Commons Sitting of 30 October 2002

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS

    COMMITTEE OF SELECTION
    Order read for resuming adjourned debate on Question [16 October],
    That Mr. John Hayes be discharged from the Committee of Selection and Mr. Peter Luff be added to the Committee.—[Mr. Ainger.]
    Hon. Members: Object.
    Debate to be resumed tomorrow.

Oral Answers to Questions
  WALES
  The Secretary of State was asked—
  WALES

    Job Losses
    Mr. Simon Thomas: What recent discussions he has had with (a) the Ministry of Defence and (b) National Assembly Secretaries regarding job losses in West Wales. [76057]
    The Secretary of State for Wales (Peter Hain): It is a great privilege for any Welsh MP to be Secretary of State for Wales, and I am especially delighted at having that honour. I pay tribute to my predecessor, now the Secretary of State for Northern Ireland, my right hon. Friend the Member for Torfaen (Mr. Murphy), who did an excellent job. He had regular discussions with ministerial colleagues at the Ministry of Defence and Members of the National Assembly for Wales.
    Mr. Thomas: I welcome the new Secretary of State to his place on behalf of Plaid Cymru and wish his predecessor well in taking on his new responsibilities, which are also of great importance. We look forward to the right hon. Gentleman making some jinking runs down the left wing in the next few Question Time sessions.
    I draw the Secretary of State's attention to the imminent loss of jobs at Dewhirst in Cardigan and to the rundown in Ministry of Defence facilities at Aberporth. The loss of more than 400 jobs in one small market town over the next year could, at least temporarily, double the unemployment rate in the Cardigan travel-to-work
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    area. Will he now redouble his efforts and those of his Departmentߞhis hon. Friend the Under-Secretary already knows about Aberporthߞto ensure that there are more constructive debates, especially with the Ministry of Defence and the Defence Diversification Agency, about new commercial opportunities using the excellent site and resources that we have at Aberporth?
    Peter Hain: Those are the first best wishes I have ever had from Plaid Cymru. I am not sure whether I should thank the hon. Gentleman for them, but I shall do so in the spirit of chivalry.
    I acknowledge the hard work that the hon. Gentleman has done on behalf of his constituents in respect of the matter that he raises. I know that he is very concerned about it and so are we. However, plans are afoot to create new opportunities in his area, including, for example, plans for a technology park at Aberporth. Those plans are still proceeding and are capable of creating more than 200 well-paid high-quality jobs. In Ceredigion, unemployment is at an all-time low; the 2.5 per cent. claimant count is one of the lowest in Wales, thanks to this Labour Government.
    Mrs. Betty Williams: I, too, congratulate my right hon. Friend on his promotion and I look forward to working with him very closely in the months and years to come. Is he aware that the unemployed claimants figure for Conwy in west Wales has fallen from 2,240 in September 1997 to 1,178 in September 2002? Does he agree that that is a considerable tribute to the Government and local business?
    Peter Hain: I am grateful to my hon. Friend. I agree that that reduction is a tribute to the sustained work that the Government have put into Wales in the past five years. We are now working in close partnership with the National Assembly for Wales to deliver Wales as a world class economy and as the top area for investment. Some 18,000 more jobs have been created in the past year and we intend to continue along that path.
    Lembit Öpik: It is great to see the right hon. Gentleman back in Wales. We have missed him and I wish him every success in his role in the run-up to when I take on the job myself in 2006. In the meantime, does he agree that one way of creating jobs, especially in north and west Wales, is the development of a strategic plan for airport development, perhaps along the lines of the consultation that was recently published for Wales? If so, is he willing to meet me and a delegation of interested groups that want a hub and spokes approach to Welsh airport development to see what we can do in working with the Assembly to achieve such a result?
    Peter Hain: I suspect that such generosity from all parts of the House is a one Question Time only experience. I remember well the hon. Gentleman's interest in regional airways and especially the route from Welshpool airport to Cardiff, which I was keen to promote when I was previously in the Welsh Office. Indeed, I took a flight with him from Welshpool, although I declined his invitation to pilot the plane. Given what happened to him a few weeks later, I am pleased that I did so. The matter is an important priority

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    for Wales and I intend to speak to the First Minister about it, especially after the hon. Gentleman's intervention.
    Mrs. Jackie Lawrence: In my area of west Wales, there are potentially 360 temporary jobs at Powergen, which has stepped in to replace the ITV Digital losses. Will my right hon. Friend work with Assembly Ministers to try to make those jobs permanent? Does he acknowledge that the 1,000 jobs that were lost when ITV Digital went to the wall had as great an impact on west Wales as the collapse of Corus on east Wales? Will he do everything possible to ensure the same amount of investment in west Wales as in east Wales?
    Peter Hain: Indeed, as a south-west Wales Member of Parliament, I understand my hon. Friend's arguments. We shall continue to work hard with the National Assembly and as a Government to create the conditions for generating more jobs in west Wales. I am sure that I do not need to point out to my hon. Friend that unemployment in her constituency has fallen by almost half since we came to power in 1997.

    Antisocial Behaviour Orders
    Mr. Mark Francois: What recent discussions he has had with ministerial colleagues on the use of antisocial behaviour orders [76058]
    Mr. Chris Bryant: What discussions he has had with the Home Secretary regarding the use of antisocial behaviour orders in Wales. [76065]
    The Parliamentary Under-Secretary of State for Wales (Mr. Don Touhig): My right hon. Friend and I hold regular discussions with colleagues about matters that affect Wales. The antisocial behaviour order is a useful tool in dealing with antisocial and loutish behaviour, which causes considerable distress and upset in communities throughout Wales.
    Mr. Francois: I thank the Minister for that reply, but is not it the case that many people throughout Wales feel threatened by rising crime? Given the low take-up of antisocial behaviour orders in Wales, and the fact that many people feel too threatened to testify against criminals in court, what are the Government doing to tackle such problems directly?
    Mr. Touhig: Antisocial behaviour orders have proved an effective tool because they have deterred those whose behaviour causes nuisance and upset in our communities.
    Mr. John Bercow (Buckingham): Twelve.
    Mr. Touhig: The hon. Gentleman is having trouble with the maths. The figure is not 12, but considerably higher.
    Several other options are available, including acceptable behaviour contracts, curfews, parenting orders, and on-the-spot fines, which are being piloted in north Wales. It is a bit rich of Conservative Members to
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    talk about rising crime. It has fallen by 22 per cent. since the Government came to power, whereas the Conservative Government doubled it in 18 years.
    Mr. Bryant: My hon. Friend knows that, especially in mining communities in south Wales, the antisocial behaviour of one person or a single family can ruin the quality of life of a whole terraced street. It is surely distressing that South Wales police have been able to enforce only four antisocial behaviour orders so far. Is my hon. Friend worried that local authorities in Wales are not yet prepared to make sufficient use of antisocial behaviour orders? Will he congratulate South Wales police on appointing a full-time antisocial behaviour order officer, based in Pontypridd?
    Mr. Touhig: I certainly welcome the actions of South Wales police on the matter. I chaired a public meeting in my constituency a week ago, during which the issue was discussed. My advice to local authorities and the police service everywhere is to use antisocial behaviour orders when appropriate. Parliament has given the police and local authorities the power to take such action. The crimes that worry most of our constituents—vandalism, antisocial behaviour and petty intimidation—distort and damage the quality of life throughout Wales. Parliament and the Government have introduced measures whereby the police and local authorities can tackle such crimes; they must now use those resources.
    Mr. Nigel Evans: The Minister says that he has given the police and local authorities power. However, the low number of antisocial behaviour orders that are used must worry him. Such an order is three times more likely to be issued in England than in Wales, yet the Minister has conceded that a few thugs and yobs cause misery throughout Wales. Is it not time to make life miserable for the thugs and yobs rather than the people of Wales? Will the Minister work with the police and local authorities to try to ensure clarity and ease of use for antisocial behaviour orders so that we can clamp down on the thugs and yobs?
    Mr. Touhig: I agree that we must make the procedure as easy as we can. I am sure that the hon. Gentleman knows that there have been difficulties, and that legal advice has been taken about some antisocial behaviour orders. Once that first hurdle has been crossed, however, it will be much easier for the police and the local authorities to put the orders to the best use.
    I told the hon. Gentleman when he raised this matter in July that the Government have laid the foundations for the most co-ordinated attack on crime in a generation. Billions are being invested in fighting crime, there are 4,500 more policemen on the beat than there were two years ago, and there are 600 more police officers in Wales than when we came to power five years ago. Only investment and reform will reduce the problem. The hon. Gentleman's party, both here and in Wales, opposes that investment and reform.
    Huw Irranca-Davies: Does my hon. Friend welcome the new guidance that is shortly to be issued by

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    the Home Office on antisocial behaviour orders? Will he ensure that he liaises closely with colleagues to roll out the orders and certificates throughout the whole of Wales?
    Mr. Touhig: Yes, I certainly welcome that initiative. My colleagues who represent Welsh constituencies may remember that I facilitated a meeting between all Welsh Members of Parliament and David A'Herne, the crime reduction director for Wales. I meet him on a regular basis, and I think that it would be productive to have further meetings with him so that we can understand the initiatives that are being taken by the crime reduction and disorder partnerships in Wales, and give them every support that we can. We had a debate on this in Westminster Hall only the other week. I urge colleagues everywhere to press their local authorities and the police service to use antisocial behaviour orders where appropriate.

    Devolved Powers
    Sir Nicholas Winterton: What assessment he has made of public perception of the operation of devolved powers in Wales. [76059]
    The Secretary of State for Wales (Peter Hain): After three years, the devolution settlement for Wales is working well, with the Government and the National Assembly acting in close partnership for the benefit of Wales. Against that background, it is tremendous news that Cardiff is on the short list for the European capital of culture in 2008. Cardiff is Europe's youngest capital, and it is on the move towards becoming a world-class British city
    Sir Nicholas Winterton: I warmly welcome and encourage the diversity of culture, language and meaningful local government throughout the United Kingdom, but has the newly appointed Secretary of State for Wales studied the findings of a recent study by the University of Wales, Aberystwyth, which states that the overwhelming majority of Welsh voters think that the Assembly has made no difference—or, at best, little difference—to public services in the Principality?
    Peter Hain: I do not know whether the hon. Gentleman is making new Tory policy on behalf of his Front Bench. Is he proposing to abolish the National Assembly for Wales? The fact is that the Assembly has been making a real difference, as we. the architects of devolution, always knew that it would. It has introduced free prescriptions for two successive years, and prescription charges in Wales are now lower than those in England. It has also provided free local bus travel for pensioners and disabled people throughout Wales, which is not provided elsewhere. It has introduced Assembly learning grants for people of limited means, funded six weeks' free home care, and seen record spending on health and education and a cut in unemployment as a result of the policies that Labour is pursuing in Wales. It is a Labour Assembly working together with a Labour Government.
    Denzil Davies: When my right hon. Friend next goes to Brussels to attend the European convention, will he explain to Mr. Giscard d'Estaing
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    what the principles of devolution are—bearing in mind, of course, that he should do so without being very rude? When he does so, will he point out that the draft European constitution shows that Giscard clearly has no idea about those principles?
    Peter Hain: I thank my right hon. Friend for that question. In fact, Britain's agenda in the convention on the future of Europe is to ensure that regions of nation states—such as Wales—get their voice heard right at the centre of decision making in Brussels, and that nation states form the bedrock of a union that is a partnership of nation states, not a Brussels superstate.
    Mr. Elfyn Llwyd: At the risk of damaging the right hon. Gentleman's political career, I congratulate him on his appointment and wish him well in post—although not too well, of course.
    I have recently received the leaked Government response to the report on the foot and mouth outbreak. Paragraph 1.29 states:
    "The terms of the Welsh devolution settlement did not fully devolve animal health powers to the Assembly … The Government is in discussion with the Welsh Assembly Government on the case for devolving further powers to it to deal with outbreaks of animal disease in Wales."
    Why, then, did the Government reject our amendments to the Animal Health Bill that were designed to do exactly that?
    Peter Hain: It was because Plaid Cymru's amendments usually have to be rejected as they do not achieve the objectives that the Government are trying to achieve for Wales. We are working closely with the National Assembly to benefit farmers and everyone in Wales. As the hon. Gentleman well knows, Plaid Cymru has never created any jobs in Wales, and has never done anything to generate better health services, better schools and a stronger economy in Wales.
    Ian Lucas: Although working relations between Front-Bench Members in Cardiff and in Westminster were excellent throughout the occupation of the post of Secretary of State for Wales by my right hon. Friend the Member for Torfaen (Mr. Murphy), could not Back Bench relations between Cardiff and Westminster be greatly improved? Following the vote last night, there will be more consideration of draft legislation. Would it not be a useful innovation to have Joint Committees of Back-Bench Assembly Members and Back-Bench Members of Parliament to discuss legislation for Wales?
    Peter Hain: I am grateful for my hon. Friend's question. Obviously, we want to promote an increasing partnership between Members of Parliament and Assembly Members in Wales, and we shall continue to work on that. I shall consider my hon. Friend's ideas, but as he knows, pre-legislation scrutiny has been developing. We are working on that, and I would welcome ideas from him or any of my right hon. and hon. Friends.

    Free Eye Tests
    Mr. Roger Williams: If he will take steps to arrange for the devolution of powers to the National Assembly for Wales to enable free eye tests to be available in Wales. [76060]
    The Parliamentary Under-Secretary of State for Wales (Mr. Don Touhig): Certain groups of people, including those under 16, those over 60 and those in receipt of income support and other benefits, are already entitled to free NHS eye tests in the United Kingdom. The power to make regulations relating to fee exemptions for eye tests has been devolved to the Assembly.
    Mr. Williams: I thank the Minister for that answer. I congratulate the Secretary of State on spelling out so clearly the achievements of the Liberal Democratic-led coalition Government in Cardiff. They are a wonderful Government. In 1989, the Conservative Government introduced charges for eye services as part of their continuing dismemberment of the national health service. Will the Minister ensure that, in any health Bill that appears in the Queen's Speech, an enabling clause is included to enable the National Assembly to deliver free health care? Will the Secretary of State put his mouth where his Nye Bevan statue is?
    Mr. Touhig: The danger of being led by the Liberal Democrats is that they may lead us up a blind alley, as we have experienced in the past. Under the National Health Service Act 1977 and other regulations, certain groups are already exempt from charges for eye tests. Primary legislation would be required to abolition all fees for eye tests in England and Wales. As far as I am aware, the Government have no plans to do that.
    Mr. Nigel Evans: I also take this opportunity to welcome the Secretary of State to his new position in the Cabinet. I pay tribute to his predecessor, who won respect from both sides of the House. I wish him well in his new job in Northern Ireland.
    Does the Minister agree with me that the Welsh Assembly might be perceived as more relevant if it concentrated on issues over which it has some responsibility, such as agricultural collapse, the NHS waiting lists crisis, and the meltdown of manufacturing jobs, rather than debating issues for which it has no responsibility, such as Iraq and the middle east, which it debated yesterday?
    Mr. Touhig: I am not clear what that has to do with eye tests, although I note that yesterday's debate on Iraq was led by Plaid Cymru. Perhaps that party has a visual problem, as one would expect. I understand the point that the hon. Gentleman makes, but the subjects to be discussed by the National Assembly are matters for the Assembly. The First Minister has made it absolutely clear that the Labour-led Administration in the National Assembly are concerned about the economy, jobs, health and education. Those are the issues that we
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    will put across to the people of Wales, and which will give the Labour party a majority in the Assembly at the next election.
    Mr. Speaker: Order. The House is far too noisy at the moment. It is unfair to hon. Members. I call Mr. Nigel Evans.
    Mr. Evans: Thank you, Mr. Speaker.
    We are always hearing demands from other political parties that they want extension of powers for the Welsh Assembly. The Minister will know that Lord Richard is conducting his own Assembly-sponsored inquiry into the number of politicians in the Welsh Assembly and the powers that they currently have. We already know that the Secretary of State for Wales and the Foreign Secretary are not so keen on referendums. The Foreign Secretary has told the people of Gibraltar that he thinks their desire for a referendum rather eccentric; indeed, he may not even take heed of what they say. If Lord Richard recommends extending the power of the Welsh Assembly, will the Minister—given the slight and slim majority that voted in favour of devolution—give the people of Wales another say in whether there should be such an extension of powers?
    Mr. Touhig: As the hon. Gentleman well knows, the Richard commission is matter for the National Assembly. The Assembly set up the commission, and it has agreed the criteria by which it will operate. The Government will await the commission's conclusions, which will doubtless be debated by the Assembly, and we will respond at the appropriate time.

    Regulation
    Mr. Henry Bellingham: When he next expects to meet representatives of industry and business to discuss ways in which his Department and the Welsh Executive can work together to alleviate the burden of regulation. [76062]
    The Secretary of State for Wales (Peter Hain): I plan regular meetings with a wide range of representatives of Welsh industry and business, as well as with Assembly colleagues, to discuss the conditions for industrial and business growth in Wales.
    Mr. Bellingham: Is the Secretary of State aware that an increasing number of burdensome regulations are coming out of Brussels—including the agency employees directive and the equal treatment in work directive—that bear down disproportionately on small firms? Does he agree that a way must be found to alleviate this burden and to prevent the destruction of wealth creation and employment?
    Peter Hain: We are, of course, continuously working with business to effect conditions for the better, in which they can prosper. However, if the conditions in respect of regulation are as bad as the hon. Gentleman says, why is there record prosperity and more jobs being created in Wales and the rest of Britain, and why is the United Kingdom economy stronger than anybody can

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    remember? The answer is that we have created the conditions in which businesses small and large can prosper.

    Family Farms
    Ann Winterton: What recent discussions he has had with the First Secretary about the future viability of small family farms in Wales. [76063]
    The Parliamentary Under-Secretary of State for Wales (Mr. Don Touhig): The former Secretary of State for Wales, my right hon. Friend the Member for Torfaen (Mr. Murphy), had regular meetings with the First Minister and agricultural matters were always high on the agenda. This will remain the case with my right hon. Friend the new Secretary of State.
    Ann Winterton: According to the Welsh Assembly's own figures, last year the average livestock and dairy farm had an income of just over £100—way below the national minimum wage. No prosperity there for Welsh farmers. What proposals will the Secretary of State bring to discussions with the First Minister in order to address the extremely serious plight of Welsh agriculture, bearing in mind that the small family farm is the lynchpin of both tourism and the food industry in Wales?
    Mr. Touhig: I do not need any lectures from the hon. Lady about farming in Wales—there are a number of farmers in my own constituency. The key point [Interruption.] Perhaps Opposition Members are dividing up for the next leadership challenge. The key point for the viability of family farms is to keep them alive and growing, and to find ways in which we can help them. The National Assembly has put in place Farming Connect, which is working with farmers to find ways to improve the viability of their businesses, to implement new practices and to discover new initiatives. A range of funds has been put in place to help achieve that.
    Also, I was pleased to help with the launching, at the Royal Welsh Agricultural Show, of an event to help regain our export markets in mainland Europe for Welsh lamb and beef. Some £600,000 has been put in place to help promote Welsh meat products in mainland Europe. Those are the kind of serious initiatives that the Government and the Assembly are involved in to restore the prosperity of Welsh farming. We commend them, and it is a pity that the hon. Lady could not.
    Gareth Thomas: As someone who actually represents a Welsh constituency, and a rural one at that, may I tell my hon. Friend that agriculture in Wales has a prosperous future, thanks to the effective partnership between a Labour-led Assembly and the Labour Government?
    Mr. Touhig: That prosperous future is being delivered by a Labour-led Government and a Labour-led Administration in Cardiff. That has made the difference to the people of Wales. We should be confident and assured in our new Wales. Our economy is strong and our future is bright. It is a pity that the Opposition, who do not have any seats in Wales, have not stopped knocking Wales.

  The Prime Minister was asked—
  PRIME MINISTER

    Engagements
    Mr. Andrew Miller: If he will list his official engagements for Wednesday 30 October.
    The Prime Minister (Mr. Tony Blair): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Miller: My right hon. Friend will understand how important sure start, and other programmes designed to tackle the needs of some of the most vulnerable children in our society, have been in constituencies such as mine. However, many families in my area still have acute problems. Will my right hon. Friend spell out, especially on a cross-departmental basis, what he intends to do to tackle need in such families?
    The Prime Minister: The issue that my hon. Friend raises is an important one for children at risk. It is true that the Government have implemented several measures—such as sure start, the new Connexions and the new help for communities through the new deal—but a Green Paper will be published early next year on the whole issue of children at risk, including how to ensure that they do not take up crime, and their family, mental health and educational problems. It is right that that is dealt with across government by a Cabinet sub-committee, which it will be, and also that we ensure that the proposals we make bear down on one of the main reasons for social exclusion in our society today.
    Mr. Iain Duncan Smith: The Labour manifesto said:
    "We will not introduce top-up fees".
    Does the Prime Minister still stand by that promise—yes or no?
    The Prime Minister: Of course we stand by our manifesto.
    Mr. Duncan Smith: If the Prime Minister stands by that specific promise in his manifesto, can he say why the Secretary of State for Education and Skills, when asked on Saturday to rule out top-up fees, did not rule them out? Should students believe the Secretary of State or the Prime Minister?
    The Prime Minister: We of course stand by our manifesto, but I do not believe that the issue is top-up fees. The issue is how we ensure that our top universities get the freedom and the independence that they want, and how we make sure that as those universities develop they are able to guarantee access for poorer students. I assure the right hon. Gentleman not merely that we will stand by our manifesto commitment, but that when we

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    publish our proposals for a review of higher education and finance, it will be against the background of increasing access for the poorest students in our society.
    Mr. Duncan Smith: The right hon. Gentleman starts by pledging himself to his manifesto, and then he starts to fudge. Let me remind him of what the manifesto said:
    "We will not introduce top-up fees and have legislated to prevent them".
    However, on Saturday, the Secretary of State for Education and Skills was asked a direct question:
    "Do you rule out top-up fees?"
    He said, "No". The Prime Minister cannot have it both ways. Either he stands by his manifesto promise, or he stands by his Secretary of State. Which is it?
    The Prime Minister: I am sorry to have to tell the right hon. Gentleman that the Government stand together on that point. [HON. MEMBERS: " Answer!"] With respect to the right hon. Gentleman, I have already answered. There is a serious issue about university finance for the future. There is an issue about freedom for universities, which is important, and an issue about how we ensure that British universities, which are among the best in the world, remain in the top 10 universities—and more—of the world.
    However, there is also an issue about—[Interruption.]
    Mr. Speaker: Order. This is out of order. Hon. Members are out of order when they shout so loudly, Miss McIntosh.
    The Prime Minister: There is also an issue about whether we increase the amount of investment in our higher education. I do not want to prejudge the proposals, but when we publish them I think that the right hon. Gentleman will see that they will make sure that our top universities are able to compete with the best in the world. I should have thought that he would agree with that. He will see also that the Government will increase the amount of money going into higher education so that, irrespective of their social background, our young people will get the university education that they need.
    The Leader of the Opposition asked me a question, so let me ask him one. [HON. MEMBERS: "No!"] It is just to get him into practice. The Government are committed to increasing university education and the finance for it. Is the right hon. Gentleman now prepared to drop the commitment of the Conservative party, which has refused to match the additional spending? We believe that increased university education can be delivered only with the additional spending that we want.
    Dr. Nick Palmer: I very much welcome the package of measures on fireworks announced by the Department of Trade and Industry, which includes spot fines for offenders who throw fireworks and cause alarm on the streets. However, under the current legislation on this matter—which the Government inherited—such fines can be applied only to people over 18. In Broxtowe, we have cracked the problem of pensioners throwing fireworks at each other. We need legislation to prevent
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    teenagers from doing so. Will my right hon. Friend commit to new legislation to curb the scourge of fireworks?
    The Prime Minister: Yes, is the short answer to that. We will introduce legislation, and we believe that there is also a role for fixed-penalty notices in such cases. Fixed-penalty notices are being piloted in three different areas of the country. They have been immensely successful. The only worry of the police forces that have worked with the orders is that they think that they do not extend to a wide enough category of offences. We are looking carefully at that in terms of the legislation coming up in the Queen's Speech.
    Mr. Charles Kennedy: The Prime Minister said a moment ago that the issue was not top-up fees. Is he saying that he rejects the—[Interruption.]
    Mr. Speaker: Order. I will not tolerate hon. Members shouting.
    Mr. Kennedy: It must be election fever.
    When the Prime Minister says that the issue is not top-up fees, is he saying that he rejects the argument that they would lead to a two-tier university system and deter potential students from lower-income backgrounds?
    The Prime Minister: I agree entirely that any system that prevents people from going to university because of their family backgrounds and income is wholly wrong. That is why I suggest that, when he sees our proposals, the right hon. Gentleman will find that they are in large part about improving access for students from poorer backgrounds.
    Mr. Kennedy: Will the Prime Minister clarify when the much awaited and delayed review of student finance will appear? When it does appear, will he address the concerns of more than 50 Back-Bench Labour Members who have signed a motion along the lines of my opening question? Will he take this opportunity to make it clear to everybody that he will not introduce university top-up fees as long as he is Prime Minister?
    The Prime Minister: First, on the timing of the review, the fact that there is a new Secretary of State obviously means that there will be a further delay in publication of the review. However, I hope very much that it will be published in the next few months.
    Secondly, I stand by the manifesto commitment, but there are serious and real issues that the review must tackle. We cannot allow to continue a situation in which our top universities are not able to compete in what is effectively a world market today. I agree that any solution to this problem is extremely difficult, but it would be irresponsible of any Government, faced with this situation, not to ensure both that we give the universities the freedom that they need to compete and that there is better access for students from poorer backgrounds.
    Obviously, I cannot prejudge the outcome of the review, but I hope that when we come up with those proposals the House will consider them sensibly. People

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    who disagree with them can make some proposals of their own. However, it would be wrong of the right hon. Gentleman and the Conservative party to pretend that there is not a serious problem that needs to be addressed.
    Mr. Khalid Mahmood: Does my right hon. Friend agree that there is no contest in the bid for the European capital of culture? The winner is the city of Birmingham, with its fusion of culture and diversity, where more than 20 languages are spoken, with its festivals of Eid, Diwali, Baisakhi and the Caribbean carnival, and where, of course, Christmas is celebrated. We have, to name but a few, a symphony orchestra, the Council of Faiths, the School of Jewellery, and we have more canals than Venice—
    Mr. Speaker: Order. The hon. Gentleman can praise his native city some other time.
    Mr. Mark Oaten: Does the Prime Minister accept that unless this country joins the euro, Germany and France will continue to dominate, he will have more summits cancelled, and this country will lack influence?
    The Prime Minister: No, I think that we should join the euro if the economic tests are met, and that is the Government's position. If we joined the single currency irrespective of the economic conditions, it would be a mistake. I had not appreciated that that was the position of the Liberal Democrats.
    Mr. Charles Kennedy indicated dissent.
    The Prime Minister: Well, the leader of the Liberal Democrats says that it is not, in which case he is in exactly the same position as me. As for the disagreement with France, it is important that we argue our corner at these summits. Personally, I think that to have ruled out common agricultural reform would have been a mistake—a mistake for Britain and a mistake for Europe
    Alan Simpson: The Prime Minister will know that the United States Secretary of State, Colin Powell, has said that the United Nations must take a decision on Iraq this week. Will the Prime Minister tell the House whether he would support the United States if it chose to conduct a war on Iraq without UN sanction, and whether the House would have the opportunity to vote on that matter and decide whether it would go down the same path?
    The Prime Minister: I do not think that Colin Powell said that the resolution had to be passed this week, but of course it is important that we get a new UN resolution—that is what we are working for at the moment. It is best not to speculate on what might happen if we do not, because I believe that we will get one and it is important that we do. As for debates in this House, I refer my hon. Friend to what my right hon. Friend the Foreign Secretary has said on the issue—
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    obviously, I stand by that entirely. I am sure that the House will have the fullest possible chance to debate that issue.
    Mr. Simon Thomas: Following the question from the hon. Member for Nottingham, South (Alan Simpson), will the Prime Minister tell the House and the country what moral difference he sees between those UN resolutions that bind Israel and Palestine and those that bind Iraq, and how that judgment will affect his decision making in the forthcoming months?
    The Prime Minister: I will tell the hon. Gentleman what the difference is. First, it is important to point out that the resolutions in respect of Israel and the middle east peace process apply to all the parties in the middle east, and to recognise Israel's difficulty when it is being met by terrorist acts from within the occupied territories. Secondly, I hope that he will realise, as I do, that United Nations resolutions in respect of Iraq—specifically, on weapons of mass destruction—should be obeyed. If he does agree with me on that, he must obviously face up to the issue, which is what we should do if Saddam Hussein refuses to abide by those resolutions.
    To revert to the middle east peace process, having said that about UN resolutions in respect of Israel, I still believe that those resolutions should be obeyed in full; and I very much hope and believe that it is essential, not just for the middle east but for the wider world, that a peace process be restarted there as quickly as possible.
    Mr. Eric Joyce: The Prime Minister will be aware that today is national breast cancer awareness day. Will he join me in commending the efforts of the organisers of the "walk for a cure" event in Falkirk, which raises funds locally for breast cancer charities, and in congratulating the national breast cancer charities, such as Breakthrough Breast Cancer, for their efforts in this area, which are so important to so many of our constituents?
    The Prime Minister: I congratulate all those who have been involved in the breast cancer awareness campaign. As my hon. Friend knows, 97 per cent. of patients with suspected cancer are referred to a consultant within two weeks. There has been a significant increase in the number of people in the national health service working on those issues and, although we obviously still have a long distance to go, there is no doubt at all that the treatment of cancer in this country is improving.
    Mr. Michael Jack: I should like to ask the Prime Minister a question about CARATs. He will be aware that the Counselling, Assessment, Referral, Advice and Throughcare scheme is an extremely successful prison-based programme, designed to break the link between the prisoner and drugs prior to release, but that not all prisoners who want to take part in the programme can do so. Will he look at the question, from within the existing prison budget, to

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    ensure that adequate resources are available to enable all prisoners who want to take up CARATs programme to benefit from its outcomes?
    The Prime Minister: That is a very good point. It is important that we extend the programme throughout the prison system. Sometimes that is difficult, as there is obviously a limit on the amount of resources available, but the right hon. Gentleman will know that, over the past few years that the programmes have been extended, there has been far more focus on both drug abuse within prisons and getting offenders off drugs and therefore less liable to reoffend when they leave prison. The new national treatment agency for drug abuse is working with the police, the prison authorities and others in order to ensure that we have the best possible programmes, and not only within the prison system.
    What is important is that, at least in the highest crime areas. we look at—as the Home Secretary is doing—how we can ensure that we end the absurd situation when someone can be arrested for an offence, tested positively for drugs and then put back out on the street without even the prospect of proper drug treatment. We need to explore that issue not only within the prison system but outside as well.
    Tony Wright: Could I ask the Prime Minister to tell us exactly how rude he was to Mr. Chirac? Did he remind the French President that if he was not in the Elysée he would almost certainly be in jail? Could I urge my right hon. Friend to be as rude as it takes to get Europe to sort out the idiocy of the common agricultural policy, which British consumers are paying for with their wallets and which the poor of the world are paying for with their lives?
    The Prime Minister: On the first point, I have to say that, no, I did not say that to the President. If that is a bid for a diplomatic post, it is certainly one of the more unusual ones.
    My hon. Friend's point on the CAP is important. That was why it was important to preserve the prospect of real and detailed agricultural reform. I wholly understand why the French position is different, but this is not just a British priority; common agricultural reform is important for Europe. We have managed to reduce the amount that we spend on agriculture from 60 to 45 per cent., but truthfully, if we look at the money that we are spending in the European Union, we could spend it better if so much was not still being spent on the common agricultural policy, often very inefficiently—even for the farming industry.
    The other issue, which I think my hon. Friend implies, is that it is extremely important to ensure that at the world trade round we make a good offer from the European Union for the developing world. Those are the poorest countries in the world, they desperately need access to our markets, and we should not let them down.
    Mr. lain Duncan Smith: Have 24-hour waits in accident and emergency departments been eliminated?
    The Prime Minister: No, they have not been eliminated but they are significantly down, I think is the answer.
    Mr. Duncan Smith: The Prime Minister should check what his Department of Health is saying. It states categorically that the 24-hour waits have now been eliminated, so clearly the Prime Minister does not even believe what his Department is saying. But this week the BMA said that one in five A and E departments actually has patients waiting for more than 24 hours. Whom should we believe—the Government or the doctors?
    The Prime Minister: What the Government said was that the very long waits for admissions—more than 12 hours—are down, and it is also correct that, I think, just under 80 per cent. of patients are seen within four hours, but it is right to say that there are still far too many too long waits in accident and emergency. I would accept that entirely, but the BMA proposals for changing the situation are threefold: first, that we should have more consultants in A and E; secondly, that we should have more nurses; and thirdly, that we should have more beds. As a result of the additional funding in the health service, there are now 100 more consultants; there are 600 more nurses just in the last year alone; and there are 700 more acute beds. The solution to the problem, therefore, is to put more money into the health service, not less. That is why, with very great respect, we can take criticism from the BMA over this, but the one person who is not in a position to criticise is the right hon. Gentleman, because he is in favour of scrapping the investment that we need.
    Mr. Duncan Smith: The Prime Minister is all over the place. His own Department said on its website today that waits of more than 24 hours have been eliminated, so they either have or they have not. If they have not, his Department should not go putting it up on its website. The reality is that, as the Prime Minister must know, two thirds of A and E consultants say that the health service is not getting better—in fact, it is getting worse. Whom should we believe—the spin doctors or the real doctors?
    The Prime Minister: Actually, if the right hon. Gentleman looks at the BMA report, it is indeed true that it says that more than a third of the consultants say that things are getting worse and that just over a quarter say that they are getting better. However, as I told him a moment or two ago, they also point out that there are now some 400,000 more people being treated in accident and emergency departments; they therefore say that the Government's record means that we have to put more investment into the beds, the doctors and the nurses. I repeat: whatever the solution to the problem to which they rightly draw attention, the solution is not to cut the funding that they need.
    Mr. Martin Caton: Just before the summer recess, the Government agreed to pay compensation to the families of young Kenyan tribes people killed or maimed by British munitions at the

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    Dol Dol and Archer's Post army training grounds in Kenya. I congratulate the Government on making that settlement, rather than taking those people through the courts, but can the Prime Minister now assure me that clean-up procedures have been put in place so that there will be no more victims of British munitions either in Kenya or elsewhere in the developing world?
    The Prime Minister: We have done what we can to make sure that there is proper regulation regarding the control, conduct and supervision of people while using Army ranges. My hon. Friend, who has taken a deep interest in this issue, will also know that we have settled some 200 cases. It is important that we do more, and we are doing more. The Ministry of Defence is now considering the remaining cases, and I hope very much that this situation will be cleared up, not just to his satisfaction, but, more importantly, to the satisfaction of the families of those who are serving in our armed forces.
    Mr. Henry Bellingham: Will the Prime Minister find time today to have a look at the case of my constituent, Mr. Frederick Matthews of Heacham, who is suffering great pain and inconvenience as the result of a haemorrhage in the pupil of his left eye? There is a clinically proven treatment and his doctor wants to treat him, but the local hospital has said that the NHS will only fund it if he goes blind in the other eye. Is that not madness? Is it not very hard on my constituent? Will he look at the policy affecting Mr. Matthews and hundreds of other people? Does he recall that when he came to see us during the election campaign he said that, under Labour, the NHS would get better? Is he surprised that Mr. Matthews does not now believe him?
    The Prime Minister: On the particular case of the hon. Gentleman's constituent, of course, I cannot comment, but I am perfectly happy to look into it. However, on the general point about the national health service, of course the Conservatives will say that it is getting worse. [Interruption.] Of course they will, because they are against it. They want to use whatever problems there are in the national health service to say that it is a flawed idea whose time has gone.
    What I would say to the hon. Gentleman is yes, of course there are still big problems in the health service, but massive investment and improvement are also going on. The vast majority of people get good treatment in our national health service, and it is an insult to doctors, nurses and those dedicated staff of the health service always to pretend that everything is going badly. There are problems—we are working on them—but the national health service is actually improving.
    Mr. Gwyn Prosser: My right hon. Friend will be aware that the Budget 2000 crackdown on big-time smugglers has reduced cross-channel smuggling by 76 per cent., and has cut associated crime. Will he join me in applauding the hardworking Customs officers at Dover and condemning those parts of the press that seek to undermine their efforts?
    The Prime Minister: I certainly welcome the work that Customs officers do in my hon. Friend's constituency
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    and other constituencies up and down the country. They often work under very difficult and trying circumstances. It is important, of course, that we make sure that they operate under sensible rules, which is why the Treasury announced changes the other day. Let me say to my hon. Friend—and through him to his constituents—that we applaud the hard work done by Customs officers, which is necessary because of the problems of smuggling.
    Mr. Patrick McLoughlin: What message would the Prime Minister give to farmers in my constituency who have seen their income substantially decline since he has been in office? Is that decline caused by his growing influence in Europe?
    The Prime Minister: It is, of course, correct that farm incomes have dropped, but not just in this country. It is also the case that many farmers face severe difficulties. They will not be helped out of those difficulties, however, by the hon. Gentleman pretending that somehow there was an easy and magical solution. They have been hit by two things: by BSE and foot and mouth disease, and by the fact that world commodity prices have dropped. Let us remember that we are putting more money into the farming industry than into the rest of British industry put together, and the only way in which to provide a viable future for farming is to continue putting in that money and support, and to try to make sure that agriculture changes over time. That is why the best way forward is to implement the proposals of the Curry commission, which we set up, on the future of farming. It will not help any part of the farming community, however, to pretend that a magic wand can be waved and all its problems will disappear.
    Mr. Stephen Pound: I am normally reluctant to raise the issue of antisocial behaviour, but it is a subject of which I have some knowledge. In view of the success of the four area trials of on-the-spot fines for hooligans, does the Prime Minister plan to extend the scheme throughout the country, including my constituency?
    The Prime Minister: We certainly have plans to roll out the scheme across the country. I am sorry if the Conservative party is opposed to those plans—I think that it is—as it would be making a very big mistake. The plans will be enormously popular with the police and with local communities, because the essence of tackling antisocial behaviour is to provide the police with a simple way of enforcing the law and penalising those who break it. The whole purpose of fixed-penalty notices is to get round some of the bureaucracy associated with the court processes and so on, and to provide a simple and easy remedy for the police to use. Not only do we believe that the scheme should be rolled out across the country, but we are looking at how the powers and penalties can be extended, as the principle applies to dealing with antisocial behaviour in many forms.
    Mr. Edward Davey: On the eve of the urban summit, does the Prime Minister agree with the Deputy Prime Minister that Britain's building industry is
    "the most inefficient in the world"

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    and a major cause of Britain's affordable housing crisis? Even if he does share that extreme view, should not his Government take more blame for five years of ineffective housing policy rather than scapegoating others for Britain's affordable housing crisis?
    The Prime Minister: We are putting an immense amount of money into housing, as the hon. Gentleman knows. The important thing is that the building industry faces real challenges in relation to skills and the use of land. If he listened to the statement that my right hon. Friend the Deputy Prime Minister made before the summer break, I hope that he would realise that the answers to the housing issue lie in many different facets. One of them is to make sure that our building industry and the private construction industry build the houses
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    that are needed in particular parts of the country, such as the south-east. I hope very much that he will support that policy rather than oppose it.
    Lynne Jones: Does my right hon. Friend the Prime Minister want higher education to get its fair share of the 6 per cent. growth money allocated to the Department for Education and Skills?
    The Prime Minister: Of course I do. That is why it is important to realise that, as part of the proposals, we will put additional sums of money into higher education. That is the position of this Government, who want to invest in higher education. The Conservative party is, of course committed to cutting the education money that we have got. [Interruption.] Oh, yes: it is committed to cutting education money, not just for universities but for schools as well.

