition to being a normal society that is free from terrorism and paramilitarism.

Clearly, paramilitary activity and organised crime have become increasingly interrelated in recent years. As the taskforce enters its third year, our intelligence and information about how and where the criminals operate has greatly improved as a result of our enhanced collection techniques. Using that improved information, the PSNI analysis centre drew together its third annual threat assessment, which was published on 11 June, and the Committee referred to it. It updates our assessment of the current position and makes it clear that two thirds of the groups known by the law enforcement agencies to be involved in organised criminal activity in Northern Ireland are associated with or controlled by loyalist or republican paramilitary organisations. The hon. Member for East Hampshire (Mr. Mates) also mentioned that.

It is not always obvious how that relationship works. It is not clear what proportion of the illegal profits criminals pass to their organisations and what proportion they retain to fund the lucrative lifestyles to which hon. Members have referred. However, we know that those involved nearly always capitalise on their paramilitary links to prey on their communities. The Government are therefore resolute in our mission to secure a safe, just and prosperous society for everyone in Northern Ireland, and we have a clear remit to tackle paramilitarist and organised criminality.

Since its inception, the Organised Crime Task Force has sought to bring the collective might of government and law enforcement to bear on organised criminality, whatever its source. The taskforce's strength has been its ability to bring all the agencies together in a way that respects their independence and autonomy while allowing them to share information, agree priority areas and, most importantly, take action. The Committee acknowledged the success of that multi-agency approach and recommended that the Government should consider how its benefits might be extended and shared more widely. My officials and I have spoken to more than 20 separate groups in the past year, highlighting the approach and methods adopted by the taskforce. In addition, the taskforce has launched its website, which provides a further opportunity to explain to a more global audience the method that it has adopted to fight the pernicious form of crime that we are debating. Since its launch in September 2002, the website has received an average of about 100,000 hits a month.

The taskforce has also sought to augment the work of the partner agencies by forming expert groups to tackle each agreed strategic organised priority area. Through those groups, law enforcement agencies have further developed information-sharing capabilities and established links with other Government agencies, as well as with trade associations and industry. For example, the deliberations of the expert group tasked with studying armed robbery have been open to industries and businesses that have been directly affected by the increase in armed robberies in Northern Ireland. As a result, the way in which cash in transit is organised and the way in which the industry goes about its business have been examined from a crime-reduction point of view, and we are beginning to see a reduction in the number of armed robberies. As several hon. Members have said, the expert group tasked with dealing with the priority area of counterfeit goods has brought together organisations with an interest in intellectual property crime, and there have been very productive discussions and seminars involving, for example, the British Phonographic—

Mr. Mates

Institute.

Jane Kennedy

I momentarily forget what BPI stood for, and I am grateful to the hon. Gentleman for reminding me.

As I was saying, we brought together the BPI and other organisations with an interest in the issue to examine the way in which industries and businesses go about their legitimate business to ascertain whether we could work with them to reduce the ability of criminals to exploit industries and businesses.

Nutts Corner in Antrim was mentioned and the Jonesborough market in south Armagh. Nutts Corner is an easier environment for the police to operate within. However, police in both areas have been proactive in trying to tackle the counterfeiting and the sale of counterfeit goods that has been prevalent in those markets, and have had a considerable amount of success.

As the Committee acknowledged, publicity is an effective tool, and our challenge is to encourage the public to report organised criminality to the police. I heard the comments from hon. Members about the reluctance of ordinary folk to come forward, give evidence and tell the police what is going on, but throughout the past year via the law enforcement agencies we have consistently reminded people of the seriousness and invidious nature of organised crime as well as pointing out the value of taskforce work.

As a result, there is a growing confidence that the police and the other law enforcement agencies are taking the matter seriously. For example, last year at the Ould Lammas fair, local traders approached the police and trading standards officers asking for a co-ordinated response to the potential misuse of the fair for the sale of counterfeit goods. It was reported after the fair that that was an enormous success, and the legitimate traders and shopkeepers in Ballycastle were delighted with the response from the law enforcement agencies.

