The proposals will apply to convicts of all levels of seriousness, a Downing Street source said, including those convicted of low-level propaganda offences like the crime previously committed by Sudesh Amman.
“I’m sure there are people who would view this as controversial,” a No 10 source said. “But we are in a position where in the space of a few months, we have people leaving prison and in a very short period of time trying to murder members of the public. That can’t be sustainable.”
The government also announced emergency legislation to prevent the automatic release of terrorist prisoners, and ensure those already in jail undergo risk assessments before being freed.
Officials would not confirm how many inmates would be affected by the plans, which fly in the face of warnings by the Parole Board and other official agencies about rampant terrorist networking and radicalisation inside British prisons.
The Streatham stabbing was the third terror attack in just over two months to be carried out by a convicted terrorist in Britain, following the assaults at Fishmongers’ Hall in London and inside HMP Whitemoor.
Amman’s mother said he had become more religious since being jailed in December 2018, and that she believed he had been radicalised further while in HMP Belmarsh.
Just days before the attack, the Independent Reviewer of Terrorism Legislation said jail “provides a perfectly receptive and captive audience for recruitment”.
Jonathan Hall QC told an event in parliament: “That doesn’t mean that prison is not the right remedy, but its consequences must be addressed, including, as the HMP Whitemoor attack shows, recognising that terrorism offending does not stop at the prison door and there is no automatic ‘job done’ when a terrorist is behind bars.”
Last month, The Independent revealed that up to 800 inmates have been flagged for extremism concerns – almost four times the number of terrorist prisoners – and officers felt too stretched to spot radicalisation.
Monday’s proposals were the latest in a series of pushes by the Conservative government to “end early release” for extremists, including a suite of plans announced two weeks ago and new laws that came into effect last April.
Robert Buckland told MPs the Parole Board would risk assess terror convicts who will become eligible for release at the two-thirds point of their sentence, rather than half way.
“The underlying principle has to be that offenders will no longer be released early automatically and that any release before the end of their sentence will be dependent on risk assessment by the Parole Board,” the justice secretary added.
“We will ensure that the functions of the Parole Board are strengthened to deal even more effectively with the specific risk that terrorists pose to public safety.”
Mr Buckland said emergency legislation would apply retrospectively to terrorist prisoners given standard determinate sentences like Amman’s.
Downing Street said there would also be a full review of the maximum prison sentences for terror offences, including looking at whether terrorist offenders of all levels of seriousness should be held in jail indefinitely until the Parole Board assesses they are no longer a threat to the public.
But the Parole Board itself has warned of the risks of keeping extremists in prison for longer.
Responding to sentencing changes in early 2018, the body raised concern about radicalisation in prisons and said: “There are concerns that increasing the penalties for less serious offenders will result in them becoming more likely to commit terrorist acts when they are released.”
The former head of counterterror police warned on Monday that “more dangerous people” are now being released from British prisons than returning from Syria.
Sir Mark Rowley said prisons needed to “get a grip” on rehabilitation, amid calls for a review of existing deradicalisation programmes and an increased focus on Islamic theology.
Amman, who had previous convictions for cannabis and offensive weapons possession, was initially arrested for planning terror attacks in May 2018, after writing online that he was “armed and ready” and pledging allegiance to Isis.
But he was charged with the lesser offences of collecting and disseminating terrorist material after consultation with prosecutors, and handed a determinate sentence of three years and four months that saw him automatically released a week ago.
The 20-year-old was placed under surveillance by police after leaving prison on 23 January.
He was being followed by undercover officers who had trailed him from his probation hostel when he grabbed a knife from a shop, removed it from its packaging, and started stabbing passers-by in Streatham on Sunday.
Scotland Yard said Amman was shot dead by police within a minute of beginning his attack, which was claimed by Isis in a generic statement on Monday morning. Both stabbing victims survived.
Labour accused the government of leaving communities less safe after years of cuts to police, prisons and probation services.
Sir Bob Neill, the Conservative chair of the Justice Committee, asked what deradicalisation measures Amman had been subject to in prison.
He called on the government to “consider again those remaining aspects of the Acheson review regarding to a much more assertive management of these particularly complex and dangerous prisoners within the system from the start of their sentence”.
Human rights campaign group Liberty accused the government of making knee-jerk responses to the attacks.
“The government’s response to recent terror attacks is a cause of increasing concern for our civil liberties,” said advocacy director Clare Collier.
“Continuing to introduce measures without review or evidence is dangerous and will create more problems than it solves. It’s clear the UK’s counterterror system is in chaos and desperately needs proper scrutiny and review.”
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