    Points of Order
    3.30
    Mr. Roy Beggs: On a point of order, Mr. Speaker. In reply to a question from me, the Minister of State, Northern Ireland Office, the hon. Member for Liverpool, Wavertree (Jane Kennedy), said that
    "extensive consultation … showed almost universal support for the abolition of the 11-plus Transfer Tests"—
    in Northern Ireland—
    "and a predominant view that academic selection should be ended".—[Official Report, 28 October 2002; Vol. 391, c. 513W.]
    I regret to say that, by providing that answer, the hon. Lady misled the House. I have already advised her office of my intention to raise the matter today.
    If you, Mr. Speaker, were to read the Department of Education report on the responses to the consultation, you would find that only 57 per cent. of 200,551 household responses received by the Department supported the abolition of the transfer test, with 32 per cent. disagreeing and 12 per cent. undecided. Fifty-seven per cent. can hardly be regarded as, to use the Minister's words, "almost universal support".
    On the question of whether academic selection should he ended, according to the Department of Education report—
    Mr. Speaker: Order. I get the feeling that the hon. Gentleman is making a speech. The Minister will have heard his points, but they are not a matter for the Chair.
    Mr. Beggs: Further to that point of order, Mr. Speaker. The evidence that I have indicates that the House has been misled. I request that you, sir, invite the Minister to come to the House to make an apology and clarify her interpretation of very clear results.
    Mr. Speaker: I have no such powers, but the Minister will be able to take note of what the hon. Gentleman has said.
    Dr. Julian Lewis: On a point of order, Mr. Speaker. Have you noticed that, because of the rescheduling of the provisional business that was due for this afternoon—the debate on home defence—tomorrow there will be a debate on home defence in the House and a debate on the foreign policy aspects of terrorism in Westminster Hall? There is, as you know, great concern among hon. Members on both sides of the House about those two closely interrelated topics. Is there anything that you can do to advise those who prepare the business of the House that in future such a clash should be avoided?
    Mr. Speaker: No, but the hon. Gentleman can certainly approach the Leader of the House.

    Patient Choice
    3.33pm
    Mr. Peter Lilley: I beg to move,
    That leave be given to bring in a Bill to reinstate a patient's right to choose the hospital in which to receive treatment within the National Health Service.
    I want to restore choice not just because it is a good thing in itself and not just because patients increasingly want to exercise choice over where, when, how and by whom they are treated, but above all because choice is the dynamic force driving up improvements in quality and efficiency. In every service where the user has a choice between alternative suppliers, the less-good, lower-quality supplier has to emulate the quality of the best or lose users and revenue.
    That is why there is a continual dynamic for improvement in those services. Sadly, that dynamic no longer exists, to the extent that it ever did, within the national health service. Even though the Government are putting 30 per cent. more in real terms into the health service, it has not resulted in commensurate improvements in quality or quantity of care. Scarcely any more in-patient operations are carried out now than in 1997 and there are scarcely any shorter waiting lists now than in 1997. In addition, we have more serious problems, which are growing more rapidly, of infections and quality of care in our hospitals than on the continent.
    The Bill proposes to reinstate the right to choose the hospital in which people are treated. I say "reinstate" because the right to choose the hospital always existed within the NHS; sadly, it was unintentionally restricted by measures, including those introduced by my Government. Unforgivably, however, the last rights of choice were eliminated by circular 117, which this Government introduced in 1999. Since then, any patient must go to the hospital where their local national health service bureaucracy is committed and contracted to send them. The director of the College of Health said that as a result of that circular there is less choice in the health service now than has ever been the case in its history.
    Patients can no longer choose to go to a hospital with shorter waiting lists or waiting times. Constituents of my hon. Friend who represents the Southampton area and my hon. Friend the Member for Bexhill and Battle (Gregory Barker) have to wait 16 weeks and 24 weeks respectively for radiotherapy. They cannot choose to go to Bournemouth, where there are almost no waiting lists. Patients cannot choose to go to a hospital where there are better health outcomes. Patients in my constituency are contracted to be sent to a hospital that had the worst outcomes for hip operations. One in six of those treated for an emergency hip operation died within 30 days of the operation and could not choose to go elsewhere.
    It is not possible for a patient to choose to go to a hospital that he believes is cleaner or has fewer cases of methicillin-resistant Staphylococcus aureus—M RSA—infection. Sadly, the sixth-worst hospital for that is near my constituency. Patients cannot choose to go to a hospital near their relatives, even if it treated them when they lived in the area, or to a hospital with single-sex wards.

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    The Bill would repeal that circular and restore the right of patients to choose which NHS hospital they attend. Patients need more than that, however. They need information, especially on waiting lists, so that they can make informed choices. That information is collected by the College of Health on the national waiting list helpline, but the Government refuse to publish it. I agree with the right hon. Member for Birkenhead (Mr. Field) that it should be published and available in every hospital waiting room and on a website, which he categorises as easyop.com.
    Information about health outcomes should be available, preferably on the basis of the pre-operative condition of the patient. We should allow for that variable, as they do in the United States, so that people can assess the success rate of different hospitals and different surgeons. Information about infection rates should be more readily available. Although that is now being made available, until recently my health service did not discuss or report it at its management meetings.
    We also need a diversity of suppliers. We need genuinely independent trusts that are not micromanaged centrally with the objective of uniformity. We also need other not-for-profit hospitals, such as charitable hospitals, and new enterprises, although they would need to meet the cost levels set by the NHS. Above all, taxpayers' money must follow patient choice. That empowers choice by rewarding and reimbursing hospitals that treat patients and ensures that the successful and popular hospitals do not run through their budgets before the end of the financial year and have to close, as was the case.
    I congratulate my right hon. Friend the Leader of the Conservative party on sending the health team to other countries to see their successful health services. I am sure that the common feature that they will have discovered is that patients have choice; they have the knowledge to make an informed choice; there is diversity of supply; and patients' money, the taxpayers' money, follows their choice.
    When I published these ideas some while ago in an excellent booklet, available from my website for free or from Demos for £6.95, the Government ridiculed them and said that if patients were given back choice, they would be racing up and down the country looking for
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    better hospitals or shorter waiting lists. Now, of course, the Government are sending patients racing around the Mediterranean looking for the same things.
    The Government published a White Paper on involving patients in health care, which spoke of committees and consultation but did not even mention the word "choice" or the idea of giving choice to patients. Now, belatedly, the Government are trying to adopt the rhetoric of choice. I would welcome that if it involved any substantial change, but so far they have simply said that if people are still alive after they have been on the waiting list for a heart operation for six months, they will be allowed to choose another hospital that can do the operation more quickly than the one whose waiting list they are on.
    The Government have created a massive new bureaucracy to supervise that. A whole new tier of officials will mediate between a patient's GP and consultant and then talk to the patient to decide whether he or she is suitable to be given choice and, if so, where and how it can be exercised. The individual and his or her GP no longer make that choice.
    My Bill will restore choice and give patients the information to make an informed choice. There will be diversity from which they can make their choice, and taxpayers' money will follow patients' choice. Choice is not a panacea; on its own it is not a sufficient remedy, but it is essential if we are to have a reformed health service that takes advantage of the extra resources available to it by improved quality of care. I commend my Bill to the House.
    Question put and agreed to.
    Bill ordered to be brought in by Mr. Peter Lilley, Sir Patrick Cormack, Mr. Frank Field, Alistair Burt, Mr. Christopher Chope, Mr. Michael Portillo, Mr. Andrew Tyrie, Mr. Gregory Barker, Mr. David Cameron, Mr. George Osborne, Mr. Mark Prisk and Mr. Andrew Turner.

    PATIENT CHOICE
    Mr. Peter Lilley accordingly presented a Bill to reinstate a patient's right to choose the hospital in which to receive treatment within the National Health Service: And the same was read the First time; and ordered to be read a Second time on Thursday 7 November, and to be printed [Bill 199].

    Prevention and Suppression of Terrorism
    3.43 pm
    The Secretary of State for the Home Department (Mr. David Blunkett): I beg to move,
    That the draft Terrorism Act 2000 (Proscribed Organisations) (Amendment) Order 2002, which was laid before the House on 28th October, be approved.
    The Terrorism Act 2000 came into force on 19 February last year. My right hon. Friend the Member for Blackburn (Mr. Straw), the Foreign Secretary, laid orders for proscription on 21 groups on 28 February last year which were approved by this House. Since then no other groups have been proscribed, but a close watch is being kept on groups, including those looking to reconfigure and rename themselves.
    I want first to state that there is no party political difference between us this afternoon, and I am grateful to the right hon. Member for West Dorset (Mr. Letwin), the shadow Home Secretary, for indicating to me issues that may prove appropriate for Privy Council briefings. I need to say now that there is information to do with the time for which particular groups have been monitored and the knowledge about their meetings and base which we would be happy to offer on Privy Council terms. Obviously, there will be questions about whether that is the earliest point at which groups may be proscribed, and I am happy to deal with them. Having moved the motion on proscription, I hope that the whole House will back us.
    I do not intend to repeat the long discourse that we had a year ago, or even the statements made since the attack in Bali, as Members are well aware of events, including the escalation that has changed the position radically, as well as the behaviour since 11 September 2001 of al-Qaeda and its offshoots—its network of cells and the loose confederation of those who are not part of its central core but who are prepared to support and help it. We must respond, monitor what groups are doing, how they relate to one another, and how their support systems, including funding, work.
    People's heightened awareness since 11 September last year has been reinforced by the tragic deaths in Bali and other events. However, security and intelligence services of countries across the world have been able to intervene and are on record as having done so to save communities from threat. It is in the light of those attempts, not just the events that led to loss of life, that we have moved the motion this afternoon. My right hon. Friend the Secretary of State for Transport today answered a parliamentary question about a review that he and I set in motion—we asked Sir John Wheeler to investigate security levels at our airports and the way in which that related to wider security issues. We obviously take that review seriously and its general conclusions have been published this afternoon. Again. I would be happy for Opposition Members to see more detailed information on Privy Council terms. The House would expect us to act immediately on Sir John's recommendations on security tightening, and we have done so. I and my right hon. Friend are grateful for his work. We owe him a debt of gratitude.
    Andrew Mackinlay: I am grateful to the Home Secretary, and listened carefully to what he said
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    about security at our airports. I would wish to share information on Privy Council terms, but unfortunately I am not a Privy Councillor. However, I am concerned about our seaports, which are largely unpoliced, with the exception of my port—Tilbury—Felixstowe, and Tees and Hartlepool. Many of us are deeply concerned that our seaports are porous—I think that that is the word—as people are coming in. The immigration authorities, Customs and Excise and the police force are simply not there to provide the necessary cover. I hope that the Home Secretary will reconsider, along with my right hon. Friend the Transport Secretary, creating a national dedicated police force for our seaports.
    Mr. Blunkett: Following the work on airport security and its relationship to air travel from airports across Europe and the world—an important factor in making our population and people travelling to our country secure from the threat of terrorism—the Transport Secretary has already told me that he is taking a close look at strengthening the present arrangements spelt out by my hon. Friend, which consist of various forms of policing, including port health and environmental health programmes. That has been drawn forcibly to my attention.
    We are also interested in putting in place technological surveillance equipment to tackle a wider threat—not simply people entering the country, but materials as well. I make that clear in case anyone who is contemplating terrorist acts or trying to get material into the country is under the misapprehension that we are not taking the necessary steps. We also want to stress, as Sir John did, the importance of people working in and around airports and our ports being vigilant—not merely those who are on policing duties but those going about their usual business.
    The report that we are putting in the Library this afternoon demonstrates that we need to tighten all forms of security, not just the obvious ones. It also behoves us to ensure that the public exercise the greatest vigilance. We need to keep our routes in and out of the country open and free. That is critical for the free movement of people, goods and commerce. It is critical that we are not damaged economically or socially, and that those who are determined to perpetrate terrorism do not get an opportunity to disrupt the lives of the nation.
    Mr. Roy Beggs: Does the Home Secretary agree that those who have hitherto enjoyed freedom and rights of way through our ports nationally must now accept that, in the interests of security, rights of way may be re-routed?
    Mr. Blunkett: Wherever there is perceived to be a credible threat, steps will be taken to ensure that people are re-routed or that diversions are put in place to secure the well-being of the public. If there is a specific concern that the hon. Gentleman would like to draw to my attention or to that of my right hon. Friends, I shall be happy to take it forward.
    Simon Hughes: My right hon. and hon. Friends will support the order. I hope that that is a helpful early indication, and I hope that the Home Secretary will feel able, at the appropriate

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    time, to include my right hon. Friends, or me, or an appropriate combination, in the briefings. That would be appreciated, and it would be helpful.
    Has the right hon. Gentleman further considered the Select Committee's recommendation of a common border force at our airports and seaports? Given the frequency of concern about security at our ports over the past two years, that seems a strong case well made that merits further attention from the Government.
    Mr. Blunkett: None of us would dismiss thoughtful contributions on how best to achieve that. There are wider issues of co-operation between the various law enforcement and security agencies, which the Prime Minister, my right hon. Friends and I are examining. I am yet to be convinced that the establishment of another force with another bureaucracy is the right way of achieving the objective. That has a wider read-over to issues that the hon. Gentleman has raised with me before in relation to a European joint border force. Although I have moved policy on to indicating that we would contribute to that, we are not in favour of some centralised administration that would undoubtedly lead to more people being employed in managing it than in securing our borders. I am happy to continue exploring the best way of achieving the common goal.
    I am grateful for the hon. Gentleman's indication of support. We need to ensure that we are open to scrutiny and that we will answer necessary questions. I have indicated to him and his colleagues over the past 15 months a willingness to ensure that we share the maximum number of facts and the greatest amount of information, and I will continue to do that.
    Today, I am asking the House to proscribe a further four organisations, in addition to the 21 that I mentioned earlier. Those four have discernible links with al-Qaeda. Following a number of recent attacks, including the one in Bali, international co-operation and the coherence of evidence and information from security and intelligence services across the world have indicated those links more clearly. That is primarily the answer to the question why we have not banned at least one of those groups, Jemaah Islamiyah, before. The evidence base, the links that have been established, the information from security services, and information that has emerged from other events over the past few months have provided a conclusive case that they are involved with and are part of the broader federal network of al-Qaeda. Of course, evidence has emerged since the tragedy in relation to suspected direct links with the bombing.
    Since 11 September last year, we have been working closely with all those seeking to fight terrorism. We have learned even more from the bombing in Bali and want to ensure a sustained and coherent approach. That is why we are linking the four proscribed groups together. Last Thursday, on the back of action taken through the United Nations, my right hon. Friend the Chancellor of the Exchequer and I issued further guidance and took further measures in relation to the freezing of assets and the movement of funds. The Proceeds of Crime Act 2002 will clearly help us in that regard and make it easier to monitor and take action, and we will take whatever further steps are necessary.
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    The proscribed organisations fall within criteria of which it will be useful to remind hon. Members. They are specified in the definition of terrorism provided in the Terrorism Act 2000, which refers to those who commit or participate in acts of terrorism, prepare for terrorism, promote or encourage it or are otherwise concerned with it. The factors spelt out alongside the original decision a year last February were as follows: consideration by the Home Secretary of the nature and scale of the organisations; the specific threat to the UK or British nationals overseas; and the presence and support of the international community. It is the support of the international community and the threat to our citizens overseas that we have weighed very carefully indeed, along with other factors, in proscribing the four groups.
    The proscribed groups are Jemaah Islamiyah, or JI, with which we are familiar in relation to allegations made about the bombing in Bali; Abu Sayyaf, a group based in the Philippines; the Islamic Movement of Uzbekistan, which has links with those whom we believe were involved in the hostage taking in Moscow; and Asbat Al-Ansar, which is based in Lebanon. Attached to the order is an explanatory memorandum that has been available to hon. Members, setting out the reasons why those groups meet the specific criteria and match he factors to which I referred.
    Proscription sends a signal. It allows us to deal swiftly with those associated with groups that are committing terror across the world, whether they are members of them or provide support to them. It provides a coherent approach involving the UN and other international partners in seeking to attack and undermine terrorism, and it is also part of the mutuality and solidarity that we have expressed in the House on a number of occasions.
    David Winnick: Does my right hon. Friend accept that many of us take the view that such action as has been taken, as well as that being taken today, has been long overdue? He may recall that I asked him and his predecessor in the Select Committee on Home Affairs about allegations made over the years by countries such as Egypt that Britain has been a safe haven for terrorism. I know that successive Home Secretaries have denied that that is the case. Our country should not be a safe haven of any kind for those who aim to engage in terrorism and destroy lives, as has happened so recently in Indonesia.
    Mr. Blunkett: I agree with my hon. Friend. Whenever evidence is presented, my colleagues and I will act. That is why we are taking action this afternoon; it is also why, after passing the Terrorism Act 2000 and the Anti-terrorism, Crime and Security Act 2001, we need to be not only vigilant but prepared to act whenever necessary. I respect the points that hon. Members have made.
    As I said previously, we need evidence. It would therefore be helpful if, when countries or their agencies make allegations, instead of doing so through newspapers, they presented us with evidence. It would also be helpful if newspapers checked the credibility of the allegations. Their publication creates an atmosphere of fear and undermines the confidence and morale of those who are at the cutting edge of our actions to combat terrorism. I repeat that I have every confidence

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    in this country's security and intelligence services, which do a first-class job. Long may that continue. Like us they are learning all the time.
    On the speed in making decisions about specific groups, I stress to the shadow Home Secretary that there is no special wisdom in government. We take the evidence that is presented, and respond at speed when people are prepared to provide verifiable evidence. If hon. Members from any party have evidence. I am happy to consider it. Some hon. Members present evidence constantly, and we check the difference between the loud-mouthed extremists who endeavour to provide diversion but, although undoubted irritants. require evidence to show that they are a threat, and those who do not clearly spell out their views or identity precisely because they constitute a greater threat and need to be taken more seriously.
    In our democracy, a right of appeal exists. An appeal is made first to the Home Secretary. If he confirms the banning order, a further appeal can be made to the Proscribed Organisations Appeal Commission. I do not imagine that many people outside the House have heard of it, but it exists.
    Mr. Douglas Hogg: Does the Home Secretary accept that the commission approaches the matter on the basis of the principles that apply to judicial review and therefore does not review the merits of the original decision?
    Mr. Blunkett: The commission has to review whether the criteria and the definitions that were debated in 2000, and when the first batch of proscriptions were made in February 2001 apply, and whether the Government and the Home Secretary properly exercised their power. That is fair, given the nature of the threat. We take time to ensure that we accumulate evidence. That is why we did not jump to proscribe only one organisation in the immediate aftermath of Bali. We wanted to have some coherence about the network of links with al-Qaeda, the evidence that could be adduced and the international position.
    We want to secure the confidence of the community and the backing of the House, and ensure that we use intelligence to tackle such groups and all their aspects, including support, fundraising, links abroad, thus making it more difficult for al-Qaeda to wreak terrorism across the globe. We take action irrespective of the creed or nationality of those involved. As hon. Members will realise, a variety of groups, which are based in different parts of the world, are linked in a loose federation to those who are determined to take away our freedom and well-being. I am glad that we appear to have the House's wholehearted support in tackling those cells and that network.
    4.4 pm
    Mr. Oliver Letwin: The Opposition welcome and support the measures that the Home Secretary has taken today. I hope that nothing that I ask will be perceived as detracting from that support. I am also aware that the Home Secretary, and any occupant of that office, bears a heavy burden, and that it is difficult to discern reality from phantoms, or to know how best to proceed even when reality appears to have a certain
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    shape. I am conscious that it is difficult—indeed, impossible, in some cases—to disclose the basis for some of the decisions that are made. That is a natural feature of this area of our national life.
    Within the limits of those constraints, I have given the Home Secretary notice that I want to probe the question of the timetable that led to the proscription of Jemaah Islamiyah today rather than at an earlier date. I wish to do so not because that has any practical import today—after all, the Home Secretary has now proscribed it, and we welcome that—but because it will help to illuminate whether the system as a whole and the legislative framework that backs it are working as well as we would mutually hope.
    I am extremely conscious that it is of great importance—as I hope the Home Secretary and the spokesman for the Liberal Democrats will agree—that we continue to have a framework within which there is a system of appeal, to which the Home Secretary rightly referred. Of course, if there is such a system, it will be necessary for the Home Office to accumulate reasonably robust evidence—albeit disclosable only in camera—before making a decision to proscribe, because otherwise the commission would overturn the proscription. I utterly accept, therefore, that there will inevitably be delays that would not occur if we were operating a system of proscription by fiat without appeal. I would be the last person in the House to suggest such a system. Indeed, the Home Secretary and I have had debates in the past on other matters in which I have been keen to strengthen the system of appeal, so I recognise the obligation on us to accept that there will be delays as a result of the appeals system.
    Nevertheless, the question arises as to why this has taken so long, and I want to ask five particular questions about that. First, how long has it been known, or guessed, by the security services that there was a link between Jemaah Islamiyah and al-Qaeda? Secondly, was it known that JI was active in Thailand at the beginning of the year, as has been reported? I do not know whether those reports are accurate; I am merely asking whether that was known. Thirdly, how long has it been known that the Indonesian authorities believed that JI was connected with the terrible events that took place there at Christmas 2000? Fourthly, what liaison was there between our agencies and the Singaporean authorities when or after the Singaporean authorities detained a considerable number of suspected JI agents—13, I think—in December 2001? Finally, when the Government of the Philippines detained nine people—in May 2002, I think—alleged to be connected to JI, did that Government inform our security apparatus of the basis on which they were proceeding? If so, why did that not lead to proscription at that stage?
    I re-emphasise that none of this had an unhappy result for Britain. There is no reason to suppose, for example, that the bombings in Bali would have been less likely to occur had proscription occurred earlier. I do not believe that any adverse practical consequences have flowed from the delay, and the Home Secretary has now taken the step that needed to be taken. No blame attaches either to him, to the Home Office or to the security services. I am grateful to him for making the offer to explain this matter in further detail on other terms. It is important, however, for the House—and perhaps, in due course, the Intelligence Committee—to

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    understand whether the system is capable of responding as fast as the quite proper legal restraints enable it to do. If the Home Secretary can reassure us, now and later, on that point, he will have our backing not only today but, as we move forward, for the continued operation of a system that is certainly much better than no such system.
    4.9 pm
    Andrew Mackinlay: I shall not detain the House, because a number of hon. Members want to speak in this brief debate. I want to pick up on and amplify the matter that I raised in an intervention on the Secretary of State, and to raise a further issue.
    I am deeply concerned about these and other terrorist groups, the growing menace of human trafficking and the likelihood of terrorist materials coming in through our sea ports. The Home Office—I am not referring to the Home Secretary himself—and other agencies do not sufficiently appreciate the nature of our sea ports. I represent the port of Tilbury, which is a secure port with it own dedicated police force, and very professional it is too. Incidentally, it celebrated its bicentenary this weekend. I am proud of the force, which is part of a much wider Port of London police force, which has now gone into decline.
    In decades past, some ports were policed by the British Transport police, but only a few ports—Tilbury, Felixstowe, Tees and Hartlepool, one on Merseyside, Lame, Belfast, Dover and perhaps a few others—have a dedicated police force. Those forces are very professional, but in many other sea ports and wharfs, including some in my constituency outside the port of Tilbury, boats come in every day. I am convinced that, day after day, people get off those boats and come into the United Kingdom unchallenged, because the immigration authorities and Customs and Excise are not present and there is no dedicated police force.
    I note what the Home Secretary said in response to the hon. Member for Southwark, North and Bermondsey (Simon Hughes) about the concept of a wider border authority for the European Union, and I am with the hon. Gentleman on that. That issue has wider implications and should be raised in a summit. I urge the Home Secretary to discuss with colleagues in his Department and across Departments the need for a dedicated national police force along the lines of the Ports Canada police and the coastguard in the United States of America. Such a force should operate in the United Kingdom. How would it be paid for? That is always the grubby problem. A small charge on each container going into our ports and a small nominal charge on each passenger passing through them could sustain an effective ports police.
    Such a force would not be instead of Customs and Excise, the immigration service and other agencies, but would buttress them. It would provide a safety net and could develop skills and expertise, and use the technology to which the Home Secretary referred. That technology is being introduced at good ports, because the port managements are investing in it. The port of Tilbury has done a great deal, and is using some wonderful technology, which I do not understand, that can see inside containers. It can prevent human
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    trafficking, terrorism and the other crimes that take place in our ports. That is not happening in some of its competitor ports. There is an issue of fairness and competition. All ports in the United Kingdom should have the same standards of integrity when combating crime and terrorism. I hope that the Home Secretary will think about that—I could amplify those ideas further in a meeting if that would be useful.
    The Home Secretary referred to this technology in the summer. I would have tabled some parliamentary questions had we been sitting, but we do not yet sit in the summer. There was a report of radioactive material coming through the port of Felixstowe. Funnily enough, it was eventually stopped in Tilbury, although it was nothing to do with the port of Tilbury. The technology worked, but the human response failed.
    Mr. Speaker: Order. This order refers to four terrorist organisations, so it is narrower than the point that the hon. Member is making.
    Andrew Mackinlay: I fully accept and abide by your ruling, Mr. Speaker. In my defence, I should say that it was the Home Secretary who referred to the technology at ports, not me. I noted that, because I thought that you might call me to order. He was the guilty man, not me, but I shall move on. The Home Secretary might know of the incident to which I refer. I realise that the question of security is involved, but I would welcome the opportunity to talk to him or his colleagues about this issue.
    I have discussed in the Foreign Affairs Committee and with the Foreign Secretary my great anxiety about the presence in our scientific postgraduate institutions of members of groups such as those that are the subject of this order who are studying doctorates. The scientific community in this country is transient. It is a high-income earner for the United Kingdom, and long may it flourish, but all the indications are that our security and intelligence services and academia have not the foggiest idea who some of these people are. That constitutes a great void in our security and intelligence services, and I hope that the Home Secretary will refer to it. The organisations mentioned in the order could well have people working at the University of London, in Bloomsbury, at Imperial College, or at other of our great and proud institutions. Such people might be working on proper research 95 per cent. of the time, but what we do not know is what they are doing during the ether 5 per cent., and what they have kept in the back of he fridge.
    4.16 pm
    Simon Hughes: I told the Home Secretary and the House that my colleagues and I will support the order in this House, and in the other House later today. Given that this is the first debate on this issue for more than a year, it is appropriate first to join Ministers and others by reaffirming our solidarity and sympathy with the huge number of people who, since we last debated proscription and terrorist organisations, have suffered at the hands of terrorists. Atrocious numbers were killed in the United States in the late summer of last year. According to the latest figures, 184 people were killed in Bali just a couple of weeks ago, of whom 14 were UK

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    citizens, and according to research carried out by my assistant with the help of our very good Library staff, the intelligence suggests that other terrorist activities that took place between 11 September last year and the Bali incident resulted in the deaths of a further 50 people in Saudi Arabia, Pakistan, Tunisia, Yemen and Kuwait.
    The Home Secretary is right to say that we need to be continually vigilant in this matter, and the Government are right to say that proscription must be kept under permanent review. As I have always made clear, we have an obligation to have legislation that helps to counter terrorism. Although he was not in his current post at the time, the Home Secretary may remember my Liberal Democrat colleagues and I arguing for the end of the old anti-terrorist legislation that split the UK into two parts—Northern Ireland in one category, and Great Britain in the other—and for comprehensive legislation that treats all parts and all citizens equally. That is why we welcomed the principle of the 2000 Act and accepted the principle of proscription. Sometimes, it is necessary to take the drastic step of telling those who belong to, work for and associate themselves with certain organisations that such activities a re unacceptable in this country. We still hold to that view, which is why we will support the order, and consider it absolutely right that this country reserve the power to proscribe certain organisations in the right way.
    To pick up on a phrase that the Home Secretary used, we should, of course, never be a haven for terrorists. The justifiable argument was made that we perhaps unwittingly became such a haven, in part, during the late 1990s. There is a difficult balance to strike. We must not become such a country, but on the other hand we must be a haven for free speech and liberty for those who, within the law, want to be critical of—in spoken word and in writing—regimes, faiths and practices that they consider unacceptable. I therefore hope that the Home Secretary—of whom I, like the right hon. Member for West Dorset (Mr. Letwin), would like to ask a few questions—will accept the good faith of our position.
    Lady Hermon: Does the hon. Gentleman accept that proscription often leads to fragmentation and splinter groups, which go underground and change their names? Sometimes, proscription can lead to greater difficulties, rather than addressing current ones.
    Simon Hughes: The hon. Lady has clear local experience of that issue in Northern Ireland, and I understand her point. When we debated the legislation in Committee, her party's nominee on the Committee was sometimes critical—as were other Opposition Members—of some of the terminology, definitions and processes put forward by the Government, and that was because of his Northern Ireland experience. Now that we have common legislation that proscribes both Irish organisations and international organisations, we have a common interest in ensuring that we get it right. One of my questions for the Home Secretary is how we can get it right so that banning one organisation does not just force the people involved to invent themselves in another guise and carry on, with the inevitable lead time before that guise is also banned.
    I have a question on timing, which is not meant to be accusatorial. The Home Secretary puts the names of four organisations before us today, which are all
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    extremist Islamic organisations. The first, Jemaah Islamiyah, is based in Indonesia, Malaysia and the Philippines, and was put on the proscribed list by the United States, Australia and the United Nations only in the past couple of days or weeks. I have not been able to check whether it is on the European Union list yet. What triggered the Government's view that the organisation should be proscribed? I understand the delicacy of the intelligence issues, but that organisation clearly has a reputation in the areas in which it is based that has given real cause for concern.
    As for the other three organisations, Abu Sayyaf is based in the Philippines, Asbat Al-Ansar is based in the Lebanon and the Islamic Movement of Uzbekistan is—self-evidently—based in that former Soviet state in Asia. All those organisations appear to have been put on the EU list last October. What link is there between a decision by the EU to put them on its list and the Government's decision to put them on our list? I accept the point, which was well made by the Home Secretary, that we must not act simply on the basis of somebody's assertion of the case against an organisation. The Home Secretary has himself had experience of a case in which someone was arrested in this country but then acquitted because the United States did not produce the evidence that the authorities had been led to believe—in good faith, I am sure—would be forthcoming. The Government are right to make their own intelligence assessment and not rely on arguments put forward by another country that might have different motives to which we might not always wish to subscribe.
    Can the Home Secretary confirm that to his knowledge none of those organisations are or have been active in the United Kingdom or are or have been a threat to our interests here? I understand that in relation to activities in Indonesia, there was a clear threat if those killed included British citizens—indeed, the organisation in question there showed that it is a threat to the international community. Is it sufficient for the purposes of the legislation for the Home Secretary to be of the view that a threat exists abroad?
    Can the Home Secretary tell us when we may expect Lord Carlile's review, taking place under the process for checking on the legislation? It is due in the near future and will be helpful as an independent review of the working of the legislation. Does the Home Secretary remember whether the Government said in Committee that they would also undertake a regular review process? What is the mechanism for doing that?
    The Home Secretary may remember that the Liberal Democrats had some arguments with the Government about the definition of terrorism. I shall not rehearse them today, but we argued for a narrower definition. We accept that we lost the argument, but we were also concerned that the legislation was a matter of proscribe first, review later. On that key issue, will the Home Secretary give further consideration to seeking the advice of the Intelligence and Security Committee—on which my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) serves—to obtain an independent view on every case in which he is minded to proscribe? That could be done very quickly. In some circumstances, it might not be possible immediately, but it would still remain a parliamentary backstop. I should be grateful if the Home Secretary would give consideration to that process, not least because it would