Several hon. Members referred to extortion, and I shall come to the issues raised during the course of that discussion. Crimes such as extortion are vastly under-reported and victims often withdraw complaints before the police can fully investigate the matter. A further focus of the taskforce on racketeering over the past year has been to consider how to enhance existing provisions for the protection of witnesses. Proposals are currently being developed with colleagues in file Home Office to see how witness protection schemes might be developed further.

I would like to describe some of that work to assist the House, and reassure hon. Members that we are taking the matter seriously. My hon. Friend the Member for West Bromwich, West (Mr. Bailey) and the hon. Member for East Hampshire started with the same point. It is true that only 10 per cent. of extortion is reported to law enforcement agencies. It is part of our determination to expose the successes and the difficulties faced by law agencies that we publish such data. As a result, we rightly increase the pressure on Government and law enforcement agencies to examine what is going wrong in such areas, and why it is so difficult to bring the extortionists to account.

Hon. Members will be aware that Professor Ron Goldstock is an adviser to the Secretary of State. He has been asked to examine the problem of extortion and to provide recommendations on how it can be tackled more effectively. Discussions with the law enforcement agencies concerning a number of issues relating to extortion, including sentencing and bail conditions, are also continuing with the taskforce legal sub-group.

The law and order action group that my right hon. Friend the Member for Hamilton, North and Bellshill (Dr. Reid), who is now the Secretary of State of Health, established last year is considering similar issues such as bail reform. If there is a clear case for updating the relevant statutes, the Government will happily take the lead in reforming the law. As I have said, officials are currently working with colleagues in the Home Office to consider the enhancement of witness protection provisions that are currently available, but the Committee will appreciate that such an enhancement has implications throughout the UK.

I want to comment further on witness protection measures. We have commissioned research through the Northern Ireland Office into how prosecution witnesses believe they have been treated by the criminal justice system, especially at the court stage. Information on intimidation and related matters should emerge as a result of that research. We expect an interim report from the researchers by the autumn.

Lady Hermon

May I bring to the Minister's attention the serious escalation and intensity of brutal attacks on the Chinese community, which is the largest ethnic community in Northern Ireland? Language can be a problem when members of the Chinese community wish to give evidence and to be witnesses in cases of extortion and other paramilitary activity. I ask the Minister to bring that to the attention of Professor Goldstock, who is considering how best to eliminate pressures on people who wish to come forward and deal with paramilitary activity.

Jane Kennedy

I shall be happy to draw the hon. Lady's comments to the attention of Ron Goldstock, and as a result of what she has said today I shall look into the matter myself.

People who are subject to the crime of extortion face a real and serious threat to their personal safety. They also risk losing their business, their livelihood, their family connections and their wider social circle. Hon. Members are right to draw the House's attention to those facts. I am alive to the problems, and we are examining what needs to be done to enable the law enforcement agencies to have greater success in dealing with the problem.

I was asked to respond more fully and to give an update on improvements in data sharing and information management. I hope that I can reassure hon. Members that we are making progress. The Proceeds of Crime Act 2002 allowed much greater sharing of information between the agencies than had existed before. For example, it allowed the Inland Revenue to play a fuller role as a partner agency in the Organised Crime Task Force.

We do not face the same difficulties now in collecting and managing data on organised crime as we did before 2000. As the Committee is aware, the objectives that were set for the taskforce last year included a requirement for the work of the taskforce partner agencies to be measured against impact and activity indicators. We published those results last month, and they serve to underline the intensive work rates that have been adopted by partner agencies to combat the threat from organised crime. I hope that that reassures hon. Members. I am continuing to monitor the progress that has been made. It is obvious that the more information we share, the greater the ability of the law enforcement agencies to respond quickly and effectively.

The hon. Member for East Antrim (Mr. Beggs) and others referred to the Assets Recovery Agency and its work. The hon. Member for Belfast, South (Rev. Martin Smyth) intervened on the hon. Gentleman and questioned the agency's choice of cases. I have discussed the matter before with hon. Members. The selection of cases that are pursued by the agency is entirely a matter for the director of the agency supported by the assistant director in Northern Ireland. She will act in accordance with her statutory duty to use her powers as she considers best calculated to reduce crime. She is as aware as we are of the need to pursue the criminals, whoever they are and whatever activity they are engaged in, to the extent that the agency has jurisdiction over their activity. She is alive to the need to develop successful techniques to bring cases before the courts.

