Home Secretary Priti Patel says the UK's terror threat level has been raised from 'substantial' to 'severe'. The move follows an explosion outside a hospital in Liverpool on Sunday, which police have declared a terrorist incident. Get live updates:
After the explosion, armed police swooped on several terraced houses in Sutcliffe Street, where the three arrests were made.
He said:"The circumstances as we understand them to be are that yesterday, shortly before 11am, a local taxi driver picked up a fare in the Rutland Avenue area of Liverpool. "Our enquiries indicate that an improvised explosive device has been manufactured and our assumption so far is that this was built by the passenger in the taxi.
He said officers were looking at his associates, his telephone records and purchases he may have made. Merseyside Chief Constable Serena Kennedy said:"There is no specific threat to the area, but I have asked for patrols to be increased right across Merseyside."