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    give him support for his propositions in connection with information that cannot always be available to the House or the country.
    It has been suggested outside the House that one currently proscribed organisation, the Sri Lankan Tamil organisation the LTTE, might be a candidate for de-proscription, as it has been de-proscribed in Sri Lanka. Given the peace process that is under way, will the Home Secretary say whether de-proscription of the LTTE is under active consideration? Which organisations currently on the list have appealed to the Home Secretary and, beyond him, to the commission? I presume that any organisation still on the list was unsuccessful in its appeal, but whether an organisation has appealed—and to which level—should not be a secret.
    Finally, I represent a constituency with a significant multi-faith community that includes Muslims. We have to do another job that is the opposite of banning organisations. We have to educate young people who might be tempted to serve the causes of bad people. It might be useful for any such education process to list the banned organisations, and to ensure that correct information is propagated. That would ensure that people were not under any misapprehension that the organisation to which they were being recruited was involved in justified activity, whether it be in Afghanistan, Pakistan, the Philippines or Indonesia. Will the Home Secretary consider ways to ensure that the communities affected—in this case, the Islamic community—can have the information that will help people with good motives to avoid entrapment in organisations that will lead them badly astray?
    This is an important debate. The level of unanimity among hon. Members of all parties shows how seriously we take it. In the past, my party asked that organisations be proscribed separately rather than collectively. We argued that differences of view about organisations meant that it was impossible to vote on them all together. We hold to that view. As it happens, we believe that each of the four organisations in the order pass the test and therefore we agree that they should be proscribed. However, we hope that the Home Secretary will consider separate proscriptions for each organisation. We also hope that there will be separate votes, if not separate debates, if the matters come before the House again while he is in office.
    4.27
    Mr. Andrew Dismore: I am sure that my right hon. Friend the Home Secretary is aware of my interest in some of these matters.
    Mr. Blunkett: I could not be anything else.
    Mr. Dismore: I think that I have asked about 150 parliamentary questions on these matters over the past couple of years. My file of correspondence is probably as fat as my right hon. Friend's, but he will be interested to know that I do not propose to raise with him the question of the people whom he called loud-mouthed irritants. I assume that they include Abu Hanza, although I believe that he is a threat in a way that my right hon. Friend does not.
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    Moreover, press reports suggest that Abu Qatada, one of the spiders at the centre of the terrorist web in Europe,is now in detention. I am pleased about that, and hope that the reports are correct. However, I want to raise the question of the Popular Front for the Liberation of Palestine, about which I was in correspondence with my right hon. Friend earlier in the year.
    I have been looking at the criteria employed for the proscription of some of the organisations. The PFLP seems to meet all of them, but has not been proscribed. That seems rather odd. My right hon. Friend the Home Secretary said earlier that proscription required that there be a specific threat to the UK or its nationals, or to those who support the international community's campaign against terrorism. Again, in that context, I am surprised that the PFLP is not on the proscribed list.
    In a letter dated 29 May—and in response to a parliamentary question that I asked at around the same date—my right hon. Friend the Home Secretary told me that the list of organisations was kept under review, that decisions to proscribe or to deproscribe were taken after consideration of all relevant aspects, that the list was renewed periodically, and that organisations could be added in the light of available information. I welcome the fact that four organisations are being added to the list, but given the criteria for selecting those organisations, I find it surprising that the PFLP was not selected.
    The PFLP has a long history of terrorism, going right back to 1968. I do not propose to go into it this afternoon, but it virtually invented aircraft hijacking with the 1970 black September hijacking, when Leila Khaled was detained in the United Kingdom after the death of a terrorist and serious injury to a flight attendant on an El Al airliner. That terrorism has developed and grown since those early days and I was very surprised that Leila Khaled was allowed into this country earlier this year.
    In recent times, the PFLP has become increasingly active in terrorist attacks. It rejects the peace process and its leadership is very hard line. In the past year, in particular, there have been some serious incidents, which mirror and, indeed, go far beyond those described on the list in the explanatory memorandum for today's debate. For example, Jemaah Islamiyah is being proscribed because of its links with al-Qaeda and the memorandum mentions
    "planning attacks against several targets in Singapore".
    In the past year, the PFLP attempted an attack on Ben Gurion international airport using a car bomb, which was mercifully foiled by the Israeli security services. Mohammed Kandas, a PFLP organiser, told his interrogators that he had been recruited in Iraq in 1988.
    In the same month, there was an attempted attack on the Maccabiah games in Jerusalem. Salem Taleb Al-Darawi, of the PFLP, was one of those involved. It was described as a "joint operation" and a PFLP militia group was involved. Perhaps most chilling of all was the attempt to bring down the Israeli equivalent of the twin towers when, on 7 May this year, Israeli soldiers intercepted a truck filled with more than half a tonne of high explosives, the target being the 50-storey Azrieli towers. Again, two of those involved were senior PFLP

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    leaders, Ra'ad Nazel, the area commander for the PFLP, who was killed in the operation, and another PFLP commander who was arrested. Let us contrast that record with that of the JI organisation, which was accused only of planning attacks. I think that the PFLP attacks were much more serious.
    The Islamic Movement of Uzbekistan is being proscribed because it is supposed to have launched a sophisticated bombing campaign in Tashkent, which was directed against the Uzbekistan regime. We should note that it was not directed against UK interests. However, in the past few months the PFLP has organised more bomb attacks. On 3 September, a car bomb and three other bombs exploded in Jerusalem and nine civilians were injured. On 17 October 2001, there was a car bombing in the Gaza strip at Nahal Oz. On 16 February 2002, two children were killed and 27 wounded when a PFLP suicide bomber exploded himself at a crowded shopping mall in Karnei Shomron. On 19 May 2002, the PFLP carried out a suicide bombing in the coastal city of Netanya, in which three people were killed and 59 wounded, which was apparently planned from prison by Ahmed Saadat, the leader of the PFLP, according to telephone taps, while he was supposed to have been guarded by UK and American prison guards as part of the agreement with the Palestinians and the Israelis.
    David Winnick: I make no apology for the organisation to which my hon. Friend refers, although I certainly see a distinction—even if he does not—between it and the organisations that have been proscribed, and I deplore all forms of terrorism. He referred to the totally unjustified killing of Israeli civilians, including children, which is absolutely deplorable. I hope that he will deplore the killing of Palestinian civilians and children by the Israeli authorities in the occupied territories.
    Mr. Dismore: Obviously, I hear what my hon. Friend says and any deaths in the middle east are to be regretted. We need to do what we can to achieve a ceasefire, but one of the keys to that is an end to Palestinian terrorism. However, that is not the issue that I am dealing with today.
    We are told that Asbat Al-Ansar is being proscribed because of its activities in the Lebanon, which we are told in the memorandum have
    "been limited to small-scale bombing and assassinations".
    We can contrast that with the assassination of the Israeli Tourism Minister, Rechavam Ze'evi, on 17 October 2001, for which the PFLP actually claimed responsibility. When we contrast the PFLP record against the individual records of those organisations, it is as much as everything that they have done.
    We are told that we should be supporting the international community. After the assassination of the Israeli Cabinet Minister, even the Palestinian Authority allegedly outlawed the military wing of the PFLP, yet we do not even seem to be doing the little that the Authority has done.
    In June this year, the European Union declared the PFLP a terror organisation. To follow up the point made by the hon. Member for Southwark, North and Bermondsey (Simon Hughes), there is a relationship
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    between our domestic anti-terrorism laws and decisions taken by the EU. I understood that the EU decision to proscribe the PFLP as a terror organisation meant that, as one of the 15 member states, we, too, must take action by—at the least—freezing the funds and assets of the PFLP. If we accept that EU decision, I fail to understand why we are not proscribing the PFLP under the order.
    We are told that we have to consider the threat to the United Kingdom and to UK citizens. There is no doubt that the PFLP is active on university campuses in the UK, as my hon. Friend the Member for Thurrock (Andrew Mackinlay) suggested. For example, in January 2001 and May 2002, Leila Khaled visited the UK, but apparently we cannot prosecute her because in 1970 our laws against hijacking were not as strong as they are nowadays. If those offences had been committed today, she would have been jailed, presumably for life; yet she is allowed to come and go with impunity because the PFLP is not a proscribed organisation. In Manchester and at the School of Oriental and African Studies in London, she reportedly justified suicide bombings. In the Daily Telegraph of 27 May, she stated that the PFLP has
    "a lot of supporters here".
    Indeed, an organisation has been formed—the Che-Leila Youth Brigade—which is primarily a student group and has been sending British students to the West Bank and to Gaza.
    The PFLP has never accepted the peace process in the middle east. The organisation is rejectionist. It has never renounced its intention to mount attacks overseas against Israeli citizens and, indeed, those who get caught in such attacks. We must not forget that, in 1994, the PFLP attempted to blow up the Israeli embassy in Britain. It is a terrorist organisation and has become increasingly active. We are being asked to proscribe four organisations and I cannot understand why the PFLP is not the fifth on the list.
    4.38 pm
    Mr. Douglas Hogg: Next time, perhaps the hon. Member for Hendon (Mr. Dismore) might care to table an amendment. We could then at least address the question specifically.
    Mr. Dismore: Will the right hon. and learned Gentleman give way?
    Mr. Hogg: Not yet.
    It is right that we should not let the motion pass undebated and that several right hon. and hon. Members should participate in the debate. The motion is important. I raise no objection to the proscription of these organisations. I am perfectly prepared to accept that they genuinely are terrorist organisations that constitute a threat to us all. None the less we need to be clear that the order is draconian and that it affects British citizens dramatically.
    If you will forgive me, Madam Deputy Speaker, I shall remind the House of the extent to which the rights of British citizens are affected. British citizens are made the subject of the criminal law and their rights to support political organisations are constrained by what is very largely an Executive action.

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    The explanatory memorandum is helpful. Section 11 of the Act makes it an offence to belong to a proscribed organisation. That offence is punishable by 10 years in prison and/or an unlimited fine. Section 12 makes it an offence to seek support, financial or otherwise, for those proscribed organisations. That, too, is subject to a 10-year maximum prison sentence and/or an unlimited fine.
    Section 13 of the Act makes it an offence to carry placards, for example, or wear the insignia of the proscribed organisations. That, too, is backed by a sentence of imprisonment and/or a fine. Of course there are very wide powers in the Act to seize, detain and forfeit the property of proscribed organisations, and the full range of the powers in the Act are applied to terrorist organisations.
    The fact that the four organisations are largely situated outside the United Kingdom should not blind us to the fact that there may be British citizens in this country who, prima facie, support them. So we are ourselves by this proscription greatly extending the scope of the criminal law to the British citizen, and we need to be absolutely clear about the gravity of what we are doing. We therefore need to consider the procedure by which the House—it is ultimately the House—makes the order.
    To start with, the Home Secretary—or, of course, his successor—has to form a belief that the organisation in question is a terrorist organisation, and I shall return to that in a moment. Assuming that the right hon. Gentleman reaches that conclusion, he will lay an order— which will doubtless be passed by the House and, indeed, the other place, because it is subject to the affirmative procedure. But let us be absolutely clear about the fact that no hon. Member, with the exception of the right hon. Gentleman, knows the nature of the evidence on which the proscription takes place, so we are entitled to ask how the British citizen affected by the order can challenge it.
    I shall tell the House. The British citizen can apply for the proscribed organisation to be de-proscribed by applying to the person who proscribed it in the first instance, and if by any chance the Home Secretary says no, one is entitled to ask what then is the appeal. Well, that is where the difficulty arises. There is no proper appeal; there is a commission. I am not blackguarding the commission—I am perfectly prepared to accept that it is staffed by very eminent and respectable people—but its powers are limited because it reviews the Home Secretary's exercise of his powers in accordance with the principles that govern judicial review. In other words, the appeal is not an appeal against the merits of the Home Secretary's decision—oh, no—it is an appeal about the procedure. Provided that the Home Secretary got the procedure right—in other words, he did not act ultra vires or in any unreasonable manner—the decision not to de-proscribe stands because there is no review of the merits. The review applies the principles of judicial review to the procedure or the exercise of the powers. That is different.
    Mr. Letwin: The issues that my right hon. and learned Friend raises are worthy of debate, but does he agree that the criteria on the basis of which the Home Secretary makes the judgment are not just whether the organisation is in his view a terrorist organisation, but whether it poses a specific threat to the United Kingdom or to British nationals overseas; whether it has a significant presence in this country; and whether there is a need to ban it to support other members of the international community in the global fight against terrorism. Given that those are the criteria on the basis of which the Home Secretary is called to judge the matter, does it not follow that the proceedings will be parallel to those in the Special Immigration Appeals Commission, or judicial review on the basis of a full display of the evidence? The merits themselves cannot be questioned, but the commission will tend to ask the question that it is appropriate to ask in the light of the Wednesbury unreasonableness test. So will the commission not be investigating precisely whether the Home Secretary has sufficient evidence to be a reasonable person in making that decision? Is that not a sufficient safeguard?
    Mr. Hogg: That may be true. Clearly, the commission in question determines whether the Secretary of State was acting intra vires and whether he was acting reasonably. That is different, however, from deciding whether the decision was right, and/or whether the evidence was sufficient on its merits to justify the conclusion. That is a different matter from reviewing procedure.
    Mr. John Burnett: The night hon. and learned Gentleman is, of course, right. He has been consistent, and he is consistently right. It should be possible for the merits to be explored by a court, and that can be done without jeopardising security. I hope that he will elaborate on that point in the short time that is available.
    Mr. Hogg: I was going to come to the next point, which is that there is a limited right of appeal to the Court of Appeal. In that regard, I am talking about the jurisdiction of England and Wales and not outside—the hon. Member for North Down (Lady Hermon) will forgive me if I do not refer to Northern Ireland on this point.
    A right exists to appeal to the Court of Appeal in England and Wales, but only on a point of law and from the commission—there are rules in relation to getting leave for that. I return to the point that, in reality, the criminal law is being extended and civil rights curtailed without anybody outside the Home Office having the opportunity to review the evidence. I view that, as a matter of principle, with great anxiety; that is not to say that it is not right in this case, but we should be very cautious.
    Simon Hughes: The right hon. and learned Gentleman will remember that when we debated the Bill, he, I and others sought to amend it to allow a review before prescription by a judicial authority that there were reasonable grounds. If the legislation were amended

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    along those lines, would he be satisfied, or at least partly satisfied, that that would deal with the Executive power unqualified of which he is now critical?
    Mr. Hogg: It would be better than the current. position, but I will make a particular proposal, too. I have expressed my anxieties, and I now want to identify some further questions. I know that the hon. Member for North Down wants to contribute, and I shall give way in good time.
    First, we need to be conscious that what are being proscribed are terrorist organisations. Terrorism is defined broadly in section 1 of the Act. Of course, that definition catches the four organisations that are the subject of the order, many of which are related to al-Qaeda. By definition, however, it also catches, for example, people who want to supplant Saddam Hussein. Distinctions exist between sheep and goats in relation to terrorism. Some terrorists are goats, and some are sheep. The interesting question is who makes that decision. In theory, of course, the House decides, as it has the right to refuse the order. As the hon. Member for Southwark, North and Bermondsey (Simon Hughes) rightly said, however, this is a rolled-up order dealing with four named organisations. It would be. better by far to have single orders dealing with the four separate organisations.
    David Winnick: Will the right hon. and learned Gentleman give way?
    Mr. Hogg: If I may, I shall finish this point, and then I shall give way.
    The point is that we need to know more definitively how the distinction between one set of terrorism, which we regard as good because it does not threaten us, and another set of terrorism, which we regard as bad because it does, is made. Nothing in the Act provides for that; it is entirely discretionary.
    David Winnick: The right hon. and learned Gentleman knows as well as anybody—perhaps better, owing to his ministerial experience—how difficult it is for a liberal democracy to protect itself while protecting civil liberties, and, at the same time, to try as far as is possible to deny those who want to destroy us the opportunity of doing so. Although the right hon. and learned Gentleman says that there is no evidence—I do not expect the Home Secretary to give us all the detailed information any more than he does—I notice that he has not questioned the information supplied to us in the explanatory memorandum. Would he not be on safer ground if he said that he does not accept what the Home Secretary has stated in the memorandum, and that he therefore disputes that the named groups are terrorist organisations?
    Mr. Hogg: I do not think that is fair criticism. In the first place, I have made it plain to the House that I am perfectly prepared to accept that the proscription of these four organisations is fair. The point that I wish to make is that the consequences are pretty draconian for British citizens. We therefore need to establish better ways of ensuring that the evidence is good.
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    That takes me to the point that I wanted to make in response to the hon. Member for Southwark, North and Bermondsey, and which has also been raised by another hon. Member. I asked rhetorically why the Joint Intelligence and Security Committee of both Houses should not review the quality of the intelligence material on the basis of which the Home Secretary acts. It would at least be able to form a view as to the quality of that material. In a sense, that would be a review of the merits of the decision.
    I have a couple of other direct questions for the Home Secretary. First, which Minister decides on proscription? I refer to the substance and not the form.
    Mr. Blunkett: It would be sensible for me to reply to the right hon. and learned Gentleman's question now. The answer is I do.
    Mr. Hogg: I am very glad to learn that. I recall from my time in the Home Office—and in the Foreign and Commonwealth Office—that there is a tendency to delegate decisions down to junior Ministers before the submission goes up to the Home Secretary. I hope that the right hon. Gentleman is saying that the decision is not delegated to junior Ministers or officials, but that it is taken exclusively by him.
    Mr. Blunkett: The right hon. and learned Gentleman used the word "hope". I have just said—therefore, it is a fact—that, on this and every other terrorism and security-related issue, I take the decisions personally.
    Mr. Hogg: I am very glad to hear that, but I want to press the right hon. Gentleman a bit further. On what basis does he act? Is it exclusively a paper-based exercise? In other words, does he rely exclusively on a file or does he ask the relevant officials from GCHQ, the security services or whatever to come and make a presentation to him? I would like to know the answer, because I would be more cautious about a paper-based exercise than I would if the right hon. Gentleman summoned officials to a meeting and quizzed them. That is what he should do. How much consultation is held with intelligence services from other countries? That issue is important.
    I have two final points. First, I very much agree with the point that the hon. Member for Southwark, North and Bermondsey made about regular reviews. They can be carried out in various ways, but I should like to think that a regular review would take place within the Home Office of whether these or any other organisations should be subject to proscription.
    I know that the hon. Member for North Down has been waiting patiently, but I wish to refer to justice. Let us never lose sight of the fact that we are curtailing civil and political rights and that we are extending the criminal law to British citizens who may or may not be our constituents. It is very easy to be unjust in the context of a crisis, an emergency or terrorism. I put those arguments to the Home Secretary during the debates on the Terrorism Act 2000.
    Mr. Burnett: I had hoped that my earlier intervention might tempt the right hon. and learned Gentleman into

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    discussing an appeals system of the sort operated by SIAC. However, I do not want to tempt him to do so for too long.
    Mr. Hogg: I have, in a sense, come to where I want to rest. I would be happy to help in the establishment of a review committee that would address the merits of proscription. The consequences of proscription are perhaps graver than we all appreciate. The fact that the House is nearly empty may be evidence of that. The fact is that we can commit serious acts of injustice in the context of a national emergency, and the House must be slow in becoming party to such a process. We must scrutinise such orders as carefully and as closely as we can within the accepted procedures.
    4.54 pm
    Lady Hermon: It is a pleasure to follow the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg). I agree with his view that it is an important measure, so it is a matter of regret that the Chamber is so empty on this occasion.
    I preface my remarks by saying that the experience of living through 30 years of terrorism in Northern Ireland colours one's impressions when speaking on any measure that deals with terrorism and extends the powers of the Home Secretary. It is with the appalling consequences that thousands of people in Northern Ireland have had to endure for those 30 years in mind that we welcome the fact that we are tightening measures to combat terrorism, not just in the United Kingdom, but around the world, where Governments are taking collective action and rightly standing shoulder to shoulder with the Prime Minister. I assure the Home Secretary that although other Members from the Ulster Unionist party are not here in body, they are with him in spirit. To quote the Prime Minister, we stand shoulder to shoulder with him in tightening measures to combat the awful scourge and threat of terrorism.
    However—I realise that it is an awful moment when an hon. Member uses that word—there are two matters on which I would welcome the Home Secretary's comments. The first relates to the statement of compatibility with the European convention on human rights, on which I should like guidance. The Home Secretary knows that, according to the convention, everyone within the jurisdiction of the United Kingdom, irrespective of their nationality, is guaranteed the right to life and to freedom from degrading and inhumane treatment. If a non-British national who is within the jurisdiction of the UK is a member of, or associated with, any of the four proscribed organisations listed in the order, can he be deported to a country where he will almost certainly be put to death or at least subjected to inhumane and degrading treatment or torture? I am greatly worried about the powers that we are taking to ourselves because the rights, privileges and the guarantees of the convention apply to everyone in the jurisdiction, irrespective of nationality.
    My second concern relates to what I said when I intervened on the hon. Member for Southwark, North and Bermondsey (Simon Hughes). Although proscription rightly sends out a strong signal to terrorist
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    organisations, as the Home Secretary said, it often leads to fragmentation of those organisations, which go underground and rename themselves. That has been our experience in Northern Ireland of both loyalist and republican organisations, although internal feuding has also been a factor.
    I shall not give a comprehensive list because I do not want to delay hon. Members, but the loyalist list includes the UDA, the UFF, the UVF, the Red Hand Commandos and the Red Hand Defenders. They have rebranded many times, primarily because of proscription, but also because of internal feuding. On the other side of the coin, the list of republican organisations started with the IRA. After a falling out, the list was extended to include the Official IRA and the Provisional IRA. The Real IRA, Continuity IRA and the INLA are also now on the list, to name but a few. Will the Home Secretary reassure me that the proscription of the four organisations will not follow the similar tragic pattern of proscribed terrorist organisations in Northern Ireland?
    4.59 pm
    Mr. Blunkett: I am grateful to right hon. and hon. Members for the manner in which they have addressed the issues, and I will endeavour to respond to the wide range of the questions that have been asked. If questions remain that I have not tackled, I shall be happy to answer them in correspondence. As I indicated at the beginning of the debate, I shall deal on Privy Council terms with issues that require security clearance.
    I assure the hon. Member for North Down (Lady Hermon) that we need to be vigorous in pursuing the intentions of proscription. If an organisation reconfigures itself—I used the term "reconfigure" earlier in the debate—and reappears with the same members presenting themselves in a different guise, it must fall under the original proscription. The key task, of course, is to ascertain that a group has done so, and I would not demur from the inference that the task needs to be performed with vigour and clarity. In other words, we have not fallen off a log, and we know that simply changing a name or vaguely reconfiguring the membership would constitute a prima facie case. I am happy to continue to discuss that, and I shall do so with the new Secretary of State for Northern Ireland. The issue was also raised by the hon. Member for Southwark, North and Bermondsey (Simon Hughes).
    I want to make it clear that the use of these powers and the designation of proscription are designed not to damage the interests of any individual but to protect the interests of the wider community. The hon. Member for North Down asked me about the process whereby an individual would, prima facie, be sent to certain death or torture. Such considerations were the reason for the establishment of the Special Immigration Appeals Commission under the 1997 Act of the same name, and for it being given powers that are wide enough to review raison d'etre and to consider evidence in camera for the decision of certification. Obviously, those provisions would apply if an individual were deemed to be a member of a proscribed organisation and was to be ejected from the country on the grounds that their presence was not conducive to the public good.
    The right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) raised several issues—fervently, as he always does. I repeat my view that all

    895
    security and intelligence issues, including proscription and the issuing of warrants, should be the job of the Home Secretary, and I take that very seriously because the buck stops here.
    I make it clear to all hon. Members that, as the right hon. Member for West Dorset (Mr. Letwin) rightly and generously said, I find decisions on proscription or the issuing of certificates weighty issues that have to be tackled with the utmost seriousness and care and in great detail. The unit established in the Home Office is able to provide that detail because it draws from the security and intelligence services evidence that they have adduced and evidence that they have gleaned from other such services throughout the world, with whom they have tremendous relationships.
    The intelligence services—MI5, MI6, GCHQ and the defence intelligence service—have the best possible relations and, therefore, the ability to draw on and share information. That is crucial for the evidence that we use, particularly concerning organised international terrorism. All four organisations in this measure are being proscribed on the basis of their international action rather than—this answers one or two of the questions raised—the presence in the United Kingdom of individuals who can be shown to be members of the organisations. However, we are concerned about the general support, financial or otherwise, that may be given to those organisations, which is why the Chancellor of the Exchequer and I acted as we did following the UN decision last week.
    In response to a question by the right hon. and learned Member for Sleaford and North Hykeham, I have to say that there is always a difficult issue concerning the proportionality and balance between the rights of individuals in a free society and the protection and public interest of that society as a whole. We debated that at length last year, and we will continue to debate it because we are a democracy. We will continue also to debate the nature of those who review the actions of the democratically elected Parliament, embodied in the Executive who are held to account, this afternoon and on many other occasions, by Parliament. The review should be conducted by people who can ask questions about the process described by the right hon. and learned Member for Sleaford and North Hykeham, as well as the evidence base and the way in which that relates to the original terms of the legislation and the definitions that I gave earlier. We should not consider democracy by Parliament and elected representatives more flawed and less reliable and secure than democracy by judicial methods—the two go hand-in-hand and are pillars supporting the same structure of protection. It is important that people do not think that the democracy that we have constructed is less secure and less of a democracy because we do not constantly hand over final decisions to those who are not elected and do not have that accountability or responsibility.
    Mr. Burnett: As usual, the Home Secretary is giving a fair view of sensitive matters, which are rightly confidential. No one in the House would impugn his personal integrity. Nevertheless, I hope that he agrees that, in the interests of justice, it should be possible for a court to scrutinise in camera the merits of a decision
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    made by him or one of his successors with the appropriate advocate chosen from a pool of prolocutors in a process similar to that used by the SIAC system.
    Mr. Blunkett: We could obviously debate whether the Proscribed Organisations Appeal Commission goes far enough in reviewing matters that we are reviewing and in being able to provide a proper form of appeal. I was asked earlier about appeal and de-proscription. If an organisation—the example given was LTTE, but others are also relevant—provides evidence that it has forsworn terrorism and is clearly distanced from it, here or internationally, it is important that we take evidence from the country that has suffered most and consider whether it is still actively raising funds and engaged in other ways with international terrorism. If so, it should be proscribed. That process can take place; the organisation can produce evidence and argue its case properly, not just to the Home Secretary but to the commission. We must take a reasonable and rational view—if the organisation believes it has a case, it can take that action. I shall supply the hon. Member for Southwark, North and Bermondsey with a list, but some appeals are going through at the moment, so I shall not comment any further. Lord Carlile's review is due in February, and a 15-month review will be debated in Parliament on the back of the sunset clause in the Anti-terrorism, Crime and Security Act 2001. There are so many review bodies and commissions, including those that rightly review all the warrants and certificates that I sign, that they almost constitute an industry. That is a proper safeguard, albeit one that is little known to the outside world, which assumes that we make a decision, then go away and that is the end of it. It is not, of course.
    Simon Hughes: I am grateful for the Home Secretary's helpful answer. To take up a proposal made on a couple of occasions, will he consider whether an existing body of parliamentarians—the democratically elected members of the Intelligence and Security Committee—may be given an additional brief reviewing intelligence prior to future decisions about proscription?
    Mr. Blunkett: I am minded to try to keep the balance of the Intelligence and Security Committee, for which we all have a great deal of respect. However, I am prepared to consider the kind of evidence that its members can take on Privy Council terms. I am not sure about widening the committee chaired by Lord Newton. In fact, I seem to have put myself in the hands of every form of opposition, from Lord Carlile to Lord Newton and Lady Harris. I am afraid to tell the hon. Member for North Down that no member of her party serves on that committee—we will have to take a look at that and see what we can do.
    In response to my hon. Friend the Member for Hendon (Mr. Dismore), I made it clear at the outset that the proscribed organisations covered by the motion are determined by their contacts with al-Qaeda and our knowledge and proof that that is so, but that does not rule out proscribing other organisations where that is merited. I have not done that. I want to make that clear to him, because he made a powerful case in relation to Palestinian terrorism.
    There is an underlying issue, which was raised throughout the debate: the need to understand the international nature of terrorism, rather than the issue

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    of whether a particular group wants to overthrow Saddam Hussein. The international nature of terrorism is what we have been debating this afternoon.
    I invite my hon. Friend the Member for Thurrock (Andrew Mackinlay) to meet the co-ordinator, to see whether we can make some progress on his concerns about port security. It is as important to me as it is to him and his constituents that we get that right. We have a senior police officer working as co-ordinator and I would value the help that my hon. Friend can give. In fact, he and my hon. Friend the Member for Hendon might be tremendous candidates for joining the security services when, at some distant future date, they decide to step down from Parliament. I shall put their names forward as they have done such a good job.
    I assure the shadow Home Secretary, the right hon. Member for West Dorset, that I will provide to him any answers that I have not given during the debate. It is important that answers are given to questions about the links to the meeting in Thailand, the incidents in the Philippines and Singapore, and the direct links to knowledge, at a particular juncture, about the work and actions of JI in the archipelago, of which Bali is just one part. I would like to provide that information on Privy Council terms. Clearly, knowledge has been available. Everyone who has taken an interest in these matters—I know that his right hon. Friend the shadow Foreign Secretary, the right hon. Member for Devizes (Mr. Ancram), raised the matter in the context of a statement following the Bali attack—was aware of the kind of intervention that had saved people in Singapore, and the exchange of information that had taken place between security services on the back of it.
    As the right hon. Gentleman rightly pointed out very gently and, I thought, generously, it is easy to be wise after the event. We are trying to balance what his right hon. and learned Friend the Member for Sleaford and North Hykeham believes to be a draconian power of proscription with the need to act quickly and decisively when we believe that there is sufficient evidence to prove
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    international links with terrorism, and a threat not just to us, but to all those seeking democracy across the world.
    Question put and agreed to.
    Resolved,
    That the draft Terrorism Act 2000 (Proscribed Organisations) (Amendment) Order 2002, which was laid before this House on 28th October, be approved.

    DELEGATED LEGISLATION
    Madam Deputy Speaker (Sylvia Heal): I propose to put together the Questions on delegated legislation.
    Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6)(Standing Committees on Delegated Legislation),

    INCOME TAX
    That an humble Address be presented to Her Majesty, praying that the draft Double Taxation Relief (Taxes on Income) (The United States of America) Order 2002 be made in the form of the draft laid before this House on 22nd July
    That an humble Address be presented to Her Majesty, praying that the draft Double Taxation Relief (Taxes on Income) (Lithuania) Order 2002 be made in the form of the draft laid before this House on 23rd July. [Joan Ryan.]
    Question agreed to.

    ENTERPRISE BILL (PROGRAMME) (NO. 4)
    Ordered,
    That the following provisions shall apply to the Enterprise Bill for the purpose of supplementing the Order of 10th April—
    Consideration of Lords Amendments
    1. Consideration of Lords Amendments to the Bill shall be completed at this day's sitting and shall (so far as not previously concluded) be brought to a conclusion—

    (a) four hours after their commencement, or

    (b) at Ten o'clock,

    whichever is later.
    Subsequent stages
    2. The proceedings on any further message from the Lords on the Bill shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—[Joan Ryan.]

Orders of the Day

  Enterprise Bill
  Lords amendments considered.
  Madam Deputy Speaker (Sylvia Heal): I draw the House's attention to the fact that privilege is involved in Lords amendments Nos. 54, 77, 279, 281, 282, 286, 294. 296, 297, 299 to 301, 305, 306 and 308, which are to be considered today. If the House agrees to any of these Lords amendments, I shall ensure that the appropriate entry is made in the Journal.

Clause 1

  OFFICE OF FAIR TRADING
  Lords amendment: No. 1, in clause 1, page 1, line 5 after "corporate" insert
  "with both a chairman and a chief executive"
  5.15 pm
  The Parliamentary Under-Secretary of State for Trade and Industry (Miss Melanie Johnson): I beg to move That this House disagrees with the Lords in the said amendment.
  Madam Deputy Speaker: With this we may discuss Lords amendment No. 2 and Government amendment (a) thereto, Lords amendments Nos. 3 to 6, Lords amendment No. 176 and Government motion to disagree thereto, Lords amendments Nos. 177 to 186 and Government motions to disagree thereto, and Lords amendments Nos. 187 and 188.
  Miss Johnson: Lords amendments Nos. 1 and 176 to 186 provide for a statutory post of chief executive to the Office of Fair Trading. The Bill provides that the OFT consist of a chairman and no fewer than four other members appointed by the Secretary of State, who would consult the chairman before appointing any other member. That is a depersonalisation of consumer and competition regulation. We expect the OFT to have a majority of non-executive members and are giving it significant independence from Ministers.
  We have taken account of the OFT's particular circumstances in deciding not to separate the roles of chairman and chief executive at this time. The Secretary of State will appoint John Vickers as chairman for the remainder of his current term as Director General of Fair Trading, honouring the commitment that was made to him when he was appointed to that post. John Vickers will work with other members of the OFT. Given his position and the need to provide some continuity in this period of great change, I do not think that the OFT should necessarily separate the roles of chairman and chief executive. Although the Bill does not provide for a separate post of chief executive, it does not preclude it either. If the OFT wishes at any time to take that route, it can create a separate post of chief executive and select the appointee.
  The amendments would create a post of chief executive appointed by the Secretary of State. By contrast, our approach ensures that the OFT could appoint a separate chief executive if it wished to do so
  900
  and gives it much more independence and discretion. It is also consistent with the approach taken throughout the Bill and with other regulators. The chief executive of Postcomm is appointed by the chairman, who is appointed by the Secretary of State, and the chief executive of Ofcom will be appointed by the board. That is why I urge the House to accept the Government motions to disagree.
  On Government amendment (a) to Lords amendment No. 2, I am very happy to accept the principle of the proposal that the OFT should have regard to generally accepted principles of good corporate governance in its affairs, but after much consideration, we consider it necessary to amend the Lords amendment to ensure that the OFT must have regard only to the principles of good corporate governance that may reasonably be regarded as relevant to it and that it must also have regard
  "to such general guidance concerning the management of the affairs of public bodies as the OFT considers appropriate."
  The OFT will be a non-ministerial Department and not a public limited company, and many of the principles of corporate governance are aimed at business practices that do not have obvious equivalents in government. I believe that the changes that I recommend reflect the will of the Lords to ensure that the OFT has regard to the principles of good corporate governance, but achieve that in a way that is appropriate to it as a public body.
  Finally, Lords amendments Nos. 3 to 6, 187 and 188 were tabled in response to points made in Committee. They improve the accountability and transparency of the OFT and require the Secretary of State to publish criteria for designating bodies as super-complainants. I am happy to speak in more detail about those amendments if hon. Members wish me to do so.
  Mr. Andrew Robathan: I come to the Bill rather late in the day after it has undergone a marathon. I pay tribute to my predecessor, my hon. Friend the Member for Eastbourne (Mr. Waterson), who represented the Opposition in earlier proceedings, and my colleagues in the House of Lords who have done sterling work.
  The Bill tackles many issues; enterprise is only an incidental part of it. It deals with consumer protection, insolvency and competition. The question of how to stimulate enterprise has taxed Governments and others throughout the ages. Not many have succeeded in answering it. The Bill returns to the Commons in a much better state than when it went to the Lords. However, it should be a grave embarrassment to the Government that it left the House of Commons with 420 amendments and nine new clauses. In the House of Lords, 326 amendments were made, the majority being Government so-called technical amendments.
  The Bill is highly complex and deals with people's livelihoods. Like so much legislation, it may have serious unintended consequences. It is a gross understatement to describe it as ill prepared and badly drafted. The Government should be ashamed of themselves. However, it was examined in detail in the House of Lords and we broadly agree with the Government about some of the amendments that were forced upon them in the other place.