I am trying to go through the points made by hon. Members in order, as it helps me to respond to them. I have temporarily mislaid the note that I wrote in response to the point about aggravated offence, but I can say that we are considering the issue very carefully. [Interruption.] I have been miraculously assisted. We are considering the question of an offence for aggravated extortion as part of our overall review of the structure of criminal offences and whether unnecessary difficulties and hurdles are placed in the way of the law enforcement agencies in tackling extortion and other criminality.

We are examining the idea of an aggravated offence, but we are also considering carefully the ideas that we have been discussing and the experience that other Administrations have shared with us. For example, America has a specific sentencing structure to deal with racketeering. We have also had the chance to examine the system in Italy. What is more, we have been bringing together different experts from around the world to share their experience with us in Northern Ireland. As a result, we have been able to test our structures against those that have been developed in other jurisdictions, always bearing it in mind that we have a different legal structure. I am confident that that work will prove fruitful. We have made changes already, but we are still considering the aggravated offence idea.

I think that I have answered the point about the improved collection of data. That reflects the growing confidence that the different agencies have displayed as they have developed their ability to work together and to share information. It also reflects the ability of the taskforce to improve its data collection procedures, and thus to present the public with a clearer picture of what is happening with organised crime in Northern Ireland. That development has proved beneficial, and will continue to give an enormous amount of ammunition and data to hon. Members who want to keep us under close scrutiny. I welcome that, because the more that we can discuss these issues and debate them in public, the more we will be able to engage the support of the public in Northern Ireland, who are, as hon. Members repeatedly say, sick and tired of the difficulties that their society faces.

I shall now deal with the severity of sentences. You will remember me from many years ago, Mr. Deputy Speaker. I used to be a social liberal, but following a long involvement with the law enforcement agencies—I love them dearly—I have at last joined the same school of thought as the hon. Member for Belfast, North (Mr. Dodds), which believes that something must be done. I accept the point that he made. We take a close interest in what happens will regard to the severity of sentences. In fact, we are reviewing the whole process from start to finish, including the difficulties and obstacles that the police face in bringing charges in the first place, in getting witnesses and information, and in making the information accessible to the court as evidence. We are considering the whole procedure to ensure that unnecessary barriers are not placed in the way of the law enforcement agencies, so that we have the most effective and successful operation possible against the organised criminals whom we seek to defeat.

I have one further point on the Assets Recovery Agency and information sharing. I believe that the provisions in section 436 of the Proceeds of Crime Act 2002 will enable the director of the agency to have access to all the information that it requires. Under that section, organisations that have been designated as permitted persons may disclose information to the director of the agency for use in the exercise of her functions. However, such a disclosure must not contravene the Data Protection Act 1998 or the Regulation of Investigatory Powers Act 2000. With those two provisos, I can tell hon. Members that there is greatly enhanced sharing of information and intelligence.

The commissioners of the Inland Revenue and Customs and Excise are permitted to delegate to an Inland Revenue official or Customs officer the power to authorise disclosures to the director. Increasingly, we are seeing the development of joint operations in which police engage the support and assistance of either a commissioner of the Inland Revenue or a Customs and Excise officer to go jointly to a business premises or house to exercise their different powers and have the maximum effect.

I was asked about the recovered assets fund. I accept the need to publicise and demonstrate the benefits that communities derive from projects financed by that fund, but the rules and conditions governing the disbursement of grants under the fund, which the hon. Member for Belfast, North raised, include audit arrangements to ensure proper, efficient and effective use of public money, and arrangements for independent monitoring and evaluation of results. I hope that that safeguard is regarded as a response, although it will not entirely satisfy everyone. I am not in a position to give much detail at this time, but we are conscious of the need to ensure that the public are aware of the benefits that flow from the fund.

The hon. Member for Grantham and Stamford (Mr. Davies) is not in his seat. I accept his apologies for that. When he reads Hansard, he will be pleased to realise that I am in a mellow mood and will try not to be vituperative in any way. He made a number of points that had already been made by other Members and I have covered the majority of them—the same is true of the hon. Member for Basingstoke (Mr. Hunter).

The hon. Member for Orkney and Shetland (Mr. Carmichael) asked about fuel smuggling and laundering. Of enormous interest is his point about the co-operation between the different organised crime groups that we are increasingly identifying. As far as they are concerned, business is business and they will work and co-operate with whomever they need to to maximise their profits.

