The Government has revealed it collects £5 million a year in tax from frozen Libyan assets.
The disclosure has prompted renewed calls for the money to be used to compensate victims of IRA attacks perpetrated with Libyan-supplied Semtex explosives.
Former dictator Muammar Gaddafi armed the IRA with the powerful plastic explosive used in atrocities such as the bombing of Harrods in 1983, the Remembrance Day ceremony in Enniskillen in 1987, Warrington in 1993 and London’s Docklands in 1996.
Those bereaved and injured by the attacks have long been pressing for Government support for their bid for compensation paid out of the £12 billion of assets linked to the toppled Gaddafi regime that were frozen in the UK in 2011 under UN sanction.
The Northern Ireland Affairs Committee recently conducted an inquiry into the issue.
As part of their investigation, committee members had repeatedly challenged the Government to reveal if it collected tax on the billions.
The Government has now informed the committee that £17 million of tax has been collected on the assets since the start of the 2016/17 financial year.
Committee chairman Simon Hoare said there was a “moral imperative” for the tax receipts to be used to compensate victims.
“The Government claims it has been taking a more ‘visibly proactive’ approach to securing compensation for victims, but it took my committee to point out that the profits the Government has been accruing from frozen Libyan assets could be put to better use,” he said.
“I am glad the figure has now been revealed to us, and there is now a clear moral imperative for this money to be used to help victims who have suffered for far too long.
“The Government needs to ask itself whether it is content to continue profiting from frozen Libyan assets while victims receive nothing.
“The tried and tested methods of grappling with this issue of the last 15 years has amounted to nothing for victims, so we are calling for a fresh approach, imagination and compassion from the Government to ensure victims are compensated urgently.”
The authorities in the US, Germany and France have already secured compensation for terror attacks allegedly directed by the Libyan government, such as the 1988 Lockerbie bombing.
The UK Government recently appointed William Shawcross as a Special Representative for UK Victims of Gaddafi-sponsored IRA terrorism. One of his tasks is to calculate the compensation due to victims.
However, the Government has said Mr Shawcross will not engage directly with the current Libyan administration on the compensation issue.
In its response to the committee, the Government highlighted the difference between attacks allegedly directed by Libya and the “indirect” involvement of the regime in the IRA bombings.
“Securing compensation for victims of attacks indirectly enabled by the Libyan government is inevitably more complex,” it said.
The Government said it had a “strong desire to see a just settlement for all victims”.
“As such, we are committed to supporting these victims and we are confident that the appointment of a Special Representative will bring greater focus to our efforts,” it added.
Jonathan Ganesh, president of the Docklands Victims Association, said victims were “disgusted” with the Government’s “lack of concern for its own victims of terrorism”.
“Victims of Gaddafi-sponsored terrorism from the US, France and Germany received substantial compensation from Libya years ago as their governments fought for their victims,” he said.
“The UK victims, many of whom are physically and psychologically injured, were told by their government to fight for themselves. I’m sorry but victims in the UK, many of whom have taken their own lives in desperation waiting for the government to act and some victims having to selling their home to pay for care, have been treated liked rubbish.”
He added: “To resolve this matter as indicated within this report all the UK Treasury has to do is release the taxable revenue that has been generated from Gaddafi’s assets being held in the UK.
“The Government has great words of sympathy for victims of terror but in reality they appear not to care. Their reluctance to fight for their victims is heartbreaking, which is devastating for all victims of terrorism in the UK.”