  901
  The amendments that we are considering deal with good corporate governance. The Government should be particularly interested in that, especially in view of the Enron scandal and others which have occurred since the Bill was first drafted. Those scandals have brought corporate governance into not only the public eye but that of Governments everywhere.
  Let us consider the two amendments with which the Government disagree. First, on what basis do the Government believe that the chief executive officer and the chairman should be the same person? We believe that it is important to emphasise the chairman's independence because the heart of the Bill involves the creation of a body that is free from political interference.
  I appreciate that the Office of Fair Trading will not be a public limited company, but apart from the Financial Services Authority, where else does no separation of power exist between chairman and chief executive officer?
  Miss Johnson: The hon. Gentleman appears not to have been listening. I provided two further examples in my remarks only a moment ago.
  Mr. Robathan: I was listening, but the examples did not appear relevant.
  I want to consider important sources that were cited in the House of Lords, including the Cadbury report. The Minister will claim that the report referred to public limited companies, but it is nevertheless relevant. It stated:
  "The chairman's role in securing good corporate governance is crucial. Chairmen are primarily responsible for the working of the board, for its balance of membership subject to board and shareholders'—
  they will not exist, of course—
  "approval, for ensuring that all relevant issues are on the agenda, and for ensuring that all directors, executive and non-executive alike, are enabled and encouraged to play their full part in its activities … Given the importance and particular nature of the chairman's role, it should in principle be separate from that of the chief executive."
  The principle is vital. The report continues:
  "If the two roles are combined in one person, it represents a considerable concentration of power".
  After that report, the Hampel report was published in 1995. It was established to review the Cadbury code. It states:
  "The chief executive officer's task is to run the business and to implement the policies and strategies adopted by the board. There are thus two distinct roles".
  The report continues:
  "Cadbury recommended that the roles of the chairman and chief executive officer should in principle be separate … We agree with Cadbury's recommendation and reasoning, and we also note that in the largest companies there may be two full-time jobs … Our view is that, other things being equal, the roles of chairman and chief executive officer are better kept separate, in reality as well as in name. Where the roles are combined, the onus should be on the board to explain and justify the fact."
  In the case that we are considering, the onus is on the Government to explain and justify the fact"
  902
  We know from the advertisements in the Sunday newspapers that the Government will appoint a strategic board. As the Minister said, it has already been decided that Sir John Vickers will take the post of chairman and chief executive, if the Government have their way. I am sure that Sir John Vickers is an excellent man. I do not know him, but he attended my college in Oxford, and that must be a recommendation, although he is younger than me. However, the question remains: should all the powers be vested in one person?
  If I could call on one person to pray in aid the idea that the powers should not be vested in one person, that person would be the Minister. There is certainly a great deal of confusion in the mind of the Government on this matter. In Committee, she said that the Director General of Fair Trading
  "currently has a wide range of functions in the areas of competition and consumer protection, many of which are being reformed in the Bill. The Government believe that in the light of the reforms, it is no longer appropriate for all those powers to be vested in one individual."—[Official Report, Standing Committee B, 16 April 2002; c. 12.]
  Perhaps the Minister will explain how it is that she seems to have changed her mind.
  Miss Johnson: I am happy to reiterate something else that I remarked on earlier. The Director General is to be backed up by a strategic board of four or five members who will oversee the work of the Office of Fair Trading under the new arrangements proposed in the Enterprise Bill.
  Mr. Robathan: The Minister did indeed say that earlier, but she has not quite explained how the powers currently vested in the Director General of Fair Trading will not be vested in the same person, although there will be non-executive directors, as she said. We believe that it is a good principle in corporate governance that there should be two people for two posts. That is true of public limited companies, and I suggest that it should also be true here, especially in a body that is required to oversee so many plcs and to consider fair trading. The Government have certainly not convinced me or my hon. Friends, or, I suggest, the Lords, otherwise.
  The second amendment under discussion is like unto the first. It talks about "good corporate governance", and I find it strange that the Government should want to change it at all. It states:
  "In managing its affairs the OFT must have regard to the generally accepted principles of good corporate governance."
  I sat in this Chamber only the week before last and listened to the introduction of a ten-minute Bill that lauded the merits of good corporate governance and stated how important it was that we all adhered to them. I do not understand why the Government want to change this proposal. Their amendment is woolly, it dilutes the purpose of having such a statement in the Bill, and it is rather meaningless. It follows the same basic idea but dilutes the principle. I do not think that it is worth opposing, but I would like the Government to explain why they intend to change the wording because the Minister has not explained, whatever she may say.
  Dr. Vincent Cable: I support the previous contribution and the Lords amendments generally. This is an important issue. We are talking not

  903
  about a technical change but a fundamental issue of principle involving the question, "Who regulates the regulators?" The Bill has implications for others—the way that we shall deal with Ofcom in due course, for example.
  We are considering an extraordinarily powerful post that has very little public accountability and mechanisms to address that problem. I suggest that there are two fundamentally different ways of doing that, involving two models. It does not really matter which we adopt. and I think that we should be open-minded. The first model is the one that the Conservatives have been promoting. I would not necessarily adopt it, but it has merits and it certainly improves the Bill. It uses the model based on corporate governance. We are clearly not dealing with a plc here—there is no direct read-across—but there are lessons to be learned from the way in which good business practice operates, and if this is the amendment on offer, I will happily support it.
  The alternative approach, for which I have argued right from the beginning of this legislation, is to strengthen public accountability. That is partly captured, rather weakly, in Lords amendments Nos. 3 and 4, but the principle of involving Parliament more directly in scrutinising the appointment of the Director General is a matter to which I shall return.
  Why is the issue of who regulates the regulators so important here? The appointment of John Vickers has already been mentioned. He is an admirable individual, whose work I have encountered professionally. As an economist, he is a very clever guy, and I have no doubt that he has complete integrity. That is not the issue here This post is very important in different ways. It inherits the discretionary powers that used to be held by Ministers. It has substantial enforcement powers—we debated at some length the power to initiate criminal action against cartels.
  5.30 pm
  The Government seem to believe that this new approach to competition will radically raise the productivity of the United Kingdom economy. If that is to happen, this post must have enormous powers. The underlying trend in growth of productivity has, remained pretty much unchanged since the Napoleonic wars. We are talking about revolutionary changes in the way in which the British economy functions. The person who drives that must have a great deal of power.
  There are analogies with other appointments Reference has been made to the Financial Services Authority. When the FSA legislation went through, the Opposition had legitimate concerns that Howard Davies would have unfettered powers. He is also an admirable public servant, but he has a great deal of power. There is some qualification in his case, because he is working alongside managing directors, so there is divided responsibility. Some heavy hints have been dropped that, when he moves on, a chairman will be appointed alongside the head of the FSA, so that problem is perhaps on the way to being resolved. The Office of Communications presents many of the same problems as this legislation.
  The approach that I have advocated is to follow in the footsteps of the Chancellor of the Exchequer when he introduced the Monetary Policy Committee. It would be
  904
  possible for the Minister to deal with this problem at any point through a statement, so no provision would have to be built into legislation. As we know, the Chancellor has boundless intellectual and political self-confidence. He obviously felt able to submit his appointments to the scrutiny of Parliament, and has done so. The process of confirmatory hearings has done an enormous amount to strengthen the credibility of the Bank of England's Monetary Policy Committee and the Chancellor. It has been a great success story. I do not understand why other Ministers have not had the self-confidence to do the same.
  As regards the approach taken in this legislation, which I think is weaker but none the less a positive step and an improvement, the argument for using the corporate governance approach is partly based on the analogy with what has happened in industry. Post-Maxwell, there has been a considerable improvement in corporate governance. The system of split responsibility prevents megalomaniacs from dominating institutions. That lesson has been widely learned.
  It is not merely a question of using a business model. One of my more illustrious constituents is Mr. Greg Dyke. I suspect that, whatever people think about him, there would be considerable apprehension if he were to have unfettered executive authority over the BBC. The BBC is not a plc, and has a chairman as well as a chief executive. Split responsibility provides a balance of power: there are checks and balances in the BBC. That public agency is in some ways analogous to the Office of Fair Trading.
  We are not arguing that we should adopt this approach because it works well in plcs in the private sector, although that is a useful source of inspiration. Split responsibility is a sensible way of dealing with over-powerful, public officials who are not sufficiently accountable. I commend the Lords amendments, and will support them.
  Mr. Jonathan Djanogly: At the start of the Bill, the Office of Fair Trading is described, separately from its current constitution, as a body corporate. As such, I fully support hon. Members' suggestion that it should be subject to, and have regard for, the principles of good corporate governance.
  For a listed company, it is accepted practice, as set out clearly in the combined codes of corporate governance, that the role of chief executive and chairman should be separated. The chief executive is at the coalface and the chairman has a detached role. The chairman can stand back, whereas the chief executive may not be able to do so. The chairman can review the wider picture, resolve conflicts within the board, act as a public interface and ensure a good balance of representation on the board.
  Having heard hon. Members' comments, I have a sneaking suspicion that the Government wish to keep the chairman's role for themselves. As the Minister would doubtless be the first to say, that is not the intention behind the Bill, but it appears to be the implication of, for example, the Governments retaining the role of selecting the chairman. The principle of separation would certainly be enhanced by separating the roles of chairman and chief executive.
  Yesterday, the Trade and Industry Committee held an inquiry into corporate governance in relation to the White Paper on the new companies legislation.

  905
  We looked carefully at corporate governance and the way in which this rapidly advancing area of regulation has moved forward. In the context of that discussion, today's debate sounds very regressive. If institutional shareholders are to make a recommendation to shareholders in circumstances in which there is no split between a company's chief executive and chairman, they will almost automatically vote against, or recommend that shareholders abstain. If that is good enough for companies, why is it not good enough for public bodies?
  The Government's amendment (a) contains certain irregularities. According to subsection (a), the OFT can make up whatever guidance it wants, but despite that fact, subsection (b) implies that some note should be taken of corporate governance best practice. However, the Government are not saying that corporate governance best practice should apply in the private sector. They use the phrase "applicable … generally", which presumably could imply the same level of best practice that applies in the Post Office, for instance. Furthermore, we know that that principle will not extend to the splitting of the roles of chairman and chief executive, because the Government oppose that.
  This is not an esoteric element of corporate governance; in fact, it is one of the primary elements that institutions would consider, and which the combined code deals with in the private sector. It would therefore be appropriate to head for best practice by, for instance, splitting the roles of chairman and chief executive. Moreover, if it is the Government's intention that what constitutes best practice be decided on the hoof by the OFT, they should instead adopt a more open approach and set out what constitutes best practice.
  The combined code itself is not a compulsory document; it is a very fluid document, and if companies do not wish to adhere to any aspects of it, they need not do so. What they must do is to say how they derogate from best practice. Such items need to be set out in their annual accounts—a perfectly proper approach. which should be followed by the OFT. In other words, its principles of best practice and good governance should be set out, and if it derogates from them, that derogation should be explained in its annual report. In that way, people could tell whether it had moved away from best practice in a perhaps appropriate context at a given time.
  If the Government are going to let the OFT go its own way and pick and choose particular elements of best practice and corporate governance, will the Minister please explain what such practice is likely to consist of? We have heard precious little about it so far, and the Government's amendment looks like a reaction to the Lords proposal rather than a clearly thought-out provision.
  In considering the future of corporate governance, we should take note of Lords amendment No. 188, which states that the OFT should
  "from time to time publish … its rules and procedures for dealing with conflicts of interest."
  That is loosely worded and is—I should have thought—an acceptable way in which to proceed. If it is not acceptable, it would be appropriate for the Minister to comment on the procedure that the OFT is likely to
  906
  follow when dealing with conflicts of interest for its members or those of its committees. That does not appear to have been dealt with previously.
  Mr. Mark Field: I, too, wish to endorse the words of my hon. Friend the Member for Blaby (Mr. Robathan). We should seek to divide the role of chairman from that of chief executive as an integral part of good corporate governance. My concerns include the potential power of the regulator, which could be immense, especially given the criminal sanctions against individuals for cartel offences. That point was discussed at great length in Committee.
  I also endorse the words of Lord Hunt of Wirral, who did splendid work in the other place on this issue, and of the hon. Member for Twickenham (Dr. Cable), who said that the crux of the matter was who regulates the regulator. More importantly, how will that regulation operate? We have discussed that issue on several occasions, and the Cadbury code recommends separation. That is especially important for the OFT, given the sensitive and political nature of what it will do. It is staggering that Lord Sainsbury was complacent enough to say, in the other place:
  "The OFT is a government department, not a public limited company. and many of the principles of good corporate governance are aimed at business practices which do not have an obvious equivalent in government."—[Official Report, House of lords, 15 October 2002; Vol. 639, c. 714–15.]
  We have similar grounds of dispute on Lords amendment No. 2, and I wished to tease out of the Minister what the Government amendment means when it says:
  "they may reasonably be regarded as applicable in relation to a statutory corporation, to generally accepted principles of good corporate governance."
  The Government appear to be saying that what is good for the Government is not so good for business. That appears to be breathtakingly complacent, in the aftermath of the disgraceful behaviour over the Penrose inquiry into Equitable Life. The inquiry's delay has meant that tens of thousands of our constituents have not had an opportunity to take their cases to the ombudsman. Because it is a Government inquiry, it is also taking place under a veil of secrecy.
  We see parallels with the distinction between the requirements for the OFT and those for bodies in the private sector, in respect of the divide between the roles of chief executive and chairman. Given the recent scandals in both the public and the private sectors, the Minister will understand why the OFT and all other public bodies must be beyond reproach. How can the Government exhort business to get its act together if they are not willing to do so themselves?
  Mr. Andrew Lansley: I apologise to the Minister and to you, Madam Deputy Speaker, for not being here for the opening speech on this group of amendments. I hope that the Minister will forgive me if I reiterate a point that she has already made.
  I had thought that I understood what the Government were trying to do when we discussed in Committee the issues related to Lords amendment No. 1. The Government had previously vested the powers in one person—the Director General of Fair

  907
  Trading—but had resolved that it would be better in future for powers to be vested in a board, or body corporate, rather than a single individual. It is therefore suggested in the schedule that there be a chairman and not fewer than four other members.
  The other place helpfully explored the underlying intention of that change. The intention is, of course, to try to ensure corporate responsibility—a division of powers that does not allow their arbitrary exercise by an individual. No one is accusing the Director General of Fair Trading of acting in such a way, but there is a tendency in the media, if not in the business community, to personalise matters and to suggest that the exercise of powers by a single regulator relies excessively on that person. That is especially true when a regulator might be replaced.
  5.45 pm
  Corporate responsibility makes possible a sense of continuity and consistency on the part of a body corporate over a period of time, regardless of changes of personnel. That is a positive move, but it is curious that the Minister, in her response to my hon. Friend the Member for Blaby (Mr. Robathan), seemed to be reinventing the idea that the OFT chairman would be its director general. However, although the chairman may act as chief executive, under the Bill it is possible for the chairman to be appointed and for another OFT member to be the chief executive.
  Miss Melanie Johnson: I hope that I can help the hon. Gentleman. I pointed out earlier that the Bill allows the OFT to have a separate post of chief executive.
  Mr. Lansley: I thank the Minister, whose intervention reinforces my point. That possibility—of the OFT having both a chairman and a chief executive—is entirely consistent with the structure of schedule 1. I presume that the chief executive would be one of the other board members.
  However, the Government seem to be contemplating that their objective will be frustrated, initially at least. The fact that the chairman of the OFT will be its chief executive reinforces the sense that the office is governed by an individual more than by a set of corporate responsibilities. That is a pity. Business people say that experience tells them that it is desirable to separate the roles of chairman and chief executive, and they believe that that separation should be evident in a body with so much power over them.
  There is no notion that it is best practice among regulators to separate the roles of chairman and chief executive. There are good examples of people combining those roles in a satisfactory manner, but we are moving away from that structure and towards having a board in which the roles are separated.
  Mr. Robathan: This issue is so complex that it is beyond the grasp of some very clever accountants and lawyers, but does my hon. Friend agree that the checks and balances governing the relationship between a chairman and a chief executive are especially desirable in respect of the OFT?
  Mr. Lansley: It is not just a question of complexity. Indeed, that complexity suggests that the technical
  908
  nature of a problem might be understood better by an extremely able person such as John Vickers than by a board comprising some part-time members. The point of separating the roles of chief executive and chairman is to allow the chairman not to become immersed in detail. The chief executive needs competence when it comes to technical factors, but the chairman should be able to see the strategic wood rather than the trees. That is not to say that the chief executive should not have a role in strategy, but that can happen more satisfactorily if the chairman is distanced a little from the chief executive's responsibilities.
  I had understood that that was the direction in which the Government wanted to go. Lords amendment No. 1 seems merely to reinforce that intention on the Government's part and is consistent with the structure of clause 1 and schedule 1. I am surprised, therefore, that the Government are resisting something that is in line with their intentions.
  Mr. John Redwood: I have declared my interest in the register. I was a fellow of an Oxford college that received an application from Mr. John Vickers for a fellowship by examination. As one of those who voted when he became a fellow of that college, I have the greatest regard for his intellectual ability and the high standard of his written work. I have since got to know him rather better and I also have a high regard for his fairness of mind and his independence, so my remarks are in no way an aspersion upon the present personality in the role. When legislating on such a powerful position, however, it is incumbent on the House to think about what might be needed were a less suitable candidate to be in the position at some future date, or were some unexpected events to transpire that, by definition, we cannot—and would not—forecast today given the personalities involved. To have good and fair law, it is important to think about what would happen should there be problems with the personality and decisions of the director general. I do not think that that has been adequately covered so far by the legislation or by ministerial statements.
  The most obvious way in which power is sensibly limited in a pluralistic democracy is through competition. The irony of this post is that we are creating a monopoly to enforce competition on the commercial world. It is a paradox rather than a contradiction. Much as I admire competition, I would not want to advocate two or three offices of fair trading. That might be taking a good thing a little too far. However, that means that the most obvious way to control power, which we are rightly recommending to the private sector, cannot apply in this case.
  The Minister may say that legal action could be taken if individual companies or industries do not like the way in which verdicts and judgments are going. There are legal remedies, but often it is not good practice, even for a powerful company, to take a regulator to court— it prejudices the relationship considerably. Many businesses and industries understand that they have to live with these regulators for the foreseeable future and are naturally reluctant to go to court.
  There are appeals procedures against the judgments of the competition authorities, which are welcome and very necessary, but which are not sufficient for all the circumstances that might arise if a director general has

  909
  gone wrong and the concentration of power is being abused. That is the situation that my hon. Friends the Members for Blaby (Mr. Robathan), for Cities of London and Westminster (Mr. Field) and for Huntingdon (Mr. Djanogly) rightly said requires special attention.
  Splitting the roles could be of some assistance. There would be another senior figure to whom Ministers, the public and others could turn if it were felt that a director general had become unreasonable or unfair and was pushing the power too far. That provision would provide a balance or check in addition to the court and appeal system, which applies in some cases but not others. I want the Minister to reconsider all those factors because the Government have removed one of the most obvious ways in which this used to be done. They have decided that Ministers and politicians are particularly dangerous beings—I can understand why. given some of the Ministers that we have, although I am not commenting particularly on the present Minister. As a democrat before anything else, I believe that the correct way to control the power of powerful regulators is through democratic accountability to Ministers and this House, but the Government have made a series of legislative manoeuvres that will limit the power of politicians to intervene and, therefore, the power of the House to hold the regulator to account. That is a pity. In that context, I urge the Minister to think again about the Opposition's reasonable suggestion that a countervailing power should perhaps be introduced by having another senior person in the regulatory system who could be a court of appeal—a second place where one could go for informal redress and someone who could ultimately take action if the director general went over the top, became systematically unreasonable or became too powerful a figure.
  I can understand why the Minister might not want to retrace steps by increasing the accountability of the regulator to this House and to Ministers, although that is a pity, so the second best answer is the one that my colleagues recommended so strongly and I urge the hon. Lady to think again.
  Miss Melanie Johnson: First, the vast majority of the Lords amendments are minor drafting amendments. About 40 or 50 amendments were accepted in the other place in direct response to arguments put forward by the Opposition—indeed, some were Opposition amendments. I hope, therefore, that this Chamber will agree that the passage and consideration of the Bill has improved it as appropriate and that the Lords have played a useful role in that.
  The hon. Member for South Cambridgeshire (Mr. Lansley) mentioned the strategic board, which is to be a minimum of four plus the Director General of Fair Trading, and the hon. Member for Twickenham (Dr. Cable) mentioned accountability. First, it is not necessarily the case that it is easier to hold to account a chairman whose role is separate to that of the chief executive. Whether there is one person occupying two roles or two people with two different roles, they will still have to answer in the role in which accountability has to be exercised. We have improved that accountability in many ways, not least through the provision for public
  910
  consultation on an annual plan and a report. Although it is obviously a matter for this House and its Committees, we expect that an appropriate Select Committee, or Select Committees, will exercise scrutiny powers. A whole range of provisions have improved accountability rather than weakened it.
  Dr. Cable: According to the press, the subjects of the Lords amendments were referred to the Cabinet for discussion. Can the Minister confirm that? Can she also explain why the amendments were thought so threatening to the Government that they had to involve senior Ministers and the Prime Minister?
  Miss Johnson: I can neither confirm nor disconfirm that. I am not a member of the Cabinet as the hon. Gentleman is aware.
  This is not a question of accountability—
  Mr. Lansley: Perhaps the Minister will clarify something. She referred once again to the Director General of Fair Trading, which is confusing. I understood that we were to have a chairman at the Office of Fair Trading and that the post of director general was to be abolished under clause 2, so I do not understand why she referred to the director general.
  Miss Johnson: It is current speak. If the hon. Gentleman will forgive me for doing so, I am referring to the individual. It may be more helpful if I simply refer to Professor John Vickers, the current occupant of the role, and we would expect him to occupy both new roles, as I explained in my opening remarks, which the hon. Gentleman missed—
  Mr. Robathan: Was it just a slip of the tongue when the Minister referred to both new roles? Does she see them as separate roles, as we do? If so, why not have two separate people to carry them out?
  Miss Johnson: I have already explained that there is a possibility of splitting the roles. It is easy to argue whether there are two roles or one, but arguing how the role is divided is largely academic. It has strategic and operational aspects. The point is whether there is a separate strategic post. I could argue in different terms, but I am using those that have been put to me in the debate.
  6 pm
  The concerns expressed by several hon. Members, including the right hon. Member for Wokingham (Mr. Redwood), were mainly about individual decisions taken by the office. We see the role of any chairman, whether or not it is separate from that of the chief executive, exercised as part of a strategic board arrangement and providing strategic oversight. There would not be a decision-by-decision oversight of matters to do with the operation of the office.
  Mr. Redwood: I was interested in the abuse of power by the office-holder. That could take many forms. It might be a run of unfair decisions, unfair treatment in a particular case or pursuit of a line that did not tally with

  911
  the normal policy. All those things are theoretically possible and the Minister needs to tell us how they would be handled.
  Miss Johnson: I have already explained that there will be an annual plan, an annual report, and mechanisms for accountability. Those were discussed at considerable length during the Bill's proceedings. If serious problems arose or if a future chairman acted inappropriately and abused their power, the Secretary of State has the power under paragraph 3 of schedule 1 to remove from office the chairman or any other board member
  "on the ground of incapacity or misbehaviour".
  We thus have provisions to deal with the "mad and bad" under the proposed arrangements.
  The other main issue raised by hon. Members relates to aspects of corporate governance. We propose to amend those provisions because not all the principles of corporate governance are relevant to a public body or a Department. For example, the principles refer to remuneration practices and relations with shareholders, which are obviously not relevant to the Office of Fair Trading. The amendment simply ensures that the OFT has regard only to what can reasonably be considered relevant to it.
  To respond to the remarks made by the hon. Member for Huntingdon (Mr. Djanogly), the amendment is intended to ensure that the guidance, which was originally aimed at private companies, does not override for the OFT any guidance specifically for public bodies. The OFT is a public body, not a private company. Indeed, all the Hampel provisions were designed for public, listed companies. Clearly, the OFT is not a public, listed company.
  To reassure hon. Members, I stress that we expect the OFT to have regard to the combined code principles in so far as they relate to it. However, it will also have to act in accordance with rules and guidance: for example, that on public accounting, which is a different area. As I explained in response to the questions of the right hon. Member for Wokingham, if there is abuse we can deal with it.
  Under the present arrangements, it is possible for the OFT to appoint a separate chief executive officer. Currently, that is true. We envisage that we shall reconsider those arrangements in 2005 when John Vickers retires from his post to assess whether they will be appropriate after that time. They are entirely appropriate at present, however, and I hope that the House will support the motion.
  Question put, That this House disagrees with the Lords in the said amendment:—
  The House divided: Ayes 325, Noes 181.

  Division No.343]

  [6:04pm

  AYES

  Abbott, Ms Diane

  Atherton, Ms Candy

  Adams, Irene (Paisley N)

  Bailey, Adrian

  Ainger, Nick

  Baird, Vera

  Alexander, Douglas

  Banks, Tony

  Allen, Graham

  Barnes, Harry

  Anderson, rh Donald (Swansea E)

  Barron, rh Kevin

  Anderson, Janet (Rossendale & Darwen)

  Battle, John

  Bayley, Hugh

  Armstrong, rh Ms Hilary

  Beard, Nigel

  912

  Begg, Miss Anne

  Ellman, Mrs Louise

  Benn, Hilary

  Ennis, Jeff (Barnsley E)

  Benton, Joe (Bootle)

  Ewing, Annabelle

  Berry, Roger

  Field, rh Frank (Birkenhead)

  Blackman, Liz

  Fisher, Mark

  Blears, Ms Hazel

  Flint, Caroline

  Blizzard, Bob

  Flynn, Paul (Newport W)

  Boateng, rh Paul

  Follett, Barbara

  Borrow, David

  Foster, rh Derek

  Bradley, rh Keith (Withington)

  Foster, Michael (Worcester)

  Bradley, Peter (The Wrekin)

  Foster, Michael Jabez (Hastings & Rye)

  Brennan, Kevin

  Brown, rh Nicholas (Newcastle E Wallsend)

  Foulkes, rh George

  Francis, Dr. Hywel

  Brown, Russell (Dumfries)

  Gapes, Mike (Ilford S)

  Bryant, Chris

  George, rh Bruce (Walsall S)

  Burden, Richard

  Gerrard, Neil

  Burgon, Colin

  Gibson, Dr. Ian

  Burnham, Andy

  Gilroy, Linda

  Byers, rh Stephen

  Godsiff, Roger

  Caborn, rh Richard

  Goggins, Paul

  Cairns, David

  Griffiths, Jane (Reading E)

  Campbell, Alan (Tynemouth)

  Griffiths, Win (Bridgend)

  Campbell, Mrs Anne (C'bridge)

  Grogan, John

  Campbell, Ronnie (Blyth V)

  Hain, rh Peter

  Caplin, Ivor

  Hall, Mike (Weaver Vale)

  Casale, Roger

  Hall, Patrick (Bedford)

  Caton, Martin

  Hamilton, Fabian (Leeds NE)

  Cawsey, Ian (Brigg)

  Hanson, David

  Challen, Colin

  Harman, rh Ms Harriet

  Chapman, Ben (Wirral S)

  Harris, Tom (Glasgow Cathcart)

  Chaytor, David

  Havard, Dai (Merthyr Tydfil & Rhymney)

  Clapham, Michael

  Clark, Mrs Helen (Peterborough)

  Henderson, Doug (Newcastle N)

  Clark, Paul (Gillingham)

  Henderson, Ivan (Harwich)

  Clarke, rh Tom (Coatbridge & Chryston)

  Hendrick, Mark

  Heppell, John

  Clarke, Tony (Northampton S)

  Hesford, Stephen

  Clelland, David

  Hewitt, rh Ms Patricia

  Clwyd, Ann (Cynon V)

  Heyes, David

  Coaker, Vernon

  Hill, Keith (Streatham)

  Coffey, Ms Ann

  Hoey, Kate (Vauxhall)

  Cohen, Harry

  Hope, Phil (Corby)

  Connarty, Michael

  Hopkins, Kelvin

  Cook, rh Robin (Livingston)

  Hoyle, Lindsay

  Cooper, Yvette

  Hughes, Kevin (Doncaster N)

  Corston, Jean

  Humble, Mrs Joan

  Cousins, Jim

  Hurst, Alan (Braintree)

  Cox, Tom (Tooting)

  Hutton, rh John

  Crausby, David

  Iddon, Dr. Brian

  Cruddas, Jon

  Illsley, Eric

  Cryer, Mrs Ann (Keighley)

  Irranca-Davies, Huw

  Cummings, John

  Jackson, Glenda (Hampstead & Highgate)

  Cunningham, Tony (Workington)

  Dalyell, Tam

  Jackson, Helen (Hillsborough)

  Darling, rh Alistair

  Jamieson, David

  Davey, Valerie (Bristol W)

  Jenkins, Brian

  David, Wayne

  Johnson, Alan (Hull W)

  Davidson, Ian

  Johnson, Miss Melanie (Welwyn Hatfield)

  Davies, rh Denzil (Llanelli)

  Davis, rh Terry (B'ham Hodge H)

  Jones, Helen (Warrington N)

  Dawson, Hilton

  Jones, Jon Owen (Cardiff C)

  Dean, Mrs Janet

  Jones, Kevan (N Durham)

  Denham, rh John

  Jones, Lynne (Selly Oak)

  Dhanda, Parmjit

  Jones, Martyn (Clwyd S)

  Dismore, Andrew

  Joyce, Eric (Falkirk W)

  Dobbin, Jim (Heywood)

  Kaufman, rh Gerald

  Dobson, rh Frank

  Keeble, Ms Sally

  Donohoe, Brian H.

  Keen, Alan (Feltham)

  Doran, Frank

  Keen, Ann (Brentford)

  Dowd, Jim (Lewisham W)

  Kelly, Ruth (Bolton W)

  Drew, David (Stroud)

  Kemp, Fraser

  Drown, Ms Julia

  Khabra, Piara S.

  Eagle, Angela (Wallasey)

  Kidney, David

  Eagle, Maria (L'pool Garston)

  Kilfoyle, Peter

  Edwards, Huw

  King, Andy (Rugby)

  913

  King, Ms Oona (Bethnal Green & Bow)

  Pope, Greg (Hyndburn)

  Pound, Stephen

  Knight Jim (S Dorset)

  Prentice, Ms Bridget (Lewisham E)

  Kumar, Dr. Ashok

  Ladyman, Dr. Stephen

  Prentice, Gordon (Pendle)

  Lammy, David

  Price, Adam (E Carmarthen & Dinefwr)

  Lawrence, Mrs Jackie

  Laxton, Bob (Derby N)

  Primarolo, rh Dawn

  Lazarowicz, Mark

  Prosser, Gwyn

  Lepper, David

  Purchase, Ken

  Leslie, Christopher

  Purnell, James

  Levitt, Tom (High Peak)

  Quin, rh Joyce

  Liddell, rh Mrs Helen

  Quinn, Lawrie

  Linton, Martin

  Rammell, Bill

  Lloyd, Tony (Manchester C)

  Rapson, Syd (Portsmouth N)

  Llwyd, Elfyn

  Raynsford, rh Nick

  Love, Andrew

  Reed, Andy (Loughborough)

  Lucas, Ian (Wrexham)

  Reid, rh Dr. John (Hamilton N & Bellshill)

  Lyons, John (Strathkelvin)

  McAvoy, Thomas

  Robertson, Angus (Moray)

  McCabe, Stephen

  Robertson, John (Glasgow Anniesland)

  McDonagh, Siobhain

  MacDonald, Calum

  Robinson, Geoffrey (Coventry NW)

  McDonnell, John

  MacDougall, John

  Rooney, Terry

  McFall, John

  Ross, Ernie (Dundee W)

  McGuire, Mrs Anne

  Roy, Frank (Motherwell)

  McIsaac, Shona

  Ruane, Chris

  McKechin, Ann

  Russell, Ms Christine (City of Chester)

  McKenna, Rosemary

  Mackinlay, Andrew

  Ryan, Joan (Enfield N)

  McNulty, Tony

  Salmond, Alex

  MacShane, Denis

  Salter, Martin

  Mactaggart, Fiona

  Sawford, Phil

  McWilliam, John

  Sedgemore, Brian

  Mahmood, Khalid

  Shaw, Jonathan

  Mahon, Mrs Alice

  Sheerman, Barry

  Mallaber, Judy

  Sheridan, Jim

  Mandelson, rh Peter

  Shipley, Ms Debra

  Mann, John (Bassetlaw)

  Simon, Siôn (B'ham Erdington)

  Marris, Rob (Wolverh'ton SW)

  Simpson, Alan (Nottingham S)

  Marsden, Gordon (Blackpool S)

  Skinner. Dennis

  Marshall, David (Glasgow Shettleston)

  Smith, rh Andrew (Oxford E)

  Smith, rh Chris (Islington S & Finsbury)

  Marshall, Jim (Leicester S)

  Marshall-Andrews, Robert

  Smith, Geraldine (Morecambe & Lunesdale)

  Martlew, Eric

  Miller, Andrew

  Soley, Clive

  Mitchell, Austin (Gt Grimsby)

  Southworth, Helen

  Moffatt, Laura

  Spellar, rh John

  Mole, Chris

  Squire, Rachel

  Moonie, Dr. Lewis

  Steinberg, Gerry

  Moran, Margaret

  Stevenson, George

  Mountford, Kali

  Stewart, David (Inverness E & Lochaber)

  Mudie, George

  Mullin, Chris

  Stewart, Ian (Eccles)

  Munn, Ms Meg

  Stoate, Dr. Howard

  Murphy, Denis (Wansbeck)

  Strang, rh Dr. Gavin

  Murphy, Jim (Eastwood)

  Stringer, Graham

  Murphy, rh Paul (Torfaen)

  Stuart, Ms Gisela

  Naysmith, Dr. Doug

  Tami, Mark (Alyn)

  Norris, Dan (Wansdyke)

  Taylor, Dari (Stockton S)

  O'Brien, Bill (Normanton)

  Taylor, David (NW Leics)

  O'Brien, Mike (N Warks)

  Thomas, Gareth (Clwyd W)

  Olner, Bill

  Thomas, Gareth (Harrow W)

  O'Neill, Martin

  Thomas, Simon (Ceredigion)

  Organ, Diana

  Tipping, Paddy

  Osborne, Sandra (Ayr)

  Todd, Mark (S Derbyshire)

  Owen, Albert

  Touhig, Don (Islwyn)

  Palmer, Dr. Nick

  Trickett, Jon

  Perham, Linda

  Truswell, Paul

  Pickthall, Colin

  Turner, Dennis (Wolverh'ton SE)

  Pike, Peter (Burnley)

  Turner, Dr. Desmond (Brighton Kemptown)

  Plaskitt, James

  Pollard, Kerry

  Turner, Neil (Wigan)

  Pond, Chris (Gravesham)

  Twigg, Derek (Halton)

  914

  Tynan, Bill (Hamilton S)

  Winterton, Ms Rosie (Doncaster C)

  Vaz, Keith (Leicester E)

  Vis. Dr. Rudi

  Wishart, Pete

  Walley, Ms Joan

  Woodward, Shaun

  Wareing, Robert N.

  Woolas, Phil

  Watson, Tom (W Bromwich E)

  Worthington, Tony

  Watts, David

  Wright, Anthony D. (Gt Yarmouth)

  Weir, Michael

  White, Brian

  Wright, David (Telford)

  Whitehead, Dr. Alan

  Wright, Tony (Cannock)

  Williams, rh Alan (Swansea W)

  Williams, Mrs Betty (Conwy)

  Tellers for the Ayes:

  Williams, Hywel (Caernarfon)

  Charlotte Atkins and

  Winnick, David

  Jim Fitzpatrick

  NOES

  Allan, Richard

  Flight Howard

  Amess, David

  Flook, Adrian

  Ancram, rh Michael

  Forth, rh Eric

  Arbuthnot, rh James

  Foster, Don (Bath)

  Atkinson, Peter (Hexham)

  Fox, Dr. Liam

  Bacon, Richard

  Gale, Roger (N Thanet)

  Barker, Gregory

  Garnier, hon. Edward

  Baron, John (Billericay)

  George, Andrew (St Ives)

  Barrett, John

  Gibb, Nick (Bognor Regis)

  Beggs, Roy (E Antrim)

  Gillan, Mrs Cheryl

  Beith, rh A. J.