I invite the hon. Gentleman to look closely at the work of the oils expert group. Other hon. Members also mentioned fuel laundering and smuggling. The oils expert group has brought together a range of agencies—including the Health and Safety Executive, trading standards services, environmental services in Northern Ireland, the PSNI, and, hon. Members might be surprised to learn, the Driver and Vehicle Licensing Agency—into one expert group.

One of the group's strategies has been to get Customs and Excise officers to work with trading standards and Health and Safety Executive officers in order systematically to visit every petrol station in Northern Ireland. Those involved are producing amazing results when it comes to ensuring that petrol stations are selling legitimate fuel that has had excise charged on it. They plan to continue that scheme throughout the year. I am confident that it will have a high degree of success.

The hon. Gentleman also asked about the organised crime desk in the PSNI. Obviously, that is essentially a matter for the Chief Constable. However, a further indication of the police service's commitment to tackling organised crime in the community is his recent announcement of a restructuring in the PSNI. The purpose of that restructuring, at senior management level, is to improve further the PSNI's crime-fighting capability.

The new structure is intended to be introduced in November. It was disclosed to the Policing Board and published recently. The central plank of the new arrangement will be the creation of a crime operations department, headed by an assistant chief constable. That department will tackle serious and organised crime, including murder investigations, as a priority.

A criminal justice department will also be created. Again, an assistant chief constable will head it, and it will deal with all non-operational crime-related functions. I expect that to be a further driver in prompting reviews of the way in which the criminal justice system operates. Further changes are also proposed. The announcement was welcome and indicates the determination of the PSNI to ensure that its structures are as fit for the purpose as possible.

I took careful note of the comments that the hon. Member for North Down (Lady Hermon) made during interventions about ensuring that provisions in UK legislation elsewhere are applicable to Northern Ireland. We will consider her comments, and I am grateful for her support in saying that good progress is being made. I am aware of the UUP's concerns about the Criminal Justice Bill that she and her hon. Friends raised. I understand that her party is due to outline its concerns specifically to the Minister of State, Northern Ireland Office, my right hon. Friend the Member for Warley (Mr. Spellar), who has agreed to examine the matter when he has had a chance to discuss the issues with the hon. Lady and her hon. Friends.

Lady Hermon

The Minister's new colleague in the Northern Ireland Office's ministerial team kindly arranged a prompt meeting with my right hon. Friend the Member for Upper Bann (Mr. Trimble). The meeting was scheduled for 26 July, but we had it earlier than anticipated.

Jane Kennedy

I am pleased to hear that there has been progress already.

I also take on board the point made by the hon. Lady about consulting the Chief Constable and the ombudsman about a particular aspect of the legislation, and I shall consider that when I have read Hansard carefully to study the point that she made.

During an interesting exchange with my hon. Friend the Member for Ealing, North (Mr. Pound) and the hon. Member for East Devon (Mr. Swire), the hon. Member for East Antrim referred to the impact of reduced funding from the United States of America leading to greater emphasis by the paramilitary organisations on fund-raising through criminal activities. I accept that too much funding is still coming through to paramilitary organisations. We must keep that under consideration, but the more that funding from other sources is reduced, the greater the effect that is felt in Northern Ireland will be. There will be an ever-increasing emphasis on paramilitaries to continue to fund their activities through criminal activity. We must focus on that and work to ensure that we hold those activities in check and make them ineffective.

The hon. Member for Basingstoke raised a different point and said that paramilitaries in Northern Ireland have always engaged in crime. That is true and we accept the point but, irrespective of the strictures of the hon. Member for Belfast, North, progress has been made. It is because the paramilitaries and their criminal activities are standing in the way of that progress that we continue to vest so much importance in the work of the taskforce in tackling organised crime.

I believe that I have covered the point about fuel tax evasion that my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) raised. I hope that he and the hon. Member for East Antrim will forgive me if I do not explore now the issues that they raised about the paramilitary beatings that continue in Northern Ireland. We have discussed the matter previously, and it can be discussed again on another occasion. The increase in the number of Customs and Excise personnel who are dedicated to tackling that crime indicates how determined the Government are to ensure that that form of fund-raising for terrorists in Northern Ireland is closed off. It is important to note that there has been an increase in legal, excise-paid, duty-paid fuel in Northern Ireland. That is the only indicator that we can look to for a specific quantitative measurement of the progress that we seek.