  Goodman, Paul

  Bellingham, Henry

  Gray, James (N Wilts)

  Bercow, John

  Green, Damian (Ashford)

  Beresford, Sir Paul

  Green, Matthew (Ludlow)

  Blunt, Crispin

  Hague, rh William

  Boswell, Tim

  Hancock, Mike

  Brady, Graham

  Harris, Dr. Evan (Oxford W & Abingdon)

  Brake, Tom (Carshalton)

  Brazier, Julian

  Harvey, Nick

  Breed, Colin

  Hawkins, Nick

  Browning, Mrs Angela

  Heald, Oliver

  Bruce, Malcolm

  Heath, David

  Burnett, John

  Hendry, Charles

  Burnside, David

  Hermon, Lady

  Burstow, Paul

  Hogg, rh Douglas

  Burt, Alistair

  Holmes, Paul

  Butterfill, John

  Horam, John (Orpington)

  Cable, Dr. Vincent

  Howard, rh Michael

  Calton, Mrs Patsy

  Howarth, Gerald (Aldershot)

  Cameron, David

  Hughes, Simon (Southwark N)

  Campbell, rh Menzies (NE Fife)

  Hunter, Andrew

  Carmichael, Alistair

  Jack, rh Michael

  Cash, William

  Jenkin, Bernard

  Chapman, Sir Sydney (Chipping Barnet)

  Johnson, Boris (Henley)

  Keetch, Paul

  Chidgey, David

  Kennedy, rh Charles (Ross Skye & Inverness)

  Chope, Christopher

  Clappison, James

  Key, Robert (Salisbury)

  Clarke, rh Kenneth (Rushcliffe)

  Kirkbride, Miss Julie

  Collins, Tim

  Kirkwood, Archy

  Cormack, Sir Patrick

  Knight, rh Greg (E Yorkshire)

  Cotter, Brian

  Laing, Mrs Eleanor

  Cran, James (Beverley)

  Lait, Mrs Jacqui

  Curry, rh David

  Lamb, Norman

  Davey, Edward (Kingston)

  Lansley, Andrew

  Davies, Quentin (Grantham & Stamford)

  Laws, David (Yeovil)

  Letwin, rh Oliver

  Davis, rh David (Haltemprice & Howden)

  Lewis, Dr. Julian (New Forest E)

  Liddell-Grainger, Ian

  Djanogly, Jonathan

  Lidington, David

  Dodds, Nigel

  Loughton, Tim

  Dorrell, rh Stephen

  Luff, Peter (M-Worcs)

  Duncan, Alan (Rutland)

  McIntosh. Miss Anne

  Duncan, Peter (Galloway)

  MacKay, rh Andrew

  Duncan Smith, rh Iain

  Maclean, rh David

  Evans, Nigel

  McLoughlin, Patrick

  Fabricant, Michael

  Malins, Humfrey

  Fallon, Michael

  Maude, rh Francis

  Field, Mark (Cities of London & Westminster)

  Mawhinney, rh Sir Brian

  May, Mrs Theresa

  915

  Mitchell, Andrew (Sutton Coldfield)

  Soames, Nicholas

  Spicer, Sir Michael

  Moore, Michael

  Spink, Bob (Castle Point)

  Moss, Malcolm

  Spring, Richard

  Norman, Archie

  Stunell, Andrew

  O'Brien, Stephen (Eddisbury)

  Swayne, Desmond

  Oaten, Mark (Winchester)

  Swire, Hugo (E Devon)

  Öpik, Lembit

  Syms, Robert

  Osborne, George (Tatton)

  Tapsell, Sir Peter

  Ottaway, Richard

  Taylor, Matthew (Truro)

  Page, Richard

  Taylor, Sir Teddy

  Paice, James

  Thurso, John

  Paterson, Owen

  Tonge, Dr. Jenny

  Pickles, Eric

  Tredinnick, David

  Portillo, rh Michael

  Trend, Michael

  Prisk, Mark (Hertford)

  Turner, Andrew (Isle of Wight)

  Pugh, Dr John

  Tyler, Paul (N Cornwall)

  Randall, John

  Tyrie, Andrew

  Redwood, rh John

  Viggers, Peter

  Reid, Alan (Argyll & Bute)

  Walter, Robert

  Rendel, David

  Waterson, Nigel

  Robathan Andrew

  Webb, Steve (Northavon)

  Whittingdale, John

  Robertson, Hugh (Faversham & M-Kent)

  Widdecombe, rh Miss Ann

  Wiggin, Bill

  Robertson, Laurence (Tewk'b'ry)

  Wilkinson, John

  Robinson, Mrs Iris (Strangford)

  Williams, Roger (Brecon)

  Roe, Mrs Marion

  Wilshire, David

  Rosindell, Andrew

  Winterton, Ann (Congleton)

  Ruffley, David

  Winterton, Sir Nicholas (Macclesfield)

  Russell. Bob (Colchester)

  Sanders, Adrian

  Yeo, Tim (S Suffolk)

  Selous, Andrew

  Young, rh Sir George

  Shepherd, rh Mrs Gillian

  Younger-Ross, Richard

  Simmonds, Mark

  Simpson, Keith (M-Norfolk)

  Tellers for the Noes:

  Smith, Sir Robert (W Ab'd'ns & Kincardine)

  Mr. Mark Hoban and Mr. Mark Francois

  Question accordingly agreed to.
  Lords amendment disagreed to.
  Government amendment (a) to Lords amendment No. 2 agreed to.
  Lords amendment No. 2, as amended, agreed to.
  Lords amendments Nos. 3 to 6 agreed to.

  New Clause
  Lords amendment: No. 7, after clause 16, to insert the following new clause—Tribunal: regulations—
  (1)The Lord Chancellor and the Secretary of State may together make regulations—
  (a) empowering the courts to transfer to the Tribunal for determination by it any issue arising in any civil proceedings the determination of which depends on whether provisions of Chapter I or II of the 1998 Act or of Article 81 or 82 of the Treaty have been infringed where, in the opinion of the court making the transfer, the transfer would be conducive to the efficient conduct of the proceedings;
  (b) making any rules that the Lord Chancellor and the Secretary of State may deem to be appropriate as ancillary to the power to make such transfers or to be reasonably required in connection therewith and in particular, but without prejudice to the generality of the foregoing, to the effect that—
  (i) on making such a transfer, the court making the transfer may state facts that the Tribunal shall then treat as established for the purposes of determining the issues transferred to it;
  (ii) after having made its determination, the Tribunal shall remit the matter to the court that made the transfer to it, declaring the determination of that issue by the Tribunal, which, subject to any clarification or amplification by the Tribunal of its determination that may be requested by the court that made the transfer, shall then be treated as a determination of that issue by that court;
  (iii) enabling courts that have made, or have in contemplation the making of, such transfers and the Tribunal to co-operate together in any way that they deem to be appropriate to enable issues arising in the proceedings before then to be determined as efficiently as possible.
  (2) The Lord Chancellor may appoint as president and as chairman of the Tribunal judges of any of the courts provided that, before appointing a judge of the Court of Session or sheriff courts under this subsection, the Lord Chancellor shall first consult the Lord President of the Court of Session.
  (3) In this section references to "the courts" are to the High Court of Justice and the county courts in England and Wales and Northern Ireland and the Court of Session and the sheriff courts in Scotland.
  (4) The power to make regulations under this section is exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.
  Miss Melanie Johnson: I beg to move, That this House disagrees with the Lords in the said amendment.
  Madam Deputy Speaker: With this it will be convenient to take Government amendment (a) in lieu, Lords amendments Nos. 8 to 17, 74, 124, 189 to 209 and the Government motion to disagree thereto and Government amendment (a) in lieu, and Lords amendment No. 210.
  Miss Johnson: Lords amendment No. 7 would give the Secretary of State and the Lord Chancellor the power to make regulations allowing the courts to transfer to the Competition Appeal Tribunal issues arising in civil proceedings that require a determination of whether there has been an infringement of competition law.
  The main argument made for the amendment in another place was that, following the implementation of the so-called modernisation project, which is likely during 2004, the ordinary courts will be given the power to apply article 81 of the EC treaty in full. They may therefore have to deal with significantly more civil cases raising complex competition law issues. The argument was that the courts were not equipped to deal effectively with competition law points, which often involve complex economic evidence.
  Article 81(3) issues are thought to be particularly difficult, requiring an assessment of whether countervailing benefits arising from an anti-competitive agreement are sufficient to legitimise it. The Competition Appeal Tribunal, an expert body set up to hear appeals against decisions of the OFT on such matters, was perceived as better qualified to determine these matters.
  The Government argued in another place that it was the role of the courts to build up the expertise in competition issues needed to handle competition matters arising in civil proceedings. There are practical ways in which the expertise of judges can be enhanced and, if necessary, certain judges could be nominated as specialists in competition law. The courts will also be assisted when necessary by the Office of Fair Trading and the European Commission. Under the modernisation regulation, the Commission will be empowered to submit written observations to the national courts on issues relating to the application of articles 81 and 82, and, when we implement modernisation, we intend to provide a similar power for

  917
  the OFT. Both bodies, with the permission of the court in question, will also be able to submit oral observations as expert witnesses.
  Our current belief, therefore, is that the courts will be able to cope with the consequences of modernisation without the need for powers to transfer issues arising in civil proceedings to the Competition Appeal Tribunal. However, we recognise the strength of feeling in another place that an explicit power should be provided in the Bill to allow regulations to be made allowing the courts to transfer competition law matters to the Competition Appeal Tribunal for determination by that body. If the proponents of the amendment are right, and the courts are not able to handle competition issues effectively, there will be specific powers to allow matters to be transferred. If the Government are right, the powers need never be used. On reflection, we now agree that an amendment along the lines of Lords amendment No. 7 would be a prudent piece of future proofing, and should be made.
  However, there are some technical difficulties with Lords amendment No. 7 as it is currently drafted, which is why we propose to replace it and Lords amendment No. 209 with our amendments in lieu. I would like to highlight the main changes. First, the redraft provides that the Lord Chancellor alone, rather than jointly with the Secretary of State, would exercise the power to make regulations. There is no particular significance to that change— it is simply customary for the Lord Chancellor to have sole responsibility for such matters. Secondly, the amendment in lieu not only refers to the regulation-making power but makes it clear that the rules of court may be made in connection with a transfer. Thirdly, the amendment removes the power for the Lord Chancellor to appoint judges directly to the key positions on the Competition Appeal Tribunal. In another place, it was accepted that this power was not needed. The power exists already, but it would cut across the policy of the Lord Chancellor's Department that all appointments to tribunals should be made through open competition.
  The second amendment in lieu, to Lords amendment No. 209, makes a corresponding adjustment to the scope of the tribunal rules so that they may make provision in connection with the transfer of proceedings from a court. Lords amendment No. 209, which was a Government amendment, is superseded by the amendment in lieu.
  I would now like to turn to the remaining amendments in this group: amendments Nos. 8 to 17, 74, 124, 189 to 208 and 210. That group of Government amendments reflects work that was done in the other place to improve the drafting of part 2 of the Bill and related provisions. Part 2 is concerned with the establishment of the Competition Appeal Tribunal and the allocation to it of new powers such as the ability to hear damages claims arising from infringements of competition law. It also provides for such claims to be brought on behalf of named consumers.
  The most important changes here are the technical improvements to clauses 17 and 18 of the Bill. Amendment No. 8, for example, makes it clear that the scope of a damages claim made before the tribunal is to be the same as that made before a court. It also makes it clear that the damages or other sums that may be
  918
  awarded include all monetary awards that could be awarded by a court in respect of the relevant infringement. Amendment No. 9 ensures, among other things, that an infringement of competition law has to be established before a group claim can be brought, and that the right to bring a group claim does not affect the right to bring a claim before the court.
  Amendment No. 11, too, is worth highlighting. It enables the Competition Appeals Tribunal to order the defendant to pay any monetary remedies to the body bringing the claim for onward distribution to the relevant individuals, as long as all of them consent. The damages will still be awarded to the individuals rather than the representative body, which will be acting on their behalf in receiving the amounts due.
  Clause 19 adds a new section 58A to the Competition Act 1998 to provide that infringement findings— for example an OFT decision that a chapter 1 prohibition has been breached— will be binding in the courts when the courts are considering monetary claims. Amendment No. 17, however, clarifies that the new section does not apply in relation to infringement decisions made before the commencement of the section. It is important, for business certainty reasons, that there should be no retrospective application of the new provisions.
  Amendments Nos. 74, 124 and 205 remove the reference to the period for bringing an appeal to the Competition Appeal Tribunal following a decision in a merger or market investigation. It is still our intention to have firm, fixed time limits, but these timings will now be set by the tribunal's rules, on which we are currently consulting. Part of that consultation seeks views on whether those periods should be one month for a merger and six weeks for a market. We have not yet come to a view on the appropriate length of either period. However, as we may end up changing these periods in the tribunal's rules, we decided that it would be better to remove the reference to three months from the Bill.
  The remaining amendments in this group are consequential on the changes to clauses 17 or 18 or are minor and technical improvements to this part of the Bill. I do not propose to go through them in detail, but I invite the House to agree that they should be made, and I am happy to address them should hon. Members so wish.
  Mr. Robathan: We are, of course, delighted that the Government have listened to the sensible arguments put forward in another place by my noble Friends Lord Kingsland, Lord Hunt of Wirral and others. The Government are rather foolish to say that their current belief is that the provision will not be necessary. Experienced lawyers have concluded that it will be necessary, and I am therefore delighted that the Government have accepted our views. That merely begs the question why such a contingency plan was not included in the Bill in the first place. With 750-odd amendments to the Bill, however, we are not that surprised.
  We have taken unofficial legal advice on the matter, which was that amendment (a) to Lords amendment 7 is somewhat better than the one that we produced, so we are happy to accept it— one would expect a parliamentary draftsman to do better than an amateur

  919
  parliamentary draftsman. Nevertheless, I would like to thank Sir Jeremy Lever, an eminent Queen's counsel, for his sensible and public spirited assistance.
  I want to raise some concerns relating to Scotland and Northern Ireland. I am not a lawyer, so I hope that the Minister will be able to put me right— as she knows, I have come to the Bill somewhat late, so perhaps she will be able to do so straight away. Will the Government clarify whether separate measures will be necessary for Scotland and Northern Ireland? Although the Lord Chancellor is given particular mention, I had understood that the Lord President had jurisdiction in Scotland. I certainly understand that the joint working party of the Bars and Law Societies of the United Kingdom says that, in this case, the Lord Chancellor would not have the relevant jurisdiction. Could the Minister scurry around to get some legal advice on that point before we finish our consideration of this clause?
  Mr. Redwood: I welcome the Government's change of heart in one important respect. I think that they will find that they need to make use of the provision. As for the principal arguments, it will expedite proceedings, as the general court system is very congested, and some of these cases need to be dealt with in a timely way. Furthermore, the technical complexity of this extremely voluminous Bill, which is very much in evidence this evening, will require specialists to argue the case and to adjudicate the complex issues involved. It will therefore often be necessary to send such cases to a tribunal to be dealt with by people who are well versed in this complicated area, and to ensure that they are dealt with in an expeditious manner. I hope that the Minister will enter fully into the spirit of the Government's welcome change of heart and recognise that it is not just a belt-and-braces provision. It was strongly recommended by independent lawyers of no political persuasion who have worked in this area for many years and have a firm view of how such matters should he handled.
  6.30 pm
  Miss Melanie Johnson: I am grateful to the right hon. Member for Wokingham (Mr. Redwood) for his remarks. Of course, I enter into the spirit as well as into the letter of the suggestion. I reassure him of that.
  The Government have not acted in the way that the hon. Member for Blaby (Mr. Robathan) suggested. We have not been foolish. We believe that the provision will not, in general, be necessary and that the courts will equip themselves with the necessary expertise. Views obviously differ, so we have accepted the wisdom of the suggestion that the Bill should contain the provision. Accordingly, we have tabled amendments that are as effective and as apropriate as possible.
  I am not a lawyer, but I have taken legal advice about the issue of separate measures in Scotland and Northern Ireland. The court rules for Northern Ireland are made by the Lord Chancellor and are not a reserved matter. In fact, Northern Ireland will be covered exactly as specified in the Bill. The hon. Member for Blaby is correct about the position in Scotland, but the law will be consistent. The Lord President will make the rules in Scotland in the way that the hon. Gentleman suggested. There will be a separate arrangement for Scotland, but not for Northern Ireland.
  Lords amendment disagreed to.
  Government amendment (a) in lieu of Lords amendment No. 7 agreed to.
  Lords amendments Nos. 8 to 17 agreed to.

Clause 21

  DUTY TO MAKE REFERENCES IN RELATION TO COMPLETED MERGERS
  Lords amendment: No. 18 in page 11, line 19, leave out paragraph (e) and insert—
  "(e) the European Commission is considering a request made, in relation to the matter concerned, by the United Kingdom (whether alone or with others) under article 22(3) of the European Merger Regulations, is proceeding with the matter in pursuance of such a request or has dealt with the matter in pursuance of such a request."
  Miss Melanie Johnson: I beg to move, That this House agrees with the Lords in the said amendment.
  Mr. Deputy Speaker (Sir Alan Haselhurst): With this we may discuss Lords amendments Nos. 21, 22, 24, 28, 34, 53, amendments (a) and (b) thereto, 54, amendments (a) to (c) thereto, 65, 66, 78, 81, 82, 84, 88 to 90, 116, 117, 136 to 142 and 211.
  Miss Johnson: This group of amendments covers issues relating to the interaction between domestic regimes and European competition law. In particular, we have introduced amendments to clarify and improve the relationship in four areas. We have sought, first, to highlight the primacy of EC competition law where it applies and, secondly, to clarify the domestic duty to reflect that. The third point is the need to ensure that the Secretary of State can act to protect legitimate interests in cases that fall to the EC merger regime for assessment of the competition aspects. The fourth and final area is the minor changes to the power to take account of modernisation. They are sensible amendments to ensure that the new domestic regime is a good fit with EC competition law.
  The Government intend to resist the amendments to Lords amendment No. 53, and I shall take your advice, Mr. Deputy Speaker, on whether I can do that. However, my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) will no doubt wish to speak to his amendments.
  Mr. Harry Barnes: I wish to speak to amendments (a) and (b) to Lords amendment No. 53, and to amendments (a), (b) and (c) to Lords amendment No. 54.
  This is the fourth attempt that has been made in the two Houses to try to insert into the Bill serious provisions relating to the public interest that are in line with those in section 84 of the Fair Trading Act 1973. Under the current legislation, it is possible in theory for the Secretary of State or the Director General of the Office of Fair Trading to refer to the Competition Commission a merger that might seriously affect the public interest. In the 1973 Act, the public interest is described as relating to the balance of industry and employment throughout the United Kingdom and to a

  921
  consideration of the ability of UK producers to compete in export markets. If those markets are harmed or damaged, the Competition Commission can consider a merger.
  Unfortunately, since the time that Lord Tebbit was a Member of the House, the policy of Governments of both persuasions has been not to make great use of that power. It is not true to say that it has never been used, but it has been difficult to persuade Governments to act. Ideally, I would like moves to be made so that action is obligatory while retaining as much as possible of the 1973 provision. I have pursued that aim on several occasions in the House. There is much concern in the trade union movement about this matter, and the general secretary of the Trades Union Congress and most of the major trade unions have made representations to the Secretary of State. I elaborated on that in our earlier debates on this issue.
  The Bill restricts public interest considerations to defence matters and contains a longstop provision, which means that the public interest can be referred to. However, the Government have never defined what that means or clarified the circumstances in which the provision could be used. The Conservatives tend to fear the Government's provision, believing that a horse and cart could be driven through it. However, I see the Government's approach as something of which we know not what. It is unlikely to be used in any feasible circumstances, so it is likely to be a fairly insignificant power. We therefore need a much stronger provision for the public interest to be introduced.
  We first discussed the matter in Standing Committee. The probing amendments that I tabled were based on the experience in my constituency of the takeover of Biwaters by Saint-Gobain, which resulted in the immediate loss of 700 jobs. In terms of employment, the distribution of industry, export markets and viability, Biwaters was in a good position. What happened was a disgrace. We should have activated and made use of the 1973 measure.
  I forced a vote on the issue on Report, as reflected at columns 1094–95 of Hansard on 13 June, when I managed to muster 39 in support of the measure. Some 245 hon. Members voted against it. I do not imagine that the Government are going to have a change of heart and make a concession, so I intend to divide the House on my amendments. The vote on 13 June was the only hostile vote by Labour Members because the Bill contains many acceptable provisions. Indeed, there has been little hassle throughout its proceedings. The Bill is lengthy. It has been greatly debated and many amendments have been tabled, but there has not been a raft of votes or heated discussions. Opposition Members have in general been happy with the Bill. They view it as a way to produce a dynamic economy, and that part of new Labour ideology appeals to some of them.
  922
  A third attempt was made to introduce public interest measures. When the Lords discussed the Bill in Committee, probing amendments were tabled by Baroness Turner, supported by Lord Hoyle. My amendments have a different framework and context.
  Mr. Robathan: I just want to clarify one thing. Although we may not object to everything, we are not entirely happy with the Bill. However, much of it is sensible.
  Mr. Barnes: I realise that many people in the City and elsewhere will be happy with many of the measures. However, other people are attracted to different aspects of it, such as consumer rights, which we wanted to extend to worker rights, and bankruptcy. Had things been different, the 11 Clay Cross councillors, some of whom still represent people in my constituency, might have faced a different system.
  The scope of our debate is reduced to matters associated with the European Union and clawing back powers. In addition, the definition of public interest is a bit restrictive because it refers to the distribution of employment and industry. It is drafted in that way because of the possibility that it would be debated and can be discussed only in the context of amendments Nos. 53 and 54.
  6.45 pm
  We are restricted to European merger laws. They relate to mergers of a certain scale and to a community dimension, which in turn relates to a complex threshold provision. They are handled exclusively by the European Commission rather than national competition authorities. However, European law allows national competition authorities to request the Commission to consider a merger on a number of grounds including defence interests, mergers that primarily affect the member state and cases in which a member state needs to take action to protect its legitimate interests. The amendments would instigate and extend public interest concerns.
  The subject was elaborated on and discussed in the Lords. Lord Sainsbury explained that the intention of the amendments tabled there was
  "to preserve the current position, which is that, where necessary, the UK can use the domestic merger control regime to take action on matters other than competition, such as defence, in relation to cases that fall to"
  the economic community merger regulations. He went on:
  "It is important to note, however, that the power to protect legitimate interests will not range any wider than the public interest considerations that may be taken into account under the new UK merger regime."—[Official Report, House of Lords, 15 October 2002; Vol. 639, c. 789.]
  My intention is not in line with that. I want to widen the scope, even though the extent to which I can do that under the procedures of the House is limited.
  I feel strongly about the matter, especially in light of the Biwaters experience and ensuing developments. It seemed that the Government were ready to get rid of the public interest concern as it related to mergers. The House needs another chance to express its views on that so that a residual part of the public interest remains.
  Dr. Cable: I admire the hon. Gentleman's persistence and stamina. I have supported him because he has a

  923
  case, although my point of departure is different from his. The existing system, which allows Ministers to make final decisions on mergers, has considerable disadvantages. That is why the Bill gets rid of it. The problem with the system is that it leads to capricious political intervention, but it does have some advantages. Ministers are ultimately accountable and can act in a wider public interest. There will be times, such as the impact of a merger on a geographical area, when that would be useful. The hon. Gentleman is right that it is desirable to have the principle of a backstop provision.
  Mr. Barnes: There is no arrangement by which the Director General of the Office of Fair Trading can use the public interest argument when referring a case to the Competition Commission. We should consider whether that power should fall to the Secretary of State or the director, or a combination of the two.
  Dr. Cable: The hon. Gentleman suggests options, but we are arguing about the principle.
  Mr. Redwood: The hon. Gentleman said that ministerial decisions can be capricious. As a Minister who was involved in making competition decisions, I hasten to put it on the record that they were never capricious. Had they been capricious, they would have been subject to judicial review and legal proceedings. There are rightly strict controls on how Ministers make such decisions and on how they have to be promulgated and explained. The hon. Gentleman should reflect again. There can never be a capricious ministerial decision unless it is one that is overturned.
  Dr. Cable: The right hon. Gentleman may be playing with words. He is describing the procedure correctly, but Ministers have in the past made decisions on mergers policy that do not appear to have been inspired by competition policy or the public interest. That is why the Bill was introduced and why it has the support of all parties.
  The hon. Member for North-East Derbyshire (Mr. Barnes) has made his presentation on several occasions. I am not sure that we would be well served by having another Division on the matter, but if the hon. Gentleman wants to press it to a vote, I will support him.
  John McDonnell: The debate on public interest and public security, as defined by the European merger regulations, has been extensive but not particularly clear. It would be helpful for future interpretation of the law if the Minister stated on record whether, under those regulations, the definitions of public interest and public security take any account of the distribution of industry and employment. Are rates of employment and unemployment in an area a consideration in determining public interest or public security? Can the Minister give examples in which those factors would be taken into account?
  Mr. Redwood: I hope, Mr. Deputy Speaker, that if the Minister catches your eye, she will comment a little more on the main purpose of these amendments and on the relation between UK and European Union law.
  When the Bill that became the Competition Act 1998 was before the House, we were assured that it would be the final statement on the necessary division between
  924
  EU law and UK law. We were told that it would implement a new system that would ensure that we were not at variance with Brussels and that we had separated powers correctly. We are now told by Ministers that the Act is far from perfect and that we must pass voluminous legislation to get it right, even though EU competition law has not changed very much. The main definitions for that law were set out in the merger regulations and other important texts that have not changed in the intervening period.
  Will the Minister explain why errors were made and why she feels that the Government have now got it right? Is she prepared to say that this is a definitive version of the relative powers of the EU and the UK in this field, barring, of course, further change because of a development in the superior law of the EU? I was pleased to hear the Minister admit that EU law in this field is superior— and that that is reflected in the Bill— because I have long believed and argued that, and I have encountered resistance from those who want to pretend that the EU is less powerful than it is. That was an important statement by the Minister.
  Mr. Djanogly: I point out, in support of my right hon. Friend, that it was repeatedly said in Committee that the previous legislation is so recent that we have not had time to assess its implications and how it works in practice.
  Mr. Redwood: My hon. Friend has made the powerful point that such complicated legislation, with many regulations, takes a long time to bed down. It takes time to establish the case law by which we see how legislation is working, so the Government, figuratively speaking, have pulled up the plant to see whether it is growing, which is not a good way of practising horticulture. I am worried that they may do that again because of the enormous complexity of this Bill. They lack a sureness of touch because they are trying to marry their political wish to tell the British people that Europe has very little power and is not taking strong legal powers beyond those of the nation states in their desire to align themselves with the obviously strong powers held by the Brussels regime in this and many other areas.
  Will the Minister reassure the House that she is aware of the current negotiations for a constitution for Europe? That is important work, and drafts have been in circulation. Can she assure the House that nothing in those drafts clarifying the relative powers of the Union and the member states will mean that she, or her successor, has to return to the House within a couple of years to legislate yet again? One worries that, as the Government fumble for a solution, this will become a perpetual round of legislating, revising and amending. That would mean that all those in the business community who are desperate for certainty about the law, about who applies it and about who has power would constantly have to go to expensive lawyers for interpretations of lengthy new legislation.
  I have declared my interest in the register, and I do not speak on behalf of business, but that community is increasingly befuddled by the length and complexity of legislation and the constant changes to it. It is beginning to feel that the Government change the law rather more often than does the EU, although they claim that in some way the EU requires those frequent changes.

  925
  Will the Minister reassure us that she has taken account of all the best legal advice about the current position, and that it is now definitive? Secondly, will she reassure us that nothing doing the rounds in Brussels or elsewhere in the EU is likely to make a material change? Thirdly, will she confirm that there is nothing in the preliminary drafts for the European constitution that will require us to revise the Bill? Fourthly, does she think that there can now be a period of greater certainty and clarity to allow our competition regime to bed down for years and give us a good chance to see how it works?
  Mr. Mark Field: I support the words of my right hon. Friend the Member for Wokingham (Mr. Redwood), and I think that the issue of certainty is central to the debate about the relationship between the EU legal regime on competition and that in the UK. My right hon. Friend rightly addressed the demand from business for more certainty. It is certainly odd that legislation passed as recently as 1998 is now being updated when it has not had an opportunity to bed down.
  My concern, however, goes further, and I am interested to hear the Minister's response. There seems to be confused thinking about the role of competition policy. Indeed, it has to be said that, whatever one thinks of EU competition policy, it is fairly certain, and it has a test— the dominant position test. One of the concerns addressed in Committee and in the Lords is that the theory underlying the Government's introduction of the Bill, which will presumably be an Act before long, is that it will bring in a "substantial lessening of competition" test. It strikes me that, notwithstanding the Minister's reassurance a few moments ago, there is a risk that if we are not careful we will fall foul of EU legislation and, as a result, our businesses will fall foul of the European court. I reiterate the point that we must have give the situation proper consideration and take full legal advice. The Minister reassured us that the Bill will be part and parcel of the EU process, but I can imagine that changing, particularly as we now seem to be diverging from the dominant position test.
  I turn briefly to the contribution of the hon. Member for North-East Derbyshire (Mr. Barnes) and that of my old sparring partner, the hon. Member for Hayes and Harlington (John McDonnell). I am sure that he is aware that only yesterday the Lords finally gave the City of London (Ward Elections) Bill its Third Reading. However, I am concerned that in his desire to get a balanced distribution of industry and employment in his amendment, the hon. Member for North-East Derbyshire presumes that the trade unions are acting in the public interest. I do not believe that that is the case. The trade unions act, rightly, in their members' interests, but the idea that those interests and the public interest are one and the same is naïve. I do not favour more Government control.
  7 pm
  Mr. Barnes: Of course, a substantial part of the Enterprise Bill covers consumers, who have their own individual concerns and legitimate interests. The hon. Gentleman may remember that I attempted to table another batch of amendments arguing that workers organisations should have such representation, which is
  926
  not to say that they do not have sectional and selfish interests as well. However, they also have legitimate interests, which sometimes produce a fruitful result.
  Mr. Field: The hon. Gentleman will forgive me if I cannot remember all his contributions. I am sure that, like me, he is befuddled by a number of matters that have come before the House. The Bill has not only completed its Report stage but has come back before the House today. However, I accept his point that collective interests are at stake, including consumer matters which, no doubt, we will discuss later, even if only in outline.
  Opposition Members are concerned that large consumer bodies will play a more important role in the Bill's operation than their status necessarily dictates. They are not unaccountable, but should be regarded as a party with particular interests that do not necessarily amount to the public interest. I shall be interested in the Minister's response, but I am concerned that the amendments are proposing more Government control. It would be unwise to second-guess markets, as that served the country badly in the 1960s and 70s. If that were introduced in the Bill, there would be no great advantages, either for enterprise or the business community as a whole.
  Miss Melanie Johnson: May I respond first to the amendments tabled by my hon. Friend the Member for North-East Derbyshire (Mr. Barnes)? I recognise that he has spent a considerable time trying to convince the Government of the wisdom of his case. Like the hon. Member for Twickenham (Dr. Cable), I admire his stamina and efforts.
  The amendments to Lords amendments Nos. 53 and 54 seek to enable the Secretary of State to intervene and act to protect matters relating to
  "the legitimate interests of the balanced distribution of industry and employment"
  in cases that fall to the European Community merger regulation—the ECMR. I am not sure that the line numbers are accurate, but I think that that is the sense of my hon. Friend's proposals. We have previously debated in the House amendments that sought to introduce the consideration of matters such as employment in cases handled under the domestic regime. I shall not repeat in detail why the Government believe such changes are undesirable, although I agree with my hon. Friend that those matters are important. The Government believe that vigorous competition is the key to ensuring that United Kingdom businesses are better able to provide long-term and sustainable employment. Our record of creating more than 1.5 million new jobs since 1997 is proof of the success of our strategy.
  The domestic regime that we have proposed ensures that competition is the key consideration—we have made it clear that that should be the focus of future merger inquiries. The European regime already operates along those lines. Under the ECMR, the European Commission looks solely at the competition aspects of the merger. Only in a very few cases is it necessary for member states to act in parallel to address non-competition concerns. We have proposed that the grounds on which the Secretary of State acts in ECMR

  927
  cases should be no wider than those in which she may act in domestic cases. It seems sensible, therefore, to link the European intervention power to the considerations specified in clause 57. However, we also need to be aware of the impact of European law in ECMR cases. The ECMR provides that the grounds on which member states can act is limited to those specified as legitimate interests or recognised as such by a decision of the Commission. The grounds suggested by my hon. Friend are neither specified nor the subject of a Commission decision, so the amendments would have no effect in law. For those reasons, I urge him to withdraw his amendments, although I respect the fact that he has said that he may wish to press them to a vote.
  Turning to the remarks of the right hon. Member for Wokingham (Mr. Redwood), the Competition Act 1998 and the Bill deal with different matters. The Competition Act deals with the introduction of prohibitions on anti-competitive agreements and abuses of the dominant position. The Bill is mainly about the reform of the merger and monopoly regimes, which were not touched by the Competition Act. The Bill completes the process of reform. We have also taken sensible steps to provide for future changes in Europe by providing for a power to deal with EC modernisation issues, although I emphasise the fact that the amendments are minor in relation to such matters. I hope that that clarifies my point that the Bill is a complementary exercise which completes the process begun by the Competition Act. Indeed, it also completes the reform of competition legislation and the competition regime in the UK, which lay untouched for several decades before the Government came to power in 1997.
  Mr. Redwood: Is the Minister assuring the House that the Bill completes the reform process so that we are completely compatible with European Union law? We would therefore need only to make changes in future if there were a big upheaval in EU law. Will she also confirm that no such upheaval is planned in the current discussions on the constitution and other matters?
  Miss Johnson: The right hon. Gentleman knows full well that it would be foolish of me to respond to his quest for assurances. We are doing our best to ensure that we do not have to make significant changes in future. I doubt whether he had a crystal ball when he was in government, and I do not have one either. The provisions are as future-proof as possible in relation, for example, to the changes mentioned by the hon. Member for Cities of London and Westminster (Mr. Field). We are discussing the future of the dominance test with the Commission and have moved towards a substantial lessening of competition. We would like the European authorities to do the same, but if they do not, that does not pose any difficulties for us. However, that is one of the main areas of discussion on competition law. I therefore hope that the right hon. Member for Wokingham accepts my assurances.
  Lords amendment agreed to.
  Lords amendment: No. 19, page 11, line 43, after "of" insert
  "a notice or possible notice under section 41(2) or 58(2) or"
  Miss Johnson: I beg to move, That this House agrees with the Lords in the said amendment.
  Mr. Deputy Speaker: With this we may discuss Lords amendment No. 20 and Government amendment (a) thereto, and Lords amendments Nos. 23, 25 to 27, 29 to 33, 35 to 52, 55 to 64, 67 to 73, 75 to 77, 79, 80, 83, 85 to 87, 91 to 115, 118 to 123, 125 to 131 and 212 to 225.
  Miss Johnson: I shall speak to this group of merger and market amendments in two parts. First, I shall deal with the turnover threshold, and then I shall speak to themany technical amendments that constitute the remainder of the group.
  On the turnover threshold, we agree with the Lords that clause 22 should be amended. We believe that Lords amendment No. 20, which replaced the £45 million threshold for mergers with one of £100 million, should itself be amended by amendment (a), which inserts one of £70 million.
  The turnover threshold is one of two jurisdictional tests that make a merger eligible for investigation by the Office of Fair Trading. The other test is whether a merger would create or enhance a 25 per cent. share of supply. It is important to emphasise at the outset that these are eligibility thresholds only. If a merger involves the acquisition of a business with a UK turnover above the relevant threshold, the OFT is entitled to inquire into it. It does not mean that the merger will be referred or blocked but simply that the OFT can consider whether the merger raises sufficient competition concerns to justify a reference. The great majority of qualifying mergers are not subject to any further action by the competition authorities, but it is important that they can be assessed.
  The purpose of thresholds is to strike a balance between excessive and necessary regulation. They should be aimed at ensuring that mergers of real concern can be examined, but avoid interference with cases of no material competition concern. Getting the level right is necessarily a matter of judgment.
  The Bill replaces the current assets-based jurisdictional threshold with a turnover threshold. It is widely agreed that turnover is a better indication of the economic significance of a merger. The issue is at what level the new threshold should be set. Our goal in selecting the level of the turnover test has always been to bring within the scope of the merger regime broadly the same number of companies as currently qualify under the assets test. To get this right will inevitably take experience.
  Our research indicated that a £45 million level would represent neither a tightening nor a loosening of the domestic merger control regime. In the context of a Bill that has as one of its primary aims the safeguarding of competition, we think that it would be odd to be thinking in terms of any significant relaxation of the scope of the regime. Anti-competitive mergers can do serious harm to the interests of consumers and to the economy at large. Avoiding that is the whole point of merger control and it should not be overlooked.

  929
  Amending the threshold to £100 million, as the Lords propose, runs a serious risk of allowing anti-competitive mergers to proceed without any form of scrutiny by the competition authorities. The OFT has estimated that about 50 per cent. of the mergers that can currently be scrutinised would no longer be eligible for any form of investigation. Far greater reliance would have to be placed on the alternative share of supply test. That would go against the grain of experience to date. At present a big majority of mergers that qualify for investigation qualify under the assets test. It also goes against the grain of international notification regimes, which are invariably based on turnover thresholds.
  7.15 pm
  The share of supply test can be useful in the context of horizontal mergers, but it is more complex and cannot be used to bring vertical mergers within the scope of the regime. For example, a merger that was scrutinised last year, the Dynergy/BG Storage merger, would not have qualified under a £100 million turnover threshold, or under the share of supply test. The merger could have affected domestic gas prices and is therefore the sort of case that we would want investigated.
  With a very high turnover threshold, we risk missing mergers of small but potentially significant companies with lower market shares, such as IT or biotech companies, which none the less represent a significant threat to established firms. It is because of such examples that the Competition Commission has expressed serious concerns about the impact that a turnover threshold of £100 million might have.
  We recognise, however, that the threshold figure is an issue around which there are strong feelings. We have no desire to increase unnecessary regulation in this area, or in any other. We have also noted that the assets threshold of £70 million has not been adjusted since 1994. A review of that figure might have been appropriate before long. We recognise that estimating the practical impact of the new turnover threshold is necessarily an imperfect science, and that it would be unfortunate if we had unintentionally caught too many cases. In the light of pressures for a higher figure, we therefore propose amending the Lords amendment so that the turnover threshold is initially set at £70 million.
  We offer this raised threshold amendment with some unease. If it proved subsequently that a significant number of harmful anti-competitive mergers were escaping scrutiny altogether, the Government would have no choice but to reduce the threshold to an appropriate level. We will need to keep the matter under review. I hope that the £70 million threshold will be acceptable to the House.
  Mr. Djanogly: In the same way as the Government intend to keep the matter under review with a view to moving the figure downwards, does the Minister accept that it may be more appropriate to move the figure upwards? Will the Government keep an open mind about what the appropriate figure should be after the Bill is enacted?
  Miss Johnson: Yes, indeed. We will keep an open mind. The entire discussion is about the methodology of
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  achieving in turnover terms the same effect as the asset threshold had before. We want neither to relax the regime nor to tighten it. We need to achieve equivalence; the question is which figure would achieve that. All our research suggested £45 million, but we have not managed to convince others of that, so we are suggesting moving to £70 million. There is a clear indication that were we to move to £100 million, there would be a significant relaxation of the merger control regime, which would be highly undesirable, as I am sure the hon. Gentleman would agree. That is why we have arrived at the £70 million figure.
  Mr. Djanogly: indicated dissent.
  Miss Johnson: The hon. Gentleman shakes his head in a worrying way, but does not wish to elaborate.
  The remaining amendments in the group are all primarily technical changes to the Bill to improve its functioning. They reflect work that has been done in the other place to respond to points raised by noble Lords and to check the Bill for accuracy. Unless hon. Members wish me to go through any of the amendments in detail, I do not propose to do so at this point.
  Mr. Robathan: It is unfortunate that on such an extraordinarily important and complex issue, which has taken up a great deal of the time of both Houses, with the exception of the hon. Member for North-East Derbyshire (Mr. Barnes) and his supporter, the hon. Member for Hayes and Harlington (John McDonnell), no hon. Member has been willing to speak in support of the Government.
  John McDonnell: I was not supporting the Government.
  Mr. Robathan: I apologise to the hon. Gentleman for suggesting that he was supporting his Front-Bench colleagues. [Interruption.] I know that he has a reputation to protect. I meant that it is a pity that no Government Back Benchers who served on the Committee or others wished to take part in the debate.
  On Lords amendment No. 20, the Government have been pragmatic and sensible, and we shall not oppose the change. Of course, we would prefer to stick with a £100 million threshold. None the less, I think that that is a moot point and a matter of judgment, so perhaps the compromise is a happy one. It is possible that the Government's acceptance of a £70 million threshold represents a recognition that turnovers are currently falling, so fewer people might be caught in that threshold as well.
  In the House of Lords, the Government committed themselves to reviewing the level within three years of implementation. The Minister has mentioned reviewing. Will there be a rolling review? Does she believe that she could raise the threshold if the provision proves not to work, as my hon. Friend the Member for Huntingdon (Mr. Djanogly) suggested?
  Apart from that, I think that we are happy to accept the amendments.
  Dr. Cable: I shall speak very much in the same spirit as the hon. Member for Blaby (Mr. Robathan).

  931
  I accept that the Minister has moved a considerable way towards acknowledging the criticisms about size levelled by the business sector. The worrying aspect of the original discussion was a sense that a number had merely been written on the back of an envelope and that it did not satisfy any scientific tests. I do not know whether the figure is right or wrong, as I am going by the information that I have been given. None the less, I gather that the CBI conducted an extensive survey of UK companies that might come within the Bill's scope in which it cited a ratio of the order of 1.2:1 in describing the relationship between turnover and assets. If that had been applied as an average, the appropriate turnover figure would have been about £85 million. I do not know whether those figures are right or wrong. Clearly, market capitalisation is very volatile and big changes have occurred in the past two years, but that seems a plausible order of magnitude to people in the industry, and I am inclined to accept their judgment.
  The key point is that the Government are keeping the matter under review and are committed to the principle of maintaining after the Bill is enacted a number of merger investigations that is roughly equivalent to the number that were conducted previously. I am not entirely clear about when the review will take place. My understanding had been that the Government would reconsider the issue after a year, rather than three years. Perhaps the Minister could clarify that point.
  In general, however, I think that the compromise that is being offered is helpful and is a move in the right direction. I am sure that most people in the business sector will accept that the provision is a useful move towards meeting their concerns about over-regulation.
  Mr. Djanogly: In supporting the comments of my hon. Friend the Member for Blaby (Mr. Robathan), and having examined the debate on these matters that occurred in the other place, I should like to say that there seemed to be some justification for the £100 million figure. However, I was happy to hear the Minister say that an open mind would be kept on the matter and that it would be reviewed.
  In introducing the Bill, the Government's clear intention was to help enterprise by inducing a competitive environment and a level playing field. That has been accepted in all parts of the House. On the other hand, at various stages in the Bill's passage, Opposition Members have stated our concern that, rather than helping competition, the Bill borders on restricting the ability of companies to trade and is unnecessarily onerous for directors.
  The turnover benchmark key in that context is obviously a very important issue. The merger rules are very complicated. Companies and directors that become involved in any sort of investigation must contend with enormously significant costs and a massive amount of time will be taken from them in running their businesses. There is always a fear in respect of such legislation that the OFT and the Serious Fraud Office, which will now get the same powers, will embark on fishing expeditions.
  After the Committee proceedings, the Minister should know that, having spoken to a competition legal practitioner, my understanding is that the OFT has recently changed its procedure. The OFT is not only investigating companies, but putting in place a new
  932
  procedure in which it asks companies to conduct its investigations on its behalf. It will basically send the companies lists of matters for investigation and ask them to come up with the goods. That is a serious development. Instead of having a certain amount of costs carried by the OFT, companies will now have to cover those costs themselves. In other words, they will have to employ professionals to do the OFT's work. Such concerns are very serious and are becoming more so.
  The turnover threshold is extremely important in that context. The concern is that, if we do not get the level right, it could stunt the growth of some of our fastest growing companies. We should want to encourage those companies, instead of restricting them with unnecessary regulation and cost. Obviously, stopping their growth will be bad for the economy overall.
  While I certainly appreciate that the £70 million figure is better than the original one, companies and practitioners have communicated genuine concerns to me. I therefore hope that the Minister and the Government will keep to what they have said about reviewing the figure carefully and seeing how it works in practice.
  Mr. Redwood: I usually speak as a hawkish person on competition matters. I think that it is most important that the regulator and the Government are vigilant in ensuring that no market is damaged by any company having unreasonable market power. That is especially important when mergers or acquisitions are being planned.
  I accept that it is possible for a company to seek dominance in a local area or region in the United Kingdom and that that might give the authorities reason to investigate mergers with relatively small turnovers. However, we should remember the context of the United Kingdom economy, which is the fourth largest economy in the world and is exposed to an enormous amount of overseas trading and huge competition from the five continents of the world. We are now talking about an economy with more than £1 trillion in national turnover. Therefore, even a business concern with a turnover of £100 million would represent 0.01 per cent. of total national income. If such a business were a national one, it would be unlikely to have a strong position unless it operated in a tiny marketplace, as in most of the larger marketplaces such turnover figures would be unlikely to attract the attention of the authorities.
  Mr. Djanogly: I thank my right hon. Friend for giving way. In that context, I think that it is worth mentioning—
  Mr. Deputy Speaker: Order. May I tell the hon. Gentleman that it is a good custom to address the Chair?
  Mr. Djanogly: Thank you, Mr. Deputy Speaker.
  It may be worth pointing out to my right hon. Friend that he might want to take into account in his speech the size of the public sector. For instance, it was disclosed to the Trade and Industry Committee only the other day that the public sector now accounts for 40 per cent.—
  Mr. Deputy Speaker: Order. I am sorry to have to interrupt the hon. Gentleman a second time, but as I

  933
  understand it, he is supposed to be making an intervention on his right hon. Friend and not a second speech.
  7.30 pm
  Mr. Redwood: I get the drift of the comments of my hon. Friend the Member for Huntingdon (Mr. Djanogly) that it is important to understand the public sector context as well as the overall national income figures to which I have referred so far.
  The Minister was right to point out that there are two tests. The lower the turnover threshold in the Bill, the more the reliance on the test of 25 per cent. or more of the market. The essence of good judgment will rest on the competition authorities and those contemplating the reference in defining the marketplace. That is always the crucial, difficult issue: is the marketplace all chocolate, specific chocolate bars, or a brand that is so well known that, sui generis, it has 100 per cent. of the market? How do we handle such issues? There have been famous cases over the years, with companies wanting as generous a definition as possible, and consumer groups and others preferring a narrow definition.
  Mr. Mark Hoban: My right hon. Friend makes an important point. Does he know how much time lawyers, accountants and other consultants spend on defining a market? From my experience, even in apparently straightforward matters, such as the supply of paper, the market can be fragmented in many different ways. Definition of the market is therefore so important that the turnover test may not be appropriate.
  Mr. Redwood: I am glad that my hon. Friend agrees that defining the market is crucial. We must examine the turnover threshold in the light of that difficult judgment.
  Narrowly defined markets in which dominance is a problem can exist, and one could gain a dominant position in parts of the national market because the services or goods are not easily transported beyond the boundaries of a specific area. In such circumstances, a lowish turnover threshold might be desirable. Therefore I do not approach the figure of £45 million from the position that it is definitely wrong because it is low and that, as a deregulator, I should like it to be higher.
  I ask myself the question that the Minister rightly asked: will a turnover threshold of £45 million provide approximately the same as the 1994 £70 million asset threshold, with which I am happy? It has worked well, and the Government must also believe that, because they have not amended it since coming to office and the Minister said that she was trying to reach equivalence when shifting to turnover. I agree with her reasoning. It is right to move to turnover because it is more meaningful than assets when defining a market. After all, turnover affects consumers, whereas the size of the asset base makes little difference to consumers except through the mediation of price. The consumer wants to know how much turnover is being transacted, so turnover is the appropriate test.
  I believed that it was implausible for £70 million of assets to correspond with £45 million of turnover. I was therefore interested to hear the remarks of the hon.
  934
  Member for Twickenham (Dr. Cable), who said that CBI research suggested a ratio of 1.2:1. I understand how such a figure could be derived. Earlier, I did some calculations on the back of an envelope and got a figure of at least £70 million for equivalence. If we take £45 million as the figure for turnover, we assume exceedingly profitable businesses to achieve an asset value of £70 million. The current state of most British industry and service sector activities shows that we are nowhere near the profitability that we would need on average to sustain translating £70 million of assets into only £45 million of turnover. A ratio of 1:1 would be required as a minimum; at least £70 million of turnover would be needed to achieve £70 million of assets. Even in that case, one assumes approximately 10 per cent. of turnover. That is an exceedingly good return for all but successful, well protected businesses such as pharmaceutical companies.
  The judgment is difficult to make. My first reaction on reading the amendments and the debate in another place was that £100 million was a better round number and closer to what one might calculate to achieve equivalence to the old assets test. However, the Minister and my hon. Friend the Member for Blaby (Mr. Robathan) have persuaded me that perhaps we should start with the figure of £70 million and a 1:1 ratio of assets to turnover in the hope that one day, activities will be more profitable and the figure will prove more realistic.
  Mr. Robathan: I want my right hon. Friend to understand that I should prefer a threshold of £100 million. That was the CBI's broad assessment. However, the decision is subjective and perhaps we should not be too dogmatic in resisting the Government's amendment.
  Mr. Redwood: Logic and knowledge of business tell me that £100 million is more sensible from the business point of view.
  Mr. Mark Field: Perhaps there is some wisdom and method in the Government's madness. Given the state of the economy, a company with a turnover of £100 million this year is likely to have a turnover of £70 million next year.
  Mr. Redwood: That introduces an irreverent political point into a hitherto elegant, non-partisan debate. However, I take my hon. Friend's point: business is not as profitable or successful in the round as one would like.
  Although I understand the logic for the figure of £100 million, as a competition hawk, I appreciate the case for starting at £70 million. However, I want to probe the Minister a little more on her interesting point that the Government had been considering that the £70 million asset threshold that was set in 1994 might no longer be appropriate. There were clearly good years in the economy in the mid-1990s, and not all have been overwhelmed or eroded by events since 2000. It would therefore be interesting to know the extent of the Government's thinking about updating the assets test. If they conclude that £70 million is low for the assets test, they must also determine that £70 million is far too low for the turnover test. I cannot be persuaded that

  935
  anything less than a ratio of 1:1 produces equivalence. I should be intrigued to learn the Minister's view on that important topic.
  Mr. Hoban: We are considering an important issue and I am grateful to my noble Friend Lord Hunt for pressing it in another place. In considering the competition law reform that the Government set in train in their first Parliament and the Minister's earlier comment that she believed that we had reached the end of the process, it is important to examine the threshold for the turnover test and ensure its fitness for today's business environment. The Government have chosen a turnover limit that is the equivalent of the gross asset test under the previous regime. That leads me to question the amount of research that the Government undertook before selecting £70 million as an appropriate turnover threshold.
  Lord Hunt's amendment was based on the considerable research that the CBI carried out. It examined 500 companies in different sectors to determine the appropriate threshold for the turnover test. I wonder whether the figure of £70 million was arbitrary and based on the previous test. The Government should consider properly the right amount of turnover in today's business environment. The competition process will be greatly enhanced by a sensible threshold. Although, as the Minister said, many references are not made when a merger is called in under the turnover test, businesses are anxious about a deal being called in.
  As I said in an intervention, consultants and others have spent much time examining the structure of a deal to ensure that it does not rise above the threshold. I should hate to believe that the Government are setting a low threshold for the turnover test without considering the costs that businesses will bear by reducing it from £100 million to £70 million.
  Mr. Djanogly: My hon. Friend makes a very good point, and reminds me of the old adage that turnover is for vanity and profit is for sanity. That has the important implication that, in a tough economic environment such as the one that we have now, the turnover might mean that companies will have less profit and that it would be more important to have a higher turnover figure because of that.
  Mr. Hoban: I am aware of my hon. Friend's commercial background and his understanding of these issues, and he makes an important point. A company could have relatively low profitability, which might suggest that it had a weak market position and low market share, and that it perhaps did not have the opportunity to impact on the competitive environment in which it operates. Simply because its turnover was more than £70 million, however, that application would be called in and looked at by the OFT. It is, therefore, important to ensure that the turnover level is set fairly and appropriately. The Minister referred earlier to the way in which that level could be reviewed. She intimated that it could be reviewed downwards, and my hon. Friend the Member for Huntingdon (Mr. Djanogly) referred to an upwards review.
  It would benefit both practitioners and Members of the House if the Minister could comment on the basis on which such an adjustment could take place, and on
  936
  when she expects that review to happen. What method of consultation would she use to ensure that we set the right level of turnover? How long a period would elapse between the Bill becoming an Act and the review taking place? Clearly, we want to ensure that we have the right answer to this, and we do not want to see too much uncertainty in the market.
  Mr. Mark Field: Does my hon. Friend agree that, following the CBI's research to which several hon. Members have referred in this small debate, one of the best ways forward might be for the Government to look at the number of companies likely to be encompassed within tile confines of such a turnover test? They could then adjust the test on the basis of, for example, the 20,000 or 30,000 companies that would be subject to the provision. In other words, the measure would have an eye to a much more broadly based market, rather than being overly hamstrung by the purely financial terms of turnover.
  Mr. Hoban: I am grateful to my hon. Friend for raising that important point about the number of companies being brought into the provisions of the Bill. My understanding from reading the debates in the other place is that the £45 million level was set with a view to bringing the same number of companies into the net as the £70 million gross asset test would have brought in. I think I see the Minister nodding assent to that explanation, and I am grateful for that. We should not make decisions about thresholds simply on the basis of getting an equivalent number of companies into the net. That would be an inappropriate way of monitoring competition, because we should be looking at the impact of transactions on competition and the market, rather than focusing on the level of turnover.
  Mr. Robathan: Does my hon. Friend share my suspicion that there has been no well-justified or empirical analysis of this threshold? We thought that the original figure of £45 million was plucked out of the air. Let us take a median point and pluck the figure of £70 million out of the air, because that seems better and might satisfy us. To a certain extent it has done so. There has not been sufficient analysis of why we should have the figure of £70 million.
  Mr. Hoban: I am grateful to my hon. Friend for raising that point, because this is one of my principal concerns. I would not say that the £70 million figure has been plucked out of the air, because that would be unfair to the Government. It is, however, a number with which we are familiar from the gross asset test applied under the previous regime. It is important that we use a sensible figure that is based on empirical evidence. That is the basis of the £100 million that the CBI suggested, which was proposed in amendments in the other place and accepted into the Bill there.
  I am concerned that the amendment that the Government have tabled is arbitrary in the way in which it sets a threshold for applications to be investigated by the OFT. The Government should be clear that this is only a holding figure. They should reconsider it in the light of experience and empirical evidence, and I hope that the CBI survey that was used to set the figure of £100 million can be used as a basis for the research

  937
  involved. Will the Minister outline in more detail the mechanisms that the Government expect to have in place when looking at the applicability and appropriateness of the £70 million limit?
  7.45 pm
  Miss Melanie Johnson: I shall endeavour to be brief. Conservative Members have raised broadly the same issues in different guises, and I think that I can be fairly brief in my response.
  I shall deal first with the figure set for the turnover threshold. The Competition Commission's estimate of the operation of the £100 million turnover threshold is that there would be 50 per cent. fewer mergers under consideration. It is worth reiterating that figure. In fact, the analysis that the Government carried out was based on the Fame database, which gives details of 1,699,137 companies that filed in 2000–01. That showed that there were 9,966 live companies with assets of £70 million or more. It also showed 7,806 companies with a United Kingdom turnover of £45 million. So, the turnover figure was as close as we could get to that. Only 5,350 companies on the database have a UK turnover of £70 million or more. The figure for companies with a turnover of £100 million was 2,258, compared with the original number of 9,966, based on the assets figure.
  Mr. Redwood: We are talking about a merger, so we have to add one turnover to another. Has the Minister any information on how many of the mergers that have been referred and blocked under the present regime would not have been blocked under either the £70 million or the £100 million turnover figure? That is the more interesting figure for us to know.
  Miss Johnson: The right hon. Gentleman will appreciate that I do not have the whole analysis file here, but very detailed work went on. I hope that I have explained one approach that was made by the Government, and why the figure was picked out as being the best stab that we could make. We shared our findings with the CBI, which undertook further analysis using the different methodology to which other hon. Members have referred. That suggested that it thought that the £100 million figure would be more appropriate, but its approach is based on measuring the average turnover of the companies that happen to meet the assets test, establishing a ratio of that turnover to assets and applying the ratio to the £70 million assets threshold to establish an equivalent turnover threshold. We think that that is an unreliable way of doing it.
  Changing the test means that we will inevitably cover a slightly different range of companies. We certainly think that new technology companies whose turnover might significantly exceed their asset base might be covered by the new test for the first time. I return to my original point, with which I am sure all hon. Members agree, that we are seeking to find an equivalent—by moving from the assets test to the turnover test—that captures those companies within the regime for consideration. As I have said, many of the cases are just cleared mergers or investigations that are not taken further. It is important that we look at the same segment in relation to competition issues.
  938
  It is also important to note that the turnover threshold relates to the turnover of the target company, to which the right hon. Member for Wokingham (Mr. Redwood) referred. A large company may acquire any company with a turnover up to the threshold without qualifying under this test.
  I hope that I have explained why we have got to where we are. We have all agreed that we need to compromise. Clause 27(4) contains a requirement for the Office of Fair Trading to report to the Secretary of State on the appropriateness of the level. I believe that we need to reconsider this matter as time goes on.
  Assurances that the Government gave in the other place about the three-year review need to be seen in the light of the original £45 million figure. We have the same interests as Opposition Members and will want to consider how the £70 million figure is emerging to see that it is broadly producing the same playing field for competition merger concerns to be considered as the present regime does, with the improvement of the turnover test. I hope that Opposition Members will support these amendments.
  Lords amendment agreed to.
  Government amendment to Lords amendment No. 20 agreed to.
  Lords amendment No. 20, as amended, agreed to.
  Lords amendments Nos. 21 to 52 agreed to.

  After Clause 65
  Lords amendment: No. 53, insert the following new Clause—
  "Intervention to protect legitimate interests

  (1) Subsection(2) applies where—

  (a) the Secretary of State has reasonable grounds for suspecting that it is or may be the case that—

  (i) a relevant merger situation has been created or that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and

  (ii) a concentration with a Community dimension (within the meaning of the European Merger Regulations), or a part of such a concentration, has thereby arisen or will thereby arise;

  (b) a reference which would otherwise be possible under section 21 or 32 is prevented from being made under that section in relation to the relevant merger situation concerned by virtue of Community law or anything done under or in accordance with it; and

  (c) the Secretary of State is considering whether to take appropriate measures to protect legitimate interests as permitted by article 21(3) of the European Merger Regulations.

  (2) The Secretary of State may give a notice to the OFT (in this section "a European intervention notice") if he believes that it is or may be the case that one or more than one public interest consideration is relevant to a consideration of the relevant merger situation concerned.

  (3) A European intervention notice shall state—

  (a) the relevant merger situation concerned;

  (b) the public interest consideration or considerations which are, or may be, relevant to a consideration of the relevant merger situation concerned; and

  (c) where any public interest consideration concerned is not finalised, the proposed timetable for finalising it.

  (4) Where the Secretary of State believes that it is or may be the case that two or more public interest considerations are relevant to a consideration of the relevant merger situation concerned, he may decide not to mention in the intervention notice such of those considerations as he considers appropriate.

  939

  (5) No more than one European intervention notice shall be given under subsection (2) in relation to the same relevant merger situation.

  (6) Where the Secretary of State has given a European intervention notice mentioning a public interest consideration which, at that time, is not finalised, he shall, as soon as practicable, take such action as is within his power to ensure that it is finalised.

  (7) For the purposes of deciding whether a relevant merger situation has been created or whether arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation, sections 22 to 31 (read together with section 33) shall apply for the purposes of this section as they do for the purposes of Chapter 1 but subject to subsection (8).

  (8) In their application by virtue of subsection (7) sections 22 to 31 shall have effect as if—

  (a) references in those sections to the decision-making authority were references to the Secretary of State;

  (b) for paragraphs (a) and (b) of section 22(9) there were substituted ", in relation to the giving of a European intervention notice, the time when the notice is given";

  (c) the references to the OFT in section 23(2)(a) and (b) included references to the Secretary of State;

  (d) sections 24, 30 and 31 were omitted; and

  (e) the references in sections 22 to 28 to the making of a reference or a reference were, so far as necessary, references to the giving of a European intervention notice or a European intervention notice.

  (9) Section 41(3) shall, in its application to this section and section (Scheme for protecting legitimate interests), have effect as if for the words "intervention notice" there were substituted "European intervention notice"."

  Amendment proposed to the Lords amendment (a), after "consideration", insert—
  ", or a matter relating to the legitimate interests of the balanced distribution of industry and employment,".—[Mr. Barnes.]
  Question put, That the amendment to the Lords amendment be made:—
  The House divided: Ayes 48, Noes 283.

  Division No. 344]

  [7:52pm

  AYES

  Abbott, Ms Diane

  Mahon, Mrs Alice

  Banks, Tony

  Marshall, Jim (Leicester S)

  Barnes, Harry

  Mitchell, Austin (Gt Grimsby)

  Barrett, John

  Öpik, Lembit

  Brooke, Mrs Annette L.

  Price, Adam (E Carmarthen & Dinefwr)

  Burnett, John

  Cable, Dr. Vincent

  Reid, Allan (Argyll & Bute)

  Calton, Mrs Patsy

  Rendel, David

  Campbell, rh Menzies (NE Fife)

  Robertson, Angus (Moray)

  Campbell, Ronnie (Blyth V)

  Russell, Bob (Colchester)

  Carmichael, Alistair

  Simpson, Alan (Nottingham S)

  Clapham, Michael

  Skinner, Dennis

  Davey, Edward (Kingston)

  Smith, Sir Robert (W Ab'd'ns & Kincardine)

  Doughty, Sue

  Ewing, Annabelle

  Stunell, Andrew

  Foster, Don (Bath)

  Thomas, Simon (Ceredigion)

  George, Andrew (St. Ives)

  Gerrard, Neil

  Thurso, John

  Green, Matthew (Ludlow)

  Vis, Dr. Rudi

  Holmes, Paul

  Webb, Steve (Northavon)

  Hughes, Simon (Southwark N)

  Weir, Michael

  Jones, Lynne (Selly Oak)

  Williams, Roger (Brecon)

  Kennedy, rh Charles (Ross Skye & Inverness)

  Wishart, Pete

  Younger-Ross, Richard

  Lamb, Norman

  Laws, David (Yeovil)

  Tellers for the Ayes:

  Llwyd, Elfyn

  Tom Brake and Mr. Kelvin Hopkins

  McDonnell, John

  940

  NOES

  Adams, Irene (Paisley N)

  Donohoe, Brian H.

  Ainger, Nick

  Doran, Frank

  Alexander, Douglas

  Dorrell, rh Stephen

  Allen, Graham

  Dowd, Jim (Lewisham W)

  Anderson, rh Donald (Swansea E)

  Drew, David (Stroud)

  Anderson, Janet (Rossendale & Darwen)

  Drown, Ms Julia

  Eagle, Maria (L'pool Garston)

  Atherton, Ms Candy

  Edwards, Huw

  Atkins, Charlotte

  Ennis, Jeff (Barnsley E)

  Bailey, Adrian

  Etherington, Bill

  Barron, rh Kevin

  Field, Mark (Cities of London & Westminster)

  Battle, John

  Bayley, Hugh

  Fisher, Mark

  Begg, Miss Anne

  Fitzpatrick, Jim

  Beggs, Roy (E Antrim)

  Flint, Caroline

  Benn, Hilary

  Flynn, Paul (Newport W)

  Benton, Joe (Bootle)

  Follett, Barbara

  Berry, Roger

  Foster, rh Derek

  Blackman, Liz

  Foster, Michael (Worcester)

  Blears, Ms Hazel

  Foster, Michael Jabez (Hastings & Rye)

  Boateng, rh Paul

  Borrow, David

  Francis, Dr. Hywel

  Bradley, rh Keith (Withington)

  Gapes, Mike (Ilford S)

  Bradley, Peter (The Wrekin)

  Gardiner, Barry

  Brennan, Kevin

  George, rh Bruce (Walsall S)

  Brown, Russell (Dumfries)

  Gilroy, Linda

  Bryant, Chris

  Godsiff, Roger

  Burden, Richard

  Goggins, Paul

  Burgon, Colin

  Griffiths, Jane (Reading E)

  Burnham, Andy

  Griffiths, Win (Bridgend)

  Byers, rh Stephen

  Grogan, John

  Cairns, David

  Hain, rh Peter

  Campbell, Alan (Tynemouth)

  Hall, Mike (Weaver Vale)

  Campbell, Mrs Anne (C'bridge)

  Hall, Patrick (Bedford)

  Caplin, Ivor

  Hamilton, David (Midlothian)

  Casale, Roger

  Hamilton, Fabian (Leeds NE)

  Caton, Martin

  Hanson, David

  Cawsey, Ian (Brigg)

  Harris, Tom (Glasgow Cathcart)

  Challen, Colin

  Havard, Dai (Merthyr Tydfil & Rhymney)

  Chapman, Ben (Wirral S)

  Chaytor, David

  Healey, John

  Clark, Mrs Helen (Peterborough)

  Henderson, Ivan (Harwich)

  Clark, Paul (Gillingham)

  Hendrick, Mark

  Clarke, rh Tom (Coatbridge & Chryston)

  Hermon, Lady

  Hesford, Stephen

  Clarke, Tony (Northampton S)

  Heyes, David

  Clelland, David

  Hill, Keith (Streatham)

  Clwyd, Ann (Cynon V)

  Hoey, Kate (Vauxhall)

  Coaker, Vernon

  Hope, Phil (Corby)

  Coffey, Ms Ann

  Hoyle, Lindsay

  Cohen, Harry

  Hughes, Beverley (Stretford & Urmston)

  Colman, Tony

  Connarty, Michael

  Hughes, Kevin (Doncaster N)

  Cook, rh Robin (Livingston)

  Humble, Mrs Joan

  Cooper, Yvette

  Hurst, Alan (Braintree)

  Corston, Jean

  Hutton, rh John

  Cousins, Jim

  Iddon, Dr. Brian

  Cox, Tom (Tooting)

  Illsley, Eric

  Crausby, David

  Irranca-Davies, Huw

  Cruddas, Jon

  Jackson, Glenda (Hampstead & Highgate)

  Cryer, Mrs Ann (Keighley)

  Cummings, John

  Jamieson, David

  Cunningham, Tony (Workington)

  Jenkins, Brian

  Davey, Valerie (Bristol W)

  Johnson, Miss Melanie (Welwyn Hatfield)

  David, Wayne

  Davidson, Ian

  Jones, Helen (Warrington N)

  Davies, rh Denzil (Llanelli)

  Jones, Jon Owen (Cardiff C)

  Davies, Geraint (Croydon C)

  Jones, Kevan (N Durham)

  Davis, rh Terry (B'ham Hodge H)

  Jones, Martyn (Clwyd S)

  Dean, Mrs Janet

  Joyce, Eric (Falkirk W)

  Denham, rh John

  Keeble, Ms Sally

  Dhanda, Parmjit

  Keen, Alan (Feltham)

  Dismore, Andrew

  Keen, Ann (Brentford)

  Djanogly, Jonathan

  Khabra, Piara S.

  Dodds, Nigel

  Kidney, David

  941

  Kilfoyle, Peter

  Pound, Stephen

  King, Andy (Rugby)

  Prentice, Ms Bridget (Lewisham E)

  King, Ms Oona (Bethnal Green & Bow)

  Prentice, Gordon (Pendle)

  Kirkbride, Miss Julie

  Primarolo, rh Dawn

  Knight, Jim (S Dorset)

  Prosser, Gwyn

  Kumar, Dr. Ashok

  Purchase, Ken

  Ladyman, Dr. Stephen

  Purnell, James

  Lammy, David

  Quin, rh Joyce

  Lawrence, Mrs Jackie

  Rammell, Bill

  Laxton, Bob (Derby N)

  Rapson, Syd (Portsmouth N)

  Lazarowicz, Mark

  Redwood, rh John

  Lepper, David

  Reed, Andy (Loughborough)

  Levitt, Tom (High Peak)

  Reid, rh Dr. John (Hamilton N & Bellshill)

  Lewis, Ivan (Bury S)

  Love Andrew

  Robertson, John (Glasgow Anniesland)

  Lucas, Ian (Wrexham)

  Lyons, John (Strathkelvin)

  Robinson, Geoffrey (Coventry NW)

  Lyons, John (Strathkelvin)

  McAvoy, Thomas

  Robinson, Mrs Iris (Strangford)

  McCabe, Stephen

  Rooney, Terry

  McCafferty, Chris

  Ross, Ernie (Dundee W)

  McDonagh, Siobhain

  Roy, Frank (Motherwell)

  MacDonald, Calum

  Ruane, Chris

  MacDougall, John

  Russell, Ms Christine (City of Chester)

  McFall, John

  McIsaac, Shona

  Ryan, Joan (Enfield N)

  MacKay, rh Andrew

  Salter, Martin

  McKechin, Ann

  Savidge, Malcolm

  McKenna, Rosemary

  Sawford, Phil

  Mackinlay, Andrew

  Sedgemore, Brian

  McNulty, Tony

  Shaw, Jonathan

  MacShane, Denis

  Sheridan, Jim

  Mactaggart, Fiona

  Simon, Siôn (B'ham Erdington)

  McWilliam, John

  Smith, rh Andrew (Oxford E)

  Mahmood, Khalid

  Smith, Geraldine (Morecambe & Lunesdale)

  Mallaber, Judy

  Mandelson, rh Peter

  Smith, Jacqui (Redditch)

  Mann, John (Bassetlaw)

  Soley, Clive

  Marris, Rob (Wolverh'ton SW)

  Southworth, Helen

  Spellar, rh John

  Marsden, Gordon (Blackpool S)

  Squire, Rachel

  Marshall, David (Glasgow Shettleston)

  Steinberg, Gerry

  Stevenson, George

  Martlew, Eric

  Stewart, David (Inverness E & Lochaber)

  Miliband, David

  Miller, Andrew

  Stewart, Ian (Eccles)

  Moffatt, Laura

  Stoate, Dr. Howard

  Mole, Chris

  Strang, rh Dr. Gavin

  Moonie, Dr. Lewis

  Stuart, Ms Gisela

  Moran, Margaret

  Tami, Mark (Alyn)

  Mountford, Kali

  Taylor, Dari (Stockton S)

  Mudie, George

  Taylor, David (NW Leics)

  Mullin, Chris

  Thomas, Gareth (Clwyd W)

  Munn, Ms Meg

  Thomas, Gareth (Harrow W)

  Murphy, Denis (Wansbeck)

  Tipping, Paddy

  Murphy, Jim (Eastwood)

  Todd, Mark (S Derbyshire)

  Murphy, rh Paul (Torfaen)

  Touhig, Don (Islwyn)

  Naysmith, Dr. Doug

  Trickett, Jon

  Norman, Archie

  Truswell, Paul

  Norris, Dan (Wansdyke)

  Turner, Dennis (Wolverh'ton SE)

  Olner, Bill

  Turner, Dr. Desmond (Brighton Kemptown)

  O'Neill, Martin

  Organ, Diana

  Twigg, Derek (Halton)

  Osborne, Sandra (Ayr)

  Tynan, Bill (Hamilton S)

  Tyrie, Andrew

  Owen, Albert

  Walley, Ms Joan

  Palmer, Dr. Nick

  Wareing, Robert N.

  Perham, Linda

  Watson, Tom (W Bromwich E)

  Picking, Anne

  White, Brian

  Pickthall, Colin

  Whitehead, Dr. Alan

  Pike, Peter (Burnley)

  Williams, Mrs Betty (Conwy)

  Plaskitt, James

  Winnick, David

  Pollard, Kerry

  Winterton, Ms Rosie (Doncaster C)

  Pond, Chris (Gravesham)

  Pope, Greg (Hyndburn)

  Woodward, Shaun

  942

  Woolas, Phil

  Wright, Tony (Cannock)

  Wright, Anthony D. (Gt Yarmouth)

  Tellers for the Noes:

  Mr. Fraser Kemp and

  Wright, David (Telford)

  Mr. John Heppell

  Question accordingly negatived.
  Lords amendment agreed to.
  Lords amendments Nos. 54 to 131 agreed to.