Mr. Barnes

The two reports of the Northern Ireland Affairs Committee, one in the previous Parliament and the other in this Parliament, make it clear to people such as myself, a member of the Committee, that considerable advances have been made in the operation of Customs and Excise during that period.

Jane Kennedy

I am grateful to my hon. Friend for that point. Encouraging progress is being made, but that needs to be kept under review.

The hon. Member for Belfast, North spoke of his constituent, whom I was pleased to meet when he brought him into my office. He gave a graphic description of the problems that he had experienced in operating his business in north Belfast. Speaking more generally, however, individuals must be prepared to assist the police, if we are to be able to offer witness protection. A person must be a witness before the witness protection scheme can operate. I accept that there are ways in which individuals can assist law enforcement agencies without actually becoming witnesses, and we are not shy of using such methods, but someone must be a witness before they can benefit from such a scheme. I would encourage all those who have suffered from organised crime, and particularly from extortion, given its extent and nature, to assist the police and other agencies in defeating it.

The hon. Gentleman and the hon. Member for Basingstoke made several points about the joint declaration. I note those points, but I will leave them for discussion on another occasion.

I shall conclude my remarks by discussing the question of resources and funding. The Government remain resolute in the fight against terrorism, and continue to ensure that the Chief Constable has at his disposal the resources to meet the threat. Yesterday, when we were considering the Select Committee's report on drug use and drug-related crime, we discussed the resources available to the drug squad in the Police Service of Northern Ireland.

Ministers responsible for the police will never say that we can do without more police officers. We can always put them to good use. However, it is important to remember that Northern Ireland currently has a police-to-population ratio of 1:186, including the full-time reserve. In Scotland, England and Wales, the ratio is 1:409.

The Police Service of Northern Ireland is highly effective. I accept that it is undergoing an enormous programme of internal change. The numbers able to take advantage of the redundancy scheme have depleted the number of police officers in the older age group, who have taken with them vast amounts of skill and experience. The change programme has taken its toll on the morale and energy of police officers. However, I am constantly encouraged by the dedication and enthusiasm that police officers in Northern Ireland continue to bring to the work that they do.

As I said, the Police Service of Northern Ireland is highly effective, and those at every level of the police force are very aware of crime and terrorist crime. The best evidence of that is their ability, a couple of weeks ago, to intercept that large van bomb in Londonderry. That was good police work: ordinary police officers being aware and working effectively to prevent terrorist crime. Similarly, in Newry and South Armagh policing district late one night, police reserve officers stumbled on one of the largest fuel-laundering plants ever discovered in Northern Ireland, and they were able to bring both police and Customs to that spot very rapidly, in an effective police operation.

Customs has increased its resources by more than 160 personnel, who are dedicated to tackling oils fraud in Northern Ireland. The question of funding for the Assets Recovery Agency should also be addressed. The agency is adequately funded for its current case load. I applaud its cautious approach, which is similar to that of the Criminal Assets Bureau in the Republic of Ireland—it has bedded itself into the criminal justice culture of Northern Ireland by ensuring that the first cases that it takes are as strong as possible, to ensure that the law is effective and that the courts will develop confidence in the new laws.

As recently as yesterday morning, I was briefed by the Northern Ireland assistant director on the progress that the agency is making. I am confident that as it continues its cautious and successful approach, although it may not be fast enough for those of us—all of us—who want rapid results, it will continue to make good progress, and I am delighted that it is ahead of the targets that we set it.

I know that there is more time allocated to us, but I believe that I have responded to all the points that I noted during the debate. We in government will do everything that we can to continue to tackle the combined threat of terrorism and organised crime in Northern Ireland. I am convinced that by confronting organised crime using the multi-agency, joined-up approach, the strategies that we have adopted with partner agencies within the Organised Crime Task Force, and with the help of the community at large, we have found the most effective way of delivering a safe, just and prosperous society in Northern Ireland.

Question put and agreed to.

Adjourned accordingly at fifteen minutes past Five o 'clock.