Clause 182

  CARTEL OFFENCE: SUPPLEMENTARY
  Lords amendment: No. 132, in page 132, line 33, leave out "section" and insert "paragraph"
  Miss Melanie Johnson: I beg to move That this House agrees with the Lords in the said amendment.
  Mr. Deputy Speaker: With this we may discuss Lords amendments Nos. 133 to 135 and 226 to 228.
  Miss Johnson: These are a few minor and improving amendments to parts 5, 6 and 7 of the Bill. Clause 191 provides for professional privilege in respect of legal and banking material in the context of investigations of a cartel offence. Amendment No. 133 provides a different way of accounting for the equivalent in Scotland of legal professional privilege. This was a response to a point initially raised by the Opposition in the other place. The amendment means that the current Scottish custom and practice is properly reflected in the Bill. It follows the more recent precedent of the Proceeds of Crime Act 2002, and provides a definition that corresponds more closely with Scottish practice.
  Amendments Nos. 134 and 135 correct a technical defect in the provisions relating to competition disqualification undertakings. They make it clear that the OFT or a specified regulator can rely on its own judgment when considering whether a person is unfit to be involved in the management of a company. That requirement applies before it can accept a competition disqualification undertaking from an individual. In making its assessment, the OFT or the regulator will take into account the same considerations in relation to a director's conduct that a court would have to do.
  Amendments Nos. 226 and 227 allow for the appointment of independent members to the Competition Commission's governing council. The addition of these independent members will strengthen the leadership of the Competition Commission, and reflects best practice in corporate governance. The council will now consist of a chairman, the deputy-chairman, the chief executive and one or more independent members.
  Mr. Robathan: We are discussing very important issues that perhaps require more airing than they have received in the past, especially since many of them were not even discussed in the Lords. Is it true that, because of the programming of discussion in Committee on the Floor of the House, cartels were not even discussed? If so, does the Minister consider that helpful?
  Miss Johnson: We are here to discuss Lords amendments, and I am unable to comment in detail on previous consideration of the Bill. The question of what

  943
  was discussed when is a matter of record in this House and in Standing Committee. The answer to the hon. Gentleman's question rests to a considerable extent on the way in which the Opposition used the time available to them.
  Lords amendment agreed to.

Clause 208

  APPLICATIONS
  Lords amendment: No. 143, in page 151, line 28, after "Investment" insert "in".
  Miss Melanie Johnson: I beg to move That this House agrees with the Lords in the said amendment.
  Mr. Deputy Speaker: with this we may discuss Lords amendments Nos. 144 to 147.
  Miss Johnson: The amendments all relate to part 8 of the Bill. Amendment No. 144 is intended to meet the concerns expressed by the Joint Committee on Human Rights about the provisions in clause 213 concerning applications for interim enforcement orders. The Committee's 21st report stated that it would be beneficial for the Bill to draw attention to the need for the courts to take account of the whole picture, rather than simply accepting the facts presented by the applicant. When an application for an interim enforcement order is made without notice being given to the person named in the application, the whole picture is necessarily limited to the evidence put before the court by the applicant. It is our view that, on an application without notice, the applicant will be obliged to put before the court all material facts, and that the court will consider them in deciding whether to make an interim enforcement order. The Committee agrees that that is likely to be the case, but for clarity amendment No. 144 includes that obligation in the Bill. The amendment—which applies to all applications for interim injunctions, and not simply to those made without notice—corresponds to a similar provision in practice direction 25, in England and Wales, on interim injunctions.
  Mr. Djanogly: Would not the rights in the amendments exist in any event? If so, can the Minister justify the need for the amendments?
  Miss Johnson: I had hoped that I was doing that. The Joint Committee has agreed that the presentation of the material facts before the court is important and that is likely to be the case whatever it says in the Bill. The Joint Committee was concerned about the expression of that in the Bill, in terms of the responsibility for human rights. We have taken that guidance and expertise into consideration when tabling Lords amendment No. 144 which makes that explicit.
  Mr. Hoban: I appreciate the reasons that the Minister has given for tabling the amendment, and we all agree with them. However, would the provisions increase the time it takes to obtain interim enforcement orders? What impact would it have on the process?
  Miss Johnson: It is a matter of making the obligations clear and not of altering the time scale. If anything, the process would be speeded up, not hindered.
  944
  Lords amendments Nos. 145 and 146 were made in response to an amendment tabled in the Lords Committee which the Government agreed to consider. When clause 224(5) left this House, it read:
  "If the OFT is preparing advice or information".
  The amendment recognised that those words were inconsistent, given that the section in fact requires the OFT to produce such advice and information.
  Lords amendment No. 147 is a technical amendment to clause 227, which concerns the supply of goods and services. The definition of the arrangements for supply when the Bill left this House mirrored that currently in section 138(3) of the Fair Trading Act 1973. That section refers to "documents" and "correspondence", which do not take account of today's world of internet transactions and other forms of electronic communications and commerce. Lords amendment No. 147 updates those provisions to include arrangements made by electronic means. Lords amendment No. 143 makes a minor drafting change in the title of the Department of Enterprise, Trade and Investment in Northern Ireland.
  Lords amendment agreed to.
  Lords amendments Nos. 144 to 147 agreed to.

Clause 233

  STATUTORY FUNCTIONS
  Lords amendment: No. 148, in page 166, line 13, at end insert—
  "() In subsection (1) the reference to an enactment includes a reference to an enactment contained in —

  (a) an Act of the Scottish Parliament;

  (b) Northern Ireland legislation;

  (c) subordinate legislation."

  Miss Melanie Johnson: I beg to move, That this House agrees with the Lords in the said amendment.
  Mr. Deputy Speaker: With this we may discuss Lords amendments Nos. 149 to 155.
  Miss Johnson: The amendments all relate to the information exchange provisions in part 9 of the Bill. Lords Amendments Nos. 148, 149 and 150 are minor technical amendments to clause 233. Lords amendments Nos. 148 and 149 ensure that the definition of "enactment" in clause 233 can include Scottish and Northern Ireland legislation, and subordinate legislation. That is to ensure that the Scottish and Northern Ireland legislation can be added to schedule 14 by order after Royal Assent, and so brought within part 9.
  Lords Amendment No. 150 ensures that the order-making powers in both subsections (1)(c) and (4) of clause 233 are subject to negative resolution procedure. Subsection (5) of clause 233 of the Bill as it left this House referred only to the power to amend schedule 14 in subsection (4).
  Mr. Greg Knight: Why does Lords amendment No. 148 not include a reference to a resolution of the Welsh Assembly?
  Miss Johnson: I may have to undertake to write to the right hon. Gentleman on the point that he has raised. I cannot answer that point now, but I am grateful to him for raising it.

  945
  Lords Amendments Nos. 151 and 152 bring the disclosure gateway for criminal proceedings in part 9 into line with the equivalent gateway in the Anti-Terrorism, Crime and Security Act 2001. Amendment No. 151 amends the gateway to allow disclosure to "any person" for the purposes of criminal proceedings. We made that change after listening to concerns expressed by the Local Authorities Co-ordinating body on Regulatory Services—LACORS—and the Alliance Against Counterfeiting and Piracy that part 9 would have prevented trading standards from disclosing information to consumers and private bodies to assist them in bringing private prosecutions. Industry bodies in particular have used such information to assist with successful private prosecutions for copyright theft. We do not wish to prevent such cases being taken in future, and saw no reason why the gateway for criminal proceedings in this Bill should be any narrower than that in the Anti-Terrorism, Crime and Security Act 2001.
  8.15 pm
  To accompany the widening of the gateway for criminal proceedings, we have introduced an additional safeguard which must be taken into consideration by a public authority before information is disclosed under the gateway. Lords Amendment No. 152 therefore adds a requirement that, before disclosing information for the purposes of UK criminal proceedings, the disclosing authority must have satisfied itself that the disclosure is proportionate to what is sought to be achieved by it. This amendment responds to one tabled in the Lords Committee and, together with amendment No. 186, brings clause 237 into line with the Anti-Terrorism, Crime and Security Act 2001.
  Lords Amendment No. 153 responds to two important recommendations made by the Joint Committee on Human Rights to ensure that the provisions on overseas disclosure are subject to tighter safeguards. First, the Committee recommended that the considerations that will be used by UK public authorities when making decisions on whether to disclose information to overseas authorities should be placed on the face of the Bill. Secondly, the Committee recommended that the criteria should include a consideration on whether the disclosure being contemplated would be proportionate to a pressing social need which the disclosure would address, and whether the matter for which disclosure is sought is sufficiently serious to justify disclosure. Amendment No. 153 therefore adds to clause 238 a set of considerations to which an authority must have regard before disclosing information to an overseas authority.
  Mr. Bellingham: In the other place, there was some discussion about the different rules pertaining to British overseas territories. Can the Minister elaborate on whether they will be treated any differently from other countries?
  Miss Johnson: I would be grateful for a reference to the report of the debate in the other place in which those matters were considered, because I am not familiar with the point that the hon. Gentleman makes.
  946
  On disclosure to overseas authorities, amendment No. 154 will ensure that legislation which is to be specified for the purposes of Community or domestic infringements in part 8 will fall within the definition of "relevant legislation". That will enable public authorities in the UK to disclose information to overseas authorities where those authorities wish to carry out investigations or bring civil proceedings under their equivalent legislation.
  If the hon. Member for North-West Norfolk (Mr. Bellingham) could supply me with the details of the point that he has just made, I hope to be able to reply to it.
  Lords amendment agreed to.
  Lords amendments Nos. 149 to 155 agreed to.

Clause 246

  PROHIBITION OF APPOINTMENT OF ADMINISTRATIVE RECEIVER
  Lords amendment: No. 156, in page 172, line 34, leave out "72F" and insert "72FA".
  Miss Melanie Johnson: I beg to move, That this House agrees with the Lords in the said amendment.
  Mr. Deputy Speaker: With this we may discuss Lords amendments Nos. 157 to 160 and amendment No.165.
  Miss Johnson: During the passage of the Bill concerns were expressed about the potential impact that the prohibition of the appointment of an administrative receiver would have on the social housing sector. Following constructive dialogues between officials and representatives from all parts of the sector, I am pleased to say that we were able to take on board and act upon their concerns. It was recognised that both the Housing Act 1996— which covers England and Wales—and the Housing (Scotland) Act 2001 provide for a moratorium period which provides an alternative means to facilitate rescues and provide a stay on unilateral action by lenders when registered social landlords are in financial difficulty. The provisions apply to housing associations that are registered social landlords.
  Lords amendments Nos. 157 and 156 and Nos. 158 to 160 are consequential amendments. They exclude organisations that are companies from the prohibition on the appointment of an administrative receiver.
  Lords amendment No. 165 ensures that the enabling power extending administration and company voluntary arrangements to industrial and provident societies does not apply to industrial and provident societies that are registered social landlords.
  Lords amendments agreed to.
  Lords amendments Nos. 157 to 160 agreed to.

Clause 247

  LIQUIDATOR'S POWERS
  Lords amendment: No. 161, in page 176, line 8, at end insert—
  "() Subsection (2) shall also not apply to a company if—

  947

  (a)the liquidator, administrator or receiver applies to the court for an order under this subsection on the ground that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits, and

  the court orders that subsection (2) shall not apply."

  Miss Melanie Johnson: I beg to move, That this House agrees with the Lords in the said amendment.
  Mr. Deputy Speaker: With this it will be convenient to take Lords amendments Nos. 162 to 164, 174, 175 and 229 to 264.
  Miss Johnson: Before detailing the amendments and the thinking behind them, I wish to thank the Opposition parties for their keen interest in the fine details of this legislation. I am extremely grateful for the various amendments that have been tabled in both Houses relating to the corporate insolvency provisions of this Bill.
  I am grateful because those amendments have provided us with an opportunity to revisit the drafting of the provisions and to refine it so that our policy aims are clarified in the Bill. Indeed, this process was started way back in the summer, during the debates in this House. It was at that time that our attention was drawn to the potential pitfalls that we faced in seeking to make the administration procedure practicable and workable while ensuring that it remained both fair and focused. I believe that we now have a Bill that is exactly that, and it is for that reason that I am grateful to hon. Members and to those in another place. I shall now turn to the details of the amendments in question.
  The need for Lords amendment No. 161 was recognised following an amendment tabled, but not moved, by the Opposition in the Lords Committee. It gives the office holder the ability to apply to the court in order that he does not have to implement the ring fence in instances where, despite the net property exceeding the prescribed minimum, he or she feels that the costs of distributing the prescribed part would outweigh the benefits.
  Mr. Djanogly: In what circumstances is the provision likely to apply? I agree with the thinking behind the amendment, but its application is quite general.
  Miss Johnson: I believe the provision could apply in cases where there is a huge number of unsecured creditors. In such cases, the costs of distributing the prescribed part may be disproportionate to the benefit gained from the distribution and the office holder should be able to take action to disapply this new section.
  In order to obtain an order under this subsection, the office holder will have to satisfy the court that the costs of distribution would be disproportionate to the benefits.
  We are grateful to the City of London Law Society for bringing the need for Lords amendments Nos. 162 and 163 to our attention. Our policy has always been that the calculation of the prescribed part will not apply to charges created before the section's commencement, but that it is to apply to any floating charge created after the section's commencement. An existing floating charge granted prior to commencement will not be subject to the new section.
  948
  Where a company has granted both pre- and post-commencement floating charges, an insolvency office holder would pay out to fixed security holders, then pay the expenses of the winding up, then pay any remaining preferential claims, then pay out to the pre-commencement floating charge holders, and then he would apply the prescribed part to the net property available to the post-commencement floating charge holders.
  It is not anticipated that there will be a problem with pre-commencement charges that have subordinated their claim to a post-commencement charge. They will have done so in the knowledge that they will be waiving their right not to be subject to the new section 176A.
  Lords amendments Nos. 164, 174 and 175 are consequential and technical amendments necessary to ensure that the appropriate insolvency provisions extend to Scotland in addition to England and Wales, to align the Bill with the Insolvency Act 2000 and facilitate the drafting of insolvency rules. They are consequential on other amendments to the Bill.
  Lords amendment No. 164 applies to clause 249. It will ensure that the powers that a Scottish liquidator has to take antecedent recovery actions against a company are also included in part I of schedule 4 to the Insolvency Act 1986 and will, as a result of clause 249, need the sanction of the court or the liquidation committee, or a meeting of creditors where there is no committee, before taking any such action. The reason for the amendment is to ensure that the benefit flowing to unsecured creditors from the abolition of the Crown's preferential status cannot be used for such actions without creditors' approval.
  Lords amendments Nos. 174 and 175 ensure that provisions in clauses 249 to 251 will extend to Scotland.
  Lords amendments Nos. 229 to 234 deal with purposes of administration. Lords amendments Nos. 235 to 240 and 242 to 245 deal with time scales, while amendments Nos. 241 and 246 to 258 are technical and relate to schedule 16, which deals with the detailed processes of administration.
  Lords amendment No. 241 applies to the types of payments to be made to an administrator, and Lords amendments Nos. 246 and 252 deal with various matters which would normally be required in accordance with the Insolvency Act 1986 when a company goes into creditors' voluntary liquidation but which, where that liquidation follows immediately after administration, are not necessary or appropriate.
  I should be happy lo give the House further details of the amendments in this group if hon. Members wish.
  Mr. Greg Knight: I am grateful to the Minister for her lucid explanation of the amendments, but I am suspicious by nature and I seek clarification and reassurance in respect of Lords amendment No. 161, which states that the subsection shall not apply to a company if
  "(a) the liquidator, administrator or receiver applies to the court for an order under this subsection on the ground that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits".

  949
  8.30 pm
  Can the Minister tell us the precise scope of that provision? My concern is that if a liquidator has inflated his or her fees, or has a large fee built in, inflated or not, could that be an argument for the liquidator saying that a distribution to unsecured creditors would be "disproportionate to the benefits". I am concerned that a fat-cat liquidator could use that provision to deny a payout to a small, unsecured creditor solely on the grounds that he or she wished to be well paid for the work undertaken. I hope that the amendment would not lead to that situation.
  Mr. Eric Forth: I am interested in the concept of proportionality in that context. Has my right hon. Friend given any thought to, or is he concerned about, the validity of the mechanisms that are available to judge proportionality in that case? While I follow his argument and share his concern, I am interested to know whether the judgment of proportionality will be appropriate in such cases.
  Mr. Knight: Perhaps I have not given that matter the depth of thought that I should have done. I will no doubt want to reflect upon it later.
  What I find slightly sinister about the provision is the requirement for the court to have a role. We all know that a liquidator can make all sorts of applications to a court—after all, he is not paying and the costs will come out of the general funds. What about the poor unsecured creditor? How does the creditor have a voice to tell the court that it should not go down that road, as the liquidator is using the provision as an excuse for not paying him when he should be paid—the liquidator is merely ensuring that he gets his own fees? I hope that the Minister will be able to reassure the House that the Government are not introducing a loophole that would allow fat-cat liquidators to ride roughshod over the poor unsecured creditor.
  Mr. Mark Field: It is a great pleasure to join in debate with my right hon. Friends the Members for Bromley and Chislehurst (Mr. Forth) and for East Yorkshire (Mr. Knight). I suspect that they are already having withdrawal symptoms at the prospect of not being able to speak at such a late hour on Wednesday evenings. I was intrigued to see a long-lost interest in insolvency matters coming to the fore.
  I am glad that the Minister has agreed with many of the Lords amendments. We discussed this matter at length in Committee and there were clearly some technical concerns. On a personal level, I am grateful to the Minister for thanking those hon. Members who contributed to the Standing Committee. I confess that on my website, which I have got up and running recently—I am sure that the hon. Lady is a regular and has logged on to it to find out what is going on in the Cities of London and Westminster, and I only wish that many other people were similarly minded—I made it clear that one of the least glamorous aspects of parliamentary life is being involved in a Standing Committee, going through legislation line by line. When I say that it is the least glamorous, it is not a reflection on the Minister, of course; it is because one has to grind through the technical amendments.
  950
  I hope that we were able to make some positive contributions to the insolvency provisions in the Bill. I pay tribute to a number of law societies, in particular the City of London Law Society, to which the Minister referred. Its contribution on the technical aspects of floating charges will, I hope, ensure, that the insolvency provisions will remain intact for some time.
  Mr. Robathan: I wish to put right an earlier omission. I paid tribute to my hon. Friend the Member for Eastbourne (Mr. Waterson), who took this Bill through the Standing Committee for the Opposition, but I did not mention those who sat with him on the Benches in Committee and did very valuable work, in particular my hon. Friends the Members for Cities of London and Westminster (Mr. Field) and for Huntingdon (Mr. Djanogly).
  Mr. Field: My hon. Friend the Member for Huntingdon (Mr. Djanogly) and I are in a nice position—we find that we are positive experts on this legislation since the Opposition Front-Bench trade and industry team has changed entirely.
  Crown preference is one area that we discussed at some length in Committee that has not been mentioned—apart from a tangential reference by the Minister earlier. I appreciate that some of the amendments would protect the position of unsecured creditors to a certain extent in the event that Crown preference was done away with. When we first considered the provision, the Minister was keen to make it clear that there would be a windfall of about £70 million to £100 million a year on which the Crown would no longer be looking for first preference.
  One of the potential problems with Crown preference is that a number of smaller companies—indeed, they need not be particularly small—have a good arrangement with the local Customs and Excise and Inland Revenue and thus have an arrangement by which they do not have to pay all their outstanding debt to the Government up front.
  The football sector has been depressed recently and constant concern has been expressed about it. The Minister may have read in the financial press of the worry about some football clubs, which had come to positive agreements with their local Inland Revenue office about large sums of money that were due at a particular time. The imposition of Crown preference will mean that if a football club looks as though it is about to go into administration or even to go bankrupt, the Inland Revenue or Customs and Excise may decide to pull the plug earlier. That will be the result—no doubt unintentional—of the imposition of Crown preference. One of the underlying intentions of the measure, rightly, is to stop failing companies going to the wall either unnecessarily or too soon.
  Mr. Hoban: Before I became a Member of the House, I had personal experience of working with companies that did not have a high asset base—their principal assets were people. I am concerned that not only football clubs but IT companies, architects and design companies will be affected. A slight pause in their income flow and in the collection of their debts might give rise to the situation to which my hon. Friend

  951
  refers—triggering bankruptcy by the Inland Revenue or Customs and Excise, to get the money immediately rather than letting the business trade through.
  Mr. Mark Field: I thank my hon. Friend, who has articulated my point rather more clearly than I could. I hope the Minister will be able to draw something from what has been said and that she will be able to deal with the genuine concerns that have been expressed about Crown preference.
  The subject is extremely technical and I applaud the Government for holding large-scale consultations during the past few months and especially over the past two or three years. I have already referred to the local law society in my constituency, but several professional bodies, in particular the Association of Business Recovery Professionals has also made constructive comments that will ensure that our amendments make the law much more workable.
  Mr. Djanogly: The Minister kindly offered to give us further explanations if required. I should appreciate her further comments on the provisions on administrators in amendment No. 241, as those provisions have been developed since we last discussed them. Will the Minister also explain why, in amendment No. 244, a decision was taken to insert the words "one year", while amendment No. 245 specifies six months?
  I concur with my hon. Friend and the Minister as regards the comments about the input to the Bill.
  Mr. Greg Knight: As regards amendment No. 241, I am troubled by paragraph 65, which states:
  "The administrator of a company may make a payment otherwise than in accordance with paragraph 64 or paragraph 13 of Schedule 1 if he thinks it likely to assist achievement of the purpose of administration."
  What does that mean? If an unsecured creditor becomes an irritant and is becoming belligerent with the administrator, could the administrator pay them off to get them off his back? That could happen if my interpretation is right. I think that it was an American politician who said that his concern about democracy was that
  "the wheel that does the squeaking is the one that gets the grease"
  My concern is that the provision might mean that the belligerent unsecured creditor always got his money, while the reasonable person who tried to obtain a payout by moderate dealings with the liquidator was left out in the cold.
  Mr. Djanogly: I thank my right hon. Friend for that intervention, and he makes a very good point. I note that the administrator could make such a payment if he thought that it would be likely to help to achieve the purposes of administration. Again, I reiterate my original request: I would appreciate it if the Minister would explain that issue.
  Mr. Hoban: My right hon. Friend the Member for East Yorkshire (Mr. Knight) suggested that, under Lords amendment No. 241, a belligerent creditor could put pressure on an administrator to settle his debt early. However, would not Lords amendment No. 242 provide
  952
  a means by which a creditor could become an irritant to a liquidator? Could not a creditor start to make noises about making claims to the court, saying that the administrator was not performing his functions as quickly or as efficiently as reasonably practicable? So there could be opportunities for the creditor and the administrator to play off against each other to reach a good deal.
  Mr. Djanogly: I thank my hon. Friend for his worthwhile comments. The instances could vary, and it would be most helpful if the Minister could provide an explanation. Other hon. Members and I raised concerns in Committee relating to the ability to question the administration costs that could be involved.
  Mr. Tony McWalter: It is as though we are back in Committee talking about all the problems that might arise with lousy administrators. Does the hon. Gentleman agree that the whole object is to try to ensure that other companies are not pulled down when a company goes bust? That should not happen unnecessarily if the administrator has the power to make such judgments.
  Mr. Djanogly: The point of administration is that the company has the best possible chance of survival. The administrator will come in, and he has powers to let staff go and to run the company in place of the directors. However, when he has been appointed, the company is very often at his mercy in cost terms.
  It is interesting that most administrations end in liquidation. The Bill may change that—that was one of the purposes of the Government's changing the administration process—but one of the main reasons why companies are finally forced into liquidation is often that, once administrators are involved, they are very expensive and that the money ends up in their pockets instead of going to the creditors.
  Mr. McWalter: I obviously did not make myself clear. I was talking not about companies in administration but about other companies that want administrators to carry out their jobs in such a way as to rescue them from the difficulties that they may face if the first company goes under completely. That was the point that I was trying to make.
  Mr. Djanogly: The hon. Gentleman makes a fair point in so far as the implications of an administration may be that the company continues to trade, so its creditors will benefit to the extent that they will not be pushed under by the fact that the first company does not survive, although that is not always the case in practice.
  8.45 pm
  Mr. Greg Knight: The hon. Member for Hemel Hempstead (Mr. McWalter) has made a telling point. We should have concerns not only for other companies that may be pulled down but for other small businesses that are not incorporated, such as the sole trader or the man who runs a corner shop and who may lose his livelihood as a result of these provisions. Lords amendment No. 242, for example, states:
  "A creditor or member of a company in administration may apply".

  953
  Is there not a case for saying that anyone aggrieved in this process may apply—for example, someone who is not a creditor or a member of a company but an unsecured creditor who may lose his business? Those are serious matters.
  Mr. Djanogly: Indeed they are, and I thank my right hon. Friend for making that point. The situation is serious, and, to that extent, I would be most appreciative if the Minister could reply to our points.
  Miss Melanie Johnson: I am enormously grateful to Opposition Members for their questions on these matters.
  First, I want to respond to the question asked by the right hon. Member for East Yorkshire (Mr. Knight). Lords amendment No. 161, to which he referred, was brought forward by his noble Friends in another place in response to the debate. I am not sure how his paranoia is progressing—I think he described himself as paranoid, or used words to that effect—and I do not know whether telling him that his noble Friends were responsible for the amendment will help or hinder his condition, but I offer that as a reassuring titbit.
  Mr. Knight: I am grateful to the Minister. I have never described myself as paranoiac—I think that I said that I was suspicious by nature, which is slightly different. My party colleagues in another place have made several improvements to the Bill. The context of my question to the Minister was whether those changes went far enough. Is she satisfied that Lords amendment No. 161 contains sufficient safeguards to prevent the sort of harm that I fear?
  Miss Johnson: I think I entirely understood the right hon. Gentleman's remarks, and I note that I should have described him as suspicious by nature. To reassure him, only the court can disapply the prescribed part. In response to his point about so-called fat-cat liquidators, the court will be able to consider whether the office holder fees are fair and reasonable. The office holder will have to make the case to the court that it should make the order sought. It will therefore be for the court to consider the reasonableness of what is being laid before it. I hope that that reassures even a right hon. Gentleman of suspicious mind.
  On the points made by the hon. Member for Cities of London and Westminster (Mr. Field), I reiterate our thanks to the City of London Law Society, particularly in relation to Lords amendments Nos. 162 and 163, and, no doubt, in relation to other work that it did on improving various aspects of the Bill. I hope that our thanks will be passed on. On Crown preference and the issues that he raised in relation to the football sector and related difficulties, the revenue departments have assured us that, in pursuing outstanding debts after abolition of preference, they will continue to offer help and support to vulnerable businesses facing genuine temporary difficulties. That includes support for business rescues via voluntary arrangements and for companies in administration. It must be remembered that the Crown Departments will not lose out
  954
  altogether, because they will benefit from money becoming available to all other creditors. The provision covers the issues that the hon. Gentleman raised.
  Mr. Hoban: The Minister has partly reassured Conservative Members who expressed concerns about early triggering. She referred to formal voluntary liquidation and administration, but I am particularly concerned about the informal arrangements that the Crown Departments might reach with a football club or an IT company. What guidance have they issued to show that they will continue to be as sympathetic to businesses as they were before the abolition of Crown preference?
  Miss Johnson: I do not have any guidance in front of me, but I have placed on record the fact that we have been assured about the way in which the Crown Departments will deal with such matters. I hope that the House will accept that assurance.
  The hon. Member for Huntingdon (Mr. Djanogly) asked about time scales and the six-month extension. This part of the Bill was subject to consultation following the Lords Committee, and the amendments were tabled to reflect the outcome of those discussions.
  Mr. Djanogly: Will the Minister give the House an explanation of the outcome of those consultations?
  Miss Johnson: I cannot respond in detail to that point, but I shall see what I can do to deal with the matter.
  On the point about belligerent creditors, simple belligerence will not allow the administrator to pay. The payment must assist the purpose of administration. For example, it could be used to pay the supplier of something that the administrator could not obtain from any other supplier. The administrator must believe that payments will achieve the purposes of administration.
  Mr. Knight: The Minister has been generous in giving way, and I appreciate that. I am heartened by what she has just said. Is she arguing that an administrator or liquidator could not say that time taken up corresponding with a vexatious unsecured creditor was not assisting the administration and that to pay that person off would assist the process? Does she confirm unequivocally that the administrator or liquidator could not use that as a reason?
  Miss Johnson: It is difficult to comment without knowledge of individual cases. The right hon. Gentleman seeks an assurance in relation not to the Bill but to the judgments taken on individual cases by those qualified to interpret or discharge the provisions in the Bill.
  To return to the point made by the hon. Member for Huntingdon, the outcome of the consultation is reflected in the time scales as amended. I hope that that point meets his concerns, and that the House will agree to the amendments.
  Lords amendment agreed to.
  Lords amendments Nos. 162 to 165 agreed to.

Clause 256

  REPEAL OF CERTAIN BANKRUPTCY OFFENCES
  Lords amendment: No. 166, page 180, line 29, after "by" insert "written"
  Miss Melanie Johnson: I beg to move, That this House agrees with the Lords in the said amendment.
  Mr. Deputy Speaker (Sir Michael Lord): With this we may discuss Lords amendments Nos. 167 to 173.
  Miss Johnson: Although not all the amendments are related, they are all technical amendments to the provisions on individual insolvency. I thank the Opposition in the other place. With the exception of amendments Nos. 168, 169 and 173, the amendments were inspired by helpful amendments tabled by them, for which we are most grateful.
  I could comment in detail on the amendments if hon. Members wish, but I do not propose to do so. Amendment No. 166 ensures that any variation of an income payments agreement must be in writing. Given that an income payments agreement itself must be in writing, it is a sensible clarifying amendment. Amendments Nos. 167, 170 and 171 apply to clause 257 on the bankrupt's home and provide protection to what the noble Lord Freeman referred to as the deserted spouse.
  Mr. Greg Knight: I may depart company with my noble Friends in the other place on this matter. Amendment No. 166 is, on the face of it, the most reasonable amendment tabled to the Bill. However, it is a long-established facet of English law that contracts do not have to be written. I await to be corrected by a lawyer, but I recall from the days when I practised law that the only aspect of law for which one had to produce a written contract was for the sale or purchase of property—land. That was introduced in the Law of Property Act 1925 by one of my political heroes, F. E. Smith, the First Earl of Birkenhead.
  Since then, lawyers have accepted that it is reasonable that if someone is selling property, there has to be evidence of a written contract because of the risk of gazumping—but that is all that the Act has to say on the matter. It does not say that the contract has to be written, just that it has to be evidenced in writing. Why is it deemed that an agreement between the parties has to go further than the Law of Property Act and be contained in a written agreement?
  Mr. Forth: I hesitate to intervene because I am not a lawyer and my right hon. Friend is a distinguished member of that profession.
  In the context of the stipulation that a contract is to be determined by agreement between the parties, does there have to be a witness to it if it is simply verbal? One of the dangers is that we might get into the difficulty—I speak as a layman—of one person's word against another. Given the importance of the matters under consideration, it strikes me that there is a fragility or vulnerability in that context. Does my right hon. Friend
  956
  believe that a simple verbal agreement without witnesses is sufficiently robust? Perhaps there should be a provision for a written agreement in such cases.
  Mr. Knight: As I understand it, amendment No. 166 requires a written agreement—a document in writing between two or more parties. Ten or more people might witness a verbal agreement. They are honest citizens who are not going to perjure themselves. They would have heard the agreement made, but if this amendment were accepted, the agreement would be outwith the scope of the Bill, and that seems rather odd.
  9 pm
  The Minister dismissed this amendment as being technical, but we are seeking to make this a unique area of law. [Interruption.] I hear the Minister for Employment Relations, Industry and the Regions, the hon. Member for Hull, West and Hessle (Alan Johnson), muttering incoherently on the Front Bench, but I have to say to him that I am aware of only one case in English law where one needs evidence of a contract, and that is in the sale or purchase of land. We are now taking that a stage further and saying that written evidence is not enough; a written contract is necessary. Why should such a draconian provision be introduced?
  My right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) touched on what many see as the danger here. If an oral contract is sufficient, someone who is less than honest may be willing to persuade his wife or another person to perjure themselves at a court or tribunal, and we have seen that happen in a number of court cases recently. We do not want to encourage that, but where a court can be satisfied that there is an agreement, even if it is not in writing, surely that should be sufficient.
  Mr. Forth: I want to press the Minister to give further clarification on amendment No. 167. It strikes me—I confess that I speak as a layman, but such is the role that we have in these circumstances—that we are making some rather radical alterations to the sense and thrust of the existing provision. The wording that the amendment seeks to change is clear: it says that the provision applies where the property comprising the bankrupt's estate consists of an interest in a dwelling house that, at the date of the bankruptcy, was the bankrupt's sole or principal residence.
  The amendment seeks radically to alter that sense. Instead of referring to the
  "bankrupt's sole or principal residence",
  it would refer to the
  "sole or principal residence of

  (a) the bankrupt,

  (b) the bankrupt's spouse, or

  (c) a former spouse of the bankrupt".

  By any definition, that considerably widens the scope of the provision. We need clarification from the Minister to establish whether the amendment seeks to broaden the definition so as to include more principal or sole residences, or whether it seeks to narrow the definition.
  I thought that I heard some reference to divorced spouses a moment ago, and after simply reading the wording I am not entirely clear whether we are trying to

  957
  include or exclude them. On the face of it, the amendment means that the measure will now apply to one of a range of properties in the bankrupt's estate, and that range will extend beyond the property of the bankrupt himself.
  That seems radically to alter the meaning of the provision, and it could have a considerable effect on a number of people, who may be innocent parties. I am not saying that any guilt should be attached to someone who is bankrupt. In fact, as the House will know, our cultural attitude to bankruptcy, which tends, wrongly in my view, to regard bankruptcy as a wicked act, is very different from that of our American cousins, who regard it as something benign that one must go through if one is to achieve something in future. I wonder whether we are trying to spread the blame and bring in others beyond the bankrupt himself or whether we are trying to protect those others.
  We seek from the Minister clarification about the thrust of the amendment and its likely effect. It would be helpful if she could give us some idea of the numbers involved. I do not know whether we are talking about a few unusual cases or a larger number. If we start to include spouses or exes, the numbers could rise considerably.
  Mr. Greg Knight: Lords amendment No. 167 is highly discriminatory or defective because proposed paragraph (b) refers to the bankrupt's spouse in the singular. What about polygamous marriages and the Mormon faith?
  Mr. Forth: My right hon. Friend is trying to draw me into territory that I am reluctant to enter. In turn, however, will he clarify something for me as a distinguished lawyer? Is he suggesting that polygamous marriages are sufficiently legal in our culture to be encompassed by the amendment? My lay interpretation is that in our Judaeo-Christian tradition the amendment can apply only to one spouse, not multiple spouses as he suggests. I should be grateful if my right hon. Friend would consider something. It is possible that under proposed paragraph (c) there would be multiple ex-spouses—that possibility does arise in the Judaeo-Christian tradition and our legal framework. My right hon. Friend was therefore half-right, but was looking at the wrong paragraph—he concentrated on proposed paragraph (b) instead of (c). I shall allow him to think about that while giving way to my hon. Friend the Member for Cities of London and Westminster (Mr. Field).
  Mr. Mark Field: I may be able to assist. Polygamous marriages are not recognised in English law, but my right hon. Friend is a polygamous politician. Not only has he represented Bromley and Chislehurst but a Worcestershire seat and another seat in the European Parliament. Our right hon. Friend the Member for East Yorkshire (Mr. Knight) is also polygamous, having previously represented Derby, North.
  Mr. Deputy Speaker: Order. Before the right hon. Gentleman responds to that intervention, I remind him that he should stay tightly on track.
  Mr. Forth: Of course I shall, Mr. Deputy Speaker. Uncharacteristically, however, my hon. Friend
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  underestimated me, as he forgot that I was a local councillor in Brentwood in Essex back in the 1960s. My multiplicity is almost unlimited, but it would be immodest of me to dwell on it—the House knows that that would be uncharacteristic.
  However, I wish to return to the remarks of my right hon. Friend the Member for East Yorkshire, which applied strictly to the amendment. The Minister, as happens from time to time when we are deliberating on such matters, tried to give the impression that we were considering a technicality—we were talking about a few words that would have little effect, and that we would have a quick glance at the provision and nod it through. I suspect that we are only scratching the surface and have an inkling that the provision could be problematic, as we do not know what its scope is. We need the Minister's guidance as to whether the provision is restrictive or permissive.
  Mr. Djanogly: In his interesting speech, my right hon. Friend mentioned the cultural differences between America and the United Kingdom on the question of bankruptcy, an issue that was discussed at some length during deliberations on the Bill. One implication of the personal insolvency provision is that the insolvency period will be cut from three years to a maximum of 12 months, which has caused great concern to many of my hon. Friends and practitioners in the insolvency world. People are saying that we may move towards an American system—if you cannot pay your bills, why not just go bust and do the same thing afterwards? It would be interesting to hear my right hon. Friend's comments.
  Mr. Forth: My hon. Friend puts his finger on an important matter, which I intended to deal with later in my remarks, but I shall do so now. Of course the time scale is relevant, in both a general sense and a specific sense. The word "former" is important. We could get into some difficulty—I refer to my hon. Friend's remarks about time scales—about the exact point at which the spouse becomes "former." My right hon. Friend the Member for East Yorkshire may be able to help us.
  When we get into the territory of nisis and absolutes, it is possible that considerable confusion could arise from the amendment as regards the exact impact of the timing of the divorce and the point at which it takes effect within the time scale that is envisaged. In one sense, it does not matter whether we are speaking of one year or three, but in another sense it does. If we are talking about longer time scales, the impact of the divorce and the legal impact of nisis and absolutes must be taken into account.
  Mr. Knight: My interest is rather in the scope of the Lords amendment. My hon. Friend the Member for Huntingdon (Mr. Djanogly) touched on the widening provision of amendment No. 167. The question that the House must ask, and which I hope my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) will address, is whether the widening goes far enough or too far. The problem that we have had for too long under English law is the stigma associated with bankruptcy, which, as my hon. Friend the Member for Huntingdon properly said, does not apply in America.

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  Not many people know that early in his career, the very successful and popular worldwide entertainer, Dean Martin, was made a bankrupt.
  Mr. Deputy Speaker: Order. Not many people may know that, and I am not sure that at this stage the House wants to hear it.
  Mr. Forth: I shall not break into song, although I am a bit of a fan of Dean Martin myself. The serious point is that the more we probe the amendment, the more troublesome it begins to appear.
  The Minister for Employment Relations, Industry and the Regions (Alan Johnson): You call that probing?
  Mr. Forth: I have probed gently so far; wait till I really get going. The difficulty that we are getting into, which I hope the Under-Secretary will deal with in detail and at some length, is the subtle interplay between the mechanisms of the divorce in the case of the former spouse referred to in the amendment, and the bankruptcy proceedings.
  Mr. McWalter: Will the right hon. Gentleman note that the reference is to a dwelling house, which must be comprised in the bankrupt's estate? We are discussing one way in which people can be protected from the seizure of their home. That is all.
  Mr. Forth: I am grateful to the hon. Gentleman for seeking to simplify matters for me. I am a simple man, as he knows. I can see that he is trying to come down to my level, to help me to understand the provisions, but I am still struggling with the interplay, which I am sure exists, between the estate, the period of bankruptcy and the legal moment of bankruptcy. We are attempting to relate that to another variable, the concept of the former spouse. I am sure that even the hon. Gentleman would agree that there are circumstances in which those factors could come into conflict. The legalities involved in the bankruptcy process, the estate and the process of divorce could come into conflict. That might not make the provision unworkable—that would be going too far—but could complicate it.
  9.15 pm
  In my view, as the original wording was straightforward and easily understandable, it was also easily implementable. My fear about the amendment is that it would introduce considerable additional complications. I therefore wonder whether their lordships gave sufficient thought to it. After all, we are here to ask such questions. Indeed, they demonstrate the great value of the two-Chamber parliamentary system. Their lordships, to whom we defer in so many ways, have, in their wisdom, proposed the amendment. Our humble role as laymen—I exclude my right hon. Friend the Member for East Yorkshire, who is an expert—is to cast our eye over each provision and say, "Hold on a minute: is this too clever, does it go too far and would it work in practice?" In this case, we must consider whether the provision would simply be—if my right hon. Friend will forgive me—a lawyers' charter.
  Mr. Redwood: I usually agree with my right hon. Friend, but I wonder whether he has misread the
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  situation. There could be a hard case that is not covered in the original words, which deal merely with the bankrupt's home. We should remember that these issues are governed by the beginning of new section 283A to the Insolvency Act 1986, which deals with the bankrupt's home ceasing to form part of the estate. I read the amendment as a helpful one that tries to explain that there could be hard cases if properties relating to the bankrupt's spouse or a former spouse are not excluded. I understand his asking where that should stop, how far back it would be possible to go and what would happen if one had several former "spice" or spouses, or whatever the plural might be. It is reasonable to ask whether such provision could become unnecessarily complicated or lax, but I hope that he will consider the possibility that a hard case might arise that the amendment would take care of, but the rather odd alternative drafting might not.
  Mr. Forth: I am grateful to my right hon. Friend, who is of course right. Will he not concede, however, that when we are trying to deal with one hard case, we often introduce at least as many difficulties, problems or even harder cases?
  We touched earlier on the possibility of serial ex-spouses. I am not sure whether the amendment deals satisfactorily with that possibility. It refers to
  "a former spouse of the bankrupt",
  but what about the plural? With which former spouse does the provision deal? Is it the most recent spouse, the first one or all of them? The amendment allows reference to only one former spouse. Again, I accept that I am treading on delicate legal territory, but I wonder whether such provision is sufficient and whether the scope is adequate to deal with those issues, quite apart from problems of timing.
  Mr. Knight: My concerns are different from those of my right hon. Friend. He seems to be anxious that the amendment is too loosely drafted and could encourage too many claimants. My concern is that, if there is any criticism to be made, it is that the amendment is too tightly drawn. What about the dependent relative of the bankrupt? The amendment contains no provision in that regard.
  May I say en passant that, in view of your earlier ruling, Mr. Deputy Speaker, I doubt whether you will be receiving a Christmas card from the Dean Martin Appreciation Society?
  Mr. Forth: May I suggest that the society might like to send a card to you, Mr. Deputy Speaker, in order to bring you round? A CD might help as well, perhaps including "Memories are Made of This" or something similar. I shall not pursue the matter any further.
  I recognise that my right hon. Friend is trying to be helpful, but we need to focus and should not be drawn into seeking ways of over-complicating a matter that is already somewhat over-complicated. I am beginning to wonder whether the amendment is entirely appropriate. It strikes me that, even though it is a well-meaning attempt—their lordships could not have a motive that was anything other than well meaning—to solve one set of problems, we might be in danger of creating even more.
  Mr. Djanogly: I appreciate that my right hon. Friend has already opined on polygamy, but I wonder whether he has considered legitimacy, which is often a problem in wills?
  Mr. Forth: I do not know whether that is a problem with the provision that we are considering. It would be if we incorporated the suggestions that my right hon. Friend the Member for East Yorkshire made a moment ago. However, I suspect that the wording is sufficiently tight to obviate the problem because we are considering "the spouse" or "former spouse".
  There is a problem with the former spouse; the serial ex presents a difficulty. However, the problem of definition is not that suggested by my hon. Friend the Member for Huntingdon (Mr. Djanogly) because a spouse is a spouse is a spouse.
  I hope that we shall not unearth another problem; that would be too much. However, would a marriage conducted in another legal jurisdiction cause difficulties in the definition of "spouse"? I am happy to say that I was married in New Mexico, and it was a wonderful experience. I do not know whether there would be any difficulty in recognising the marriage in our United Kingdom jurisdiction. Perhaps my right hon. Friend the Member for East Yorkshire can help me.
  The simple use of the word "spouse" is either legally sufficiently watertight to obviate any definition problems or in danger of introducing further difficulties.
  Mr. Redwood: I cannot help with that point, but I am worried about an ambiguity on which my right hon. Friend may like to comment. It appears that we have to choose between "the bankrupt's spouse" and "a former spouse". That could be invidious, but whether paragraphs (a) and (b) or (a) and (c) of Lords amendment No. 167 can apply simultaneously is left ambiguous because "and" or "or" are not included after paragraph (a). Is the amendment therefore defective?
  Mr. Forth: I believe that I can help my right hon. Friend. The potential conflict between paragraphs (b) and (c) or the existing spouse and the former spouse is obviated by the word "or" in paragraph (b). However, that introduces another problem. I presume that there is an order of priority, and one spouse must pre-empt the other. The existing spouse will probably take precedence over the former, or any number of former spouses, but perhaps the Minister will explain whether she is satisfied that the amendment is sufficiently clear and therefore immune from challenge.
  Mr. Knight: I hope that my right hon. Friend will forgive me, but I believe that, uncharacteristically, he is making heavy weather of the matter. I appreciate that his friends will not recognise that description of his contribution, but he is labouring the issue. We are considering the provision that applies when
  "property comprised in the bankrupt's estate consists of an interest in a dwelling-house".
  If we are dealing with a former spouse of several years, surely the court, in the divorce proceedings, will have settled the property on the former spouse. It is therefore no longer in the amendment's ambit.
  Mr. Forth: I am grateful to my right hon. Friend for helping us. I was about to consider the definition of the
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  estate and whether there was potential difficulty in the probate stage that existed at the time of the bankruptcy. There are potential problems throughout the process in the time scales for various legal matters. Anyone who has experienced probate, divorce or any combination of those understands that they are inevitably lengthy and complex matters that must interplay in the circumstances that we are discussing. Even something as apparently simple as the concept of the bankrupt's estate must be open to doubt, because it would depend on any number of interrelationships, perhaps involving the bankrupt being the potential beneficiary of probate, on the one hand, or the other way round, if I can put it that way.
  David Winnick: Can the right hon. Gentleman satisfy my curiosity by telling me whether he has resigned from the Front Bench as shadow Leader of the House? If he has not, is his sitting on the Back Benches a new feature—and why not? It could all be part of modernisation—in which he doubles up, appearing on the Front Bench as a senior Member one day, and on the Back Benches the next? The other rumour is that all this is simply a ruse to keep the House going until 10 o'clock.
  Mr. Forth: The hon. Gentleman is being uncharacteristically unfair.
  Mr. Knight: Characteristically.
  Mr. Forth: Well, I am going to be fair to the hon. Gentleman and I would not accuse him of being anything other than fair and a man of great integrity. It saddens me, therefore, that he seems to suggest that my motive is anything other than to seek the truth—after all, that is why we are all here—and examine the legislation, which I thought was also our job. As for his questioning my role, the modern Conservative party is flexible and progressive, and it allows a number of different roles to be played by right hon. and hon. Members.
  I have taken an interest in this matter, and the view that I took, having listened to the Minister's brief introduction to the amendment, was that it was perhaps slightly inadequate. So I am simply playing my role as a seeker of truth and a legislator, and I shall give way to the hon. Member for Hemel Hempstead (Mr. McWalter), who, I suspect, comes into the same category.
  Mr. McWalter: In my desire to get this matter curtailed, may I ask the right hon. Gentleman to bear it in mind that, if someone had loads of houses and loads of spouses, subsection (3) would come into play? The interests would be realised, people would get a share of the action, and out of that mess everything would eventually be settled. This provision involves a right that people would have in extremis. It is not designed to be—it could not be, because of subsection (3)—a way of liquidating all one's assets to try to ensure that one's creditors could not get at them.
  Mr. Forth: I am grateful to the hon. Gentleman. This amendment will henceforward be known as the "houses

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  and spouses amendment", which will help to fix it in our memories. As for "in extremis", I am rarely accused of being in extremis in any context.
  Mr. Knight: Will my right hon. Friend give way?
  Mr. Forth: I will give way, but then I really must draw my remarks to a conclusion, because I want to give the Minister the maximum possible time. She might need all the time that is left to us to answer the questions that have been posed.
  Mr. Knight: I am not sure that that last intervention was particularly helpful. What would happen in the case of a bankrupt who had three houses that formed part of his estate, if he lived in one of them, his spouse lived in another, and a former spouse lived in the third?
  Mr. Forth: My right hon. Friend has made a valuable contribution in pointing out the difficulties that could arise from this no doubt well-meaning amendment.
  Mr. Hoban: Will my right hon. Friend give way?
  Mr. Forth: I will give way, but this really must be the last time.
  Mr. Hoban: This has been an interesting debate on the terminology used in the amendment. The debate has confined itself to talking about legally recognised relationships. In our modern society, it is remarkable that there is no reference in the provisions to the position of cohabitees or former cohabitees. Does my right hon. Friend not agree that they, too, should be covered by the Bill?
  Mr. Forth: I almost hesitate to get into that territory. My hon. Friend tempts me, but I shall resist the temptation except to say that he has illustrated that, if we look at this matter in a modern way—after all, we look at things in a modern way in the House, do we not?—it may seem to be taking an overly restrictive approach. We hear all sorts of talk these days about partners, and we ought perhaps to give some thought to whether unmarried people come into this. I have not even touched on the matter of gender, either. After all, we talk of people of this or that gender having this or that relationship. I wonder whether the amendment is sufficiently broadly drawn to satisfy those with a modern and progressive attitude on these matters, and whether the issue of gender should be dealt with in the legislation.
  I am grateful to my hon. Friend the Member for Fareham (Mr. Hoban), because he has added yet another dimension to the considerations that are raised by the amendment, which at first blush seemed to be perfectly straightforward. It now seems that there are worrying complications, and I hope that the Minister, when she concludes this little debate, will satisfy the House that she has the answers to all these questions, so that we can decide whether to give the amendments our approval. I hope that that will be the case, and that my modest contribution has helped the House to focus on some of these questions.
  9.30 pm
  Mr. Redwood: I shall not detain the House long, but I think that my right hon. Friend has put his finger on some difficult issues raised by the amendment. The context is clear. The Bill provides for a new section 283A in the Insolvency Act 1986 when the bankrupt's home ceases to form part of the estate. It says:
  "This section applies where property comprised in the bankrupt's estate consists of an interest in a dwelling-house which at the date of the bankruptcy was the bankrupt's sole or principal residence."
  The aim of amendment No. 167 is to amend and broaden that proposal.
  In the light of my right hon. Friend's remarks and the study that I have made of this matter as he was speaking and before, I have worries that the amendment, while generous in intention by including spouse or former spouse, leaves ambiguities and difficulties that may make the legislation even less perfect than the original version. The thrust of the amendment may be sensible, but the drafting is not as felicitous as it might be.
  My first worry is that it is by no means clear whether we are talking about the principal residence of the bankrupt and the bankrupt's spouse if they happen to have different residences, or whether we have to make a choice. Secondly, the draft clause is silent on how people in positions of responsibility should determine a case if they have to choose between the residence of the bankrupt's spouse or a former spouse. My right hon. Friend has made some reflections on that, but I think that the legislation, if it is to widen the provision in that way, should give more guidance on how these invidious choices may fall to be made.
  The drafting is not as inclusive or modern as some Labour Members and others may like. I have no objection to the use of the word "spouse", but these days people often prefer the word "partner" because they want to cover a variety of relationships that could be important to the individual concerned. It is strange that the legislation should look backwards, especially under this Administration. My right hon. Friend the Member for East Yorkshire (Mr. Knight) asked whether it is right to single out a former spouse rather than some other dependent relative, because there could be more deserving cases. There could be difficult cases of people with important responsibilities who have become bankrupt. That has not been included in the amendment to this part of the revised bankruptcy legislation.
  I hope that the Minister will deal with the detail when she replies to this vignette of a debate. It shows that the House has an important role to play in examining the words in detail, and that, when and if they are let loose in a court, there could be scope for intelligent, well-briefed and expensive lawyers to go round and round in the interests of the person they are defending and show that we the legislators have been sloppy or negligent by allowing these ambiguities and imprecisions to remain in the legislation.
  Mr. Djanogly rose—
  Mr. Redwood: I shall give way to my hon. Friend, but we are running out of time.
  Mr. Djanogly: I note with interest the thought processes of my right hon. Friend in respect of changing

  965
  the word "spouse" to "partner". I should like to hear more of his views on that subject, because I am not sure that "partner" has the same meaning in law as " spouse", or, indeed, any meaning.
  Mr. Redwood: I ought not to be drawn too far down this interesting byway, as there are others better qualified to comment. My hon. Friend may well be right to say that the word "partner" has a legal imprecision. I simply raise the issue for the Minister because it is one of concern for a Government who pride themselves on being modern and inclusive. I am particularly worried about the issue of substance that I raised: are there other people in relationships with the bankrupt apart from a spouse or a former spouse—in the latter case, the relationship might be far from close or friendly—who should be included in, or excluded from, this very important provision?
  The legislation is complicated and leaves considerable discretion in the hands of those dealing with the bankruptcy issue. In certain cases, the clause that we seek to amend leaves the timing imprecise. A three-year period is mentioned, but the trigger time varies, depending on what information has been revealed, and on the circumstances of the individual bankruptcy. Of course, those called to adjudicate these matters have considerable powers of discretion as to how the bankruptcy estate should be handled and added up, and what element should cease to form part of it.
  Mr. Greg Knight: Does my right hon. Friend accept that the discretion to which he refers does not extend to allowing any adjudicator to substitute words that are not included in the amendment? That is its weakness: it does not refer to partners or to a dependent relative. There would be no discretion whatsoever, therefore, in terms of taking care of a dependent relative or a long-term partner, because the drafting does not include that description or category of person.
  Mr. Redwood: That is right—that is part of the twin criticism that I am making. People are excluded who might be more deserving than those who are included, but there is also a fundamental ambiguity in the phrases "spouse" and "former spouse". Moreover, there are other complications to which reference has been made at some length, and which I will not repeat. If the provision were to go through, it would not be good legislation. To be good legislation, it needs amending to make the intention absolutely clear. I join my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) in asking the Minister to think again about those who should be included.
  This legislation is about people who have been through a miserable time. They may also have created misery for others—their creditors—who may not be satisfied. It is the job of good legislation to try to come up with a fair and judicious balance. Of course, we wish to be as generous as possible to the creditors, because they have been wronged. If we do not look after their interests, they, in turn, could get into financial difficulties, or their businesses could struggle. However, we also have a duty—as I hope my right hon. Friends the Members for Bromley and Chislehurst and for East
  966
  Yorkshire agree—to think about the condition of the bankrupt. Some bankrupts have been through extremely difficult times; for example, they may have made a misjudgment, or simply been swallowed up by bad luck and unpredictable changes in the marketplace. They need to live and survive, and to have some reasonable basis on which to proceed with their own lives. I understand that this legislation is trying to strike some form of balance—
  Mr. Deputy Speaker: Order. The right hon. Gentleman's remarks are becoming rather general. He ought to be a bit more precise.
  Mr. Redwood: I quite agree, and I stand corrected, Mr. Deputy Speaker. I was trying to describe the context, but my crucial point is that the amendment has to get the right balance between the bankrupt and those dependent on him, and the creditors. My worry is that it does not. It does not answer the big issue as to why this limited group of people is included, but not others who may be in need. It is unclear whether subsection (a) applies with, or instead of, subsection (b), and it is also unclear how one would judge between subsections (b) and (c). A lot is therefore left to the courts, and it leaves open the question of how, ultimately, the balance is to be struck between the bankrupt's needs of his estate, and the creditor's obviously pressing needs. It is those points that I hope the Minister will clarify.
  Miss Melanie Johnson: I am grateful to Opposition Members for their enormously discursive interest in this subject. I shall respond briefly to the points that have been made, because despite speaking at considerable length the right hon. and hon. Members have failed to convince me that the aspects that worried them are sufficiently worrying to require a detailed response. Indeed, it is not clear what some of those anxieties were, but I shall not take any interventions from Opposition Members during my remarks.
  In relation to the comments by the right hon. Member for East Yorkshire (Mr. Knight), the Bill provides that the income payments agreements must be in writing and, therefore, we felt that it was appropriate to provide that a variation of that agreement should be in writing. The incomes payments agreement has the force of a court order and is not merely a contract, as he suggested; his points might have been relevant to a contract.
  Lords amendment No. 167 attracted much heat but not much light. It provides valuable protection for a spouse or former spouse. The right hon. Member for Wokingham (Mr. Redwood) was right that it deals with a particular situation—if a bankrupt still has an interest in the property in which a spouse or former spouse resides, it provides protection against the threat of losing the home. Trustees will still be able to deal with the property. On unmarried partners, the amendment is

  967
  consistent with the protection provided for parties other than the bankrupt in the individual insolvency provisions of the Insolvency Act 1986.
  Mr. Redwood: Will the Minister give way?
  Miss Johnson: No, I regret that I will not give way.
  Mr. Redwood: It is an important point.
  Miss Johnson: It may be so. The mechanics of how the new provisions will operate have been, and continue to be, the subject of consultation with stakeholders and will be dealt with in the rules.
  As I have emphasised, the amendments are the results of the work done by the colleagues of Opposition Members in the other place. I am amazed by the suspicion with which the amendments have been greeted, but I hope that Opposition Members have been reassured on those points.
  Lords amendment agreed to.
  Lords amendments Nos. 167 to 175 agreed to.
  Lords amendments Nos. 176 to 186 disagreed to.
  Lords amendments Nos. 187 to 208 agreed to.
  Lords amendment No. 209 disagreed to
  Government amendment (a) in lieu of Lords amendment No. 209 agreed to.
  Lords amendments Nos. 210 to 264 agreed to.
  9.45 pm

Schedule 24

  TRANSITIONAL AND TRANSITORY PROVISIONS AND SAVINGS
  Lords amendment: No. 265, in page 322, line 23, at end insert—
  "(2) The Secretary of State may treat any consultation carried out with the President of the Competition Commission Appeal Tribunals (before the appointment of the President of the Competition Appeal Tribunal) as being as effective for the purposes of section 15(1) as if it had been carried out with the President of the Competition Appeal Tribunal."
  Miss Melanie Johnson: I beg to move, That this House agrees with the Lords in the said amendment.
  Mr. Deputy Speaker: With this it will be convenient to take Lords amendments Nos. 266 to 366.
  Miss Johnson: I hope that the House agrees to Lords amendment No. 265. The remaining amendments in the group, Nos. 266 to 326, are to the transitional, consequential and repeal schedules. The vast majority of them are consequential to various sectoral enactments such as the legislation covering gas, electricity and airports, and they follow the template of amendments made on Report to the legislation covering broadcasting and telecommunications. These sectoral enactments include a mechanism by which the licence modifications proposed by the relevant sectoral regulator but disputed by the licensee can be referred to the Competition Commission. Such references currently rely on
  968
  procedural provisions in the Fair Trading Act 1973 and the Competition Act 1998 that are being modified or repealed by the Bill.
  In addition, the amendments cover the merger and market transition provisions. I can give more detail on weights and measures if hon. Members so desire.
  Mr. Forth: I hope this time that I can tease a little more in formation out of the Minister. It is not good enough that she should stand up and say that she is cross at being kept here so late, that she does not propose to take interventions or answer questions.
  Miss. Johnson: The right hon. Gentleman is generous enough to put into my mouth words that never crossed my lips, and meanings that never existed. I do not know where he gets his ideas from.
  Mr. Forth: Perhaps we shall have to read Hansard tomorrow to see what was said, although the tone and sense will not come across on the cold page. However, I shall try a little harder to coax the Minister into giving us some more information. I always thought that the point of this exercise was that the Minister should reply to the debate.
  Mr. Redwood: The Minister would not give way to me earlier when I wanted to raise a point of great interest outside the House. She did not seem to care about people whose interests need to be protected by the Bill. I think that my right hon. Friend is right.
  Mr. Forth: I am grateful for my right hon. Friend's support. The record will show how charmingly and fully the Minister responded to the debate. I hope that we will build on that as we proceed.
  This group of amendments, which the Minister has attempted to portray as innocuous and technical, covers 56 pages of text in the Bill and 60 clauses. I am always nervous when asked by a Minister to accept that material of that length and complexity, with all its attendant implications, should be nodded through because it deals with technicalities. Some of us have been here long enough to know that that is rarely the case.
  I want to start with Lords amendment No. 265, the lead amendment in the group. I have tried hard to understand it, but so far I have failed. I invite the Minister to explain it, in her charming way, to the House. I shall read out the amendment, as I want it on the record, so that when the Minister comes to explain it we can relate its content with the way in which she has been prepared to help the House.
  It reads:
  "The Secretary of State may treat any consultation carried out with the President of the Competition Commission Appeal Tribunals (before the appointment of the President of the Competition Appeal Tribunal) as being as effective for the purposes of section 15(1) as if it had been carried out with the President of the Competition Appeal Tribunal."
  I am not an entirely unintelligent individual. I have been here for a while and have read a number of such texts in my day, but that one has defeated me completely. There is probably a simple explanation. It probably has profound hidden meaning. In a case such as this, the Minister owes it to the House to give some explanation

  969
  of what the hell this is all about. Otherwise, I do not think that the House should be prepared simply to say, "Oh well, this is okay then." So, that is my first simple request to the Minister.
  When we look at the 55 pages that follow that amendment we realise that references to some important matters, such as time limits and powers of investigation, are hidden in this complex text. When I see references to such powers, I am always more than a little nervous. Time and again when we consider such provisions and powers of investigation, when we read the details we find references to
  "attendance of witnesses and production of documents … enforcement of powers under section 106: general … penalties … appeals in relation to penalties … recovery of penalties"
  and so forth. The Minister says that this has all been dealt with in a different context, so we are importing it into the Bill and that will be okay. I am not sure that that is a sufficient explanation. It will not necessarily do. The Minister may have to say a little more about how she believes that that very complex wording relates to what has gone before. For example, is she going to tell us that the words on those 55 pages—about 60 clauses, by my reckoning—are identical to some provisions that have been in force for some time and are tried, tested and proven? Are they beyond doubt and dispute? Or, is she going to tell us that there is sufficient that is new in this text to require more scrutiny?
  I do not know which is the case, because the Minister did not share that with us. She did not tell us the provenance of the wording. Therefore, we are in the dark as to whether we are being expected to accept something that is new, or something that is tried and tested, has been imported from other legislation and is deemed to be appropriate in this case. One could go through that text in some detail, but given the time limitations, sadly, that would be inappropriate.
  Lords amendment No. 290 refers to new section
  "46A Enforcement of notices under section 46".
  Subsection (1) states:
  "The High Court may, on an application by the OFT, enquire into whether any person … has refused or otherwise failed, without reasonable excuse, to comply with a notice".
  When one picks out such a phrase, almost at random, from this huge morass of words that we are expected virtually to nod through, one suspects that matters about which we are entitled to be uneasy or that certainly deserve further explanation are hidden within it.
  Mr. Greg Knight: Will my right hon. Friend give way?
  Mr. Forth: I was about to conclude, but I will give way just this once.
  Mr. Knight: My right hon. Friend has made a valid point. Had the Minister spent a little more time explaining in her opening remarks the ambit of the provisions, it would have shortened rather than lengthened the debate. My right hon. Friend's concerns would have been answered and he might not have felt the need to raise these important matters.
  970
  I hesitate to say this, as it is a maxim among lawyers that free advice is worth what one pays for it, but these seem to be fairly minor matters that are consequential on other issues, so the volume of the amendments should not trouble my right hon. Friend too much.
  Mr. Forth: I defer to the legal expertise of my right hon. Friend, who has obviously studied these matters much more closely than I have. If he is satisfied that these matters are relatively detailed—I will not say "trivial" as that would be the wrong term—and of limited impact, I am prepared to accept his advice and judgment.
  However, I hope that my right hon. Friend agrees that the Minister owes the House an explanation of what she and the Government understand to be the importance of those words, so that, at the very least, we shall know in future whether we are being expected to accept something that is of relatively minor impact or whether the impact might be much wider.
  Even with an eye to the clock, I hope that the Minister can be a little more fulsome than she felt able to be in respect of the last group and that she can give the House some reassurance as to where we are going with the large volume of material that falls within this group of amendments, described as "minor and consequential". We are always owed an explanation as to whether "minor and consequential" means what it says. One does not have to be too cynical, or too much of a disbeliever, to suspect that sometimes something greater and of more importance lies behind those words.
  That is my humble request, Mr. Deputy Speaker. I hope that you agree that it is not unreasonable and I hope that the Minister can be a little more forthcoming on this group than she was on the last.
  Mr. Knight: I shall speak briefly, as I want to hear the Minister's response. The amendments seem to be fairly minor and consequential, but I have a question about subsection (5) of Lords amendment No. 290, on page 57. It states:
  "The High Court may punish the defaulter as it would have been able to punish him had he been guilty of contempt of court."
  That is a draconian power. Will the Minister confirm that the subsection is a replacement or a redrafting of an existing provision? If it is, I am happy. However, if it is a new provision, she should certainly refer to it in her opening remarks and she should be prepared to revisit it if it causes difficulty or injustice in the future.
  Miss Melanie Johnson: Amendment No. 265 is required to allow the Secretary of State to fulfil the consultation requirements imposed by clause 15, prior to making the rules of the Competition Appeal Tribunal. That is its purpose.
  I hope that helps Opposition Members who had difficulty in understanding the wording. I am surprised at their difficulties because I know how expert the right hon. Member for Bromley and Chislehurst (Mr. Forth) is in reading legislation, but I accept his humble assurances as to the difficulties that he has set out to the House. I hope that he will agree that my explanation was fulsome and detailed and gave him all the information that he needs.
  I commend the amendments to the House.
  Lords amendment agreed to.
  Lords amendments 266 to 326 agreed to.
  Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to certain of their amendments to the Bill: Mrs. Anne Campbell, Mr. Mark Hoban, Miss Melanie Johnson, Mr. Jim Murphy and Mr. Andrew Robathan; Three to be the quorum of the Committee.—[Mr. Woolas.]
  To withdraw immediately.
  Reasons for disagreeing to certain Lords amendments reported, and agreed to; to be communicated to the Lords.

  DELEGATED LEGISLATION
  Mr. Deputy Speaker (Sir Michael Lord): With permission, I shall put together motions 7 and 8.
  Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

  DELEGATED LEGISLATION

    NORTHERN IRELAND
    That the Northern Ireland Act 2000 (Suspension of Devolved Government) Order 2002 (S.I., 2002, No. 2574), dated 14th October 2002, a copy of which was laid before this House on 15th October, be approved.
    That the Northern Ireland Act 2000 (Modification) Order 2002 (S.I., 2002, No. 2587), dated 14th October 2002, a copy of which was laid before this House on 15th October, be approved.—[Mr. Woolas.]
    Question agreed to,
    Motion made,

    JUSTICE AND CONSTITUTIONAL AFFAIRS COMMITTEE
    That Standing Order No. 152 (Select Committees related to Government departments) be amended as follows:

    In the Table

    Item 7, column 2, leave out from 'Office;' to end of entry;

    After Item 8 insert

    `Justice and Constitutional Affairs

    Lord Chancellor's 11'. Department (including the work of staff provided for the administrative work of courts and tribunals, but excluding consideration of individual cases and appointments); and administration and expenditure of the Attorney General's Office, the Treasury Solicitor's Department, the Crown Prosecution Service and the Serious Fraud Office (but excluding individual cases and appointments and advice given within government by Law Officers)

    —[Mr. Woolas]
    Hon. Members: Object.

  PETITIONS

    Natural Health Products
    10.1 pm
    Mr. David Tredinnick: Before I present this petition about the threats to herbal remedies and vitamin supplements on behalf of my constituents, may I say that there are three main concerns? First, nutrients are missing from the list of permitted ingredients in the food supplements directive. Secondly, the setting of maximum levels for nutrients is unsatisfactory. There are very real worries that the products outside the scope of the traditional herbal medicinal products directive should be included. Member states need to be able to introduce their own national rules. There are also concerns about the cost of implementation.
    Thirdly, the proposed ban on sales of kava kava products is based on questionable data. I draw the House's attention to early-day motion 183, in my name, which attracted 44 signatures just last night. We will all regret the fact that the proposed regulatory response is disproportionate.
    The petition states:
    The petition of Consumers for Health Choice and its supporters declares that consumers in the UK have for many years maintained good health by choosing to take safe vitamin and mineral supplements and herbal remedies; and fears that the European food supplements directive and the proposed European directive on traditional herbal medicinal products would severely restrict the number and range of such products on general retail sale in the future.
    The Petitioners therefore request that the House of Commons requires that the Secretary of State for Health does all in his power to protect the rights of UK consumers by ensuring that such European legislation does not unnecessarily and unacceptably restrict the availability of natural health products.
    And the Petitioners remain, etc.
    To lie upon the Table.

    Doorstep Recycling Schemes
    10.4
    Mr. Laurence Robertson: The petition of the residents of Tewkesbury and others declares:
    That over 290 Members have signed Early Day Motion No. 186 on Doorstep Recycling Schemes, and that such schemes will encourage better use of resources which, in turn, will bring significant economic benefits; that recycling provides jobs, reduces the demand for raw materials, cuts emissions of greenhouse gases and reduces the pressure for unpopular and environmentally damaging new landfill sites and incinerators; that doorstep recycling to every home is key to the future of recycling and is both effective and inclusive: where recycling centres can be inaccessible for some areas of society such as the infirm, elderly or those without a car, everyone can take part in doorstep recycling, being as simple as putting out the rubbish.
    The petitioners therefore request that the House of Commons urges the Government to ensure that all local authorities introduce doorstep recycling schemes.
    And the Petitioners remain, etc.
    To lie upon the Table.

    Regulation of Care Homes
    Motion made, and Question proposed, That this House do now adjourn.—[Jim Fitzpatrick.]
    10.5 pm
    Dr. Vincent Cable son: I am grateful to have the opportunity to introduce an Adjournment debate on an issue that concerns many of us—the problems associated with residential care homes for the elderly. I was in the Members' Dining Room a few moments ago, and I noticed a headline in today's Evening Standard:
    "Betrayal of the Helpless. Standard inquiry reveals appalling regime of neglect in private care home for elderly".
    That did not relate to the home to which I shall refer, but it could have done. Despite the introduction of a regulatory system and the National Care Standards Commission, the problem is widespread.
    The matter that I want to raise primarily concerns a home called Lynde House, in Twickenham, which is owned by Westminster Health Care. It differs significantly from the home described in the Evening Standard article, as it is owned by one of the largest groups in the country. It is a particularly luxurious home, which, none the less, has been subject to an independent investigation, which I instigated, and which has produced some damning conclusions. I want to describe to the House and the Minister the process through which we had to go to secure that inquiry and its aftermath. I also want to raise some of the wider policy issues in terms of how the National Care Standards Commission will manage its relations with very large private providers, and some of the unresolved questions about how standards will be defined and monitored under the National Care Standards Commission.
    I shall start with a narrative of how this situation arose. I became a Member of Parliament in 1997, and, shortly afterwards, I was invited to another care home in my constituency called Brinsworth House, of which the Minister may have heard. It is a famous care home for the elderly, where many retired comedians, musicians and variety artists reside. Thora Hird is among its current residents, and Arthur Askey was a resident there. It is a wonderful institution. I was called in by the general manager, who pointed out a serious problem affecting his home—a care nurse had abused elderly patients, and he had taken steps to have the person dismissed. He had discovered, however, that that person had been hired by another care home down the road a few days later.
    The general manager called me in for two reasons. First, he wanted me to note that appalling things were happening in the unregulated private sector, that people were being hired and rehired who were well below acceptable standards, and that it was very important that the Government grasped the need to regulate the sector properly. Secondly, he wanted me to go to the local press to publicise the fact that his home had had this problem and had dealt with it. I took that to heart, as it struck me as being an exemplary way in which providers of care for the elderly in the private sector should deal with problems: in an open, transparent and public way, with nothing to hide.
    974
    Having seen that experience and good practice, I was well prepared for the events as they unfolded in relation to Lynde House. I had been made aware throughout most of last year of a growing number of complaints from relatives of residents of the home who lived in my constituency. That came to a head in November when the Catholic priest in an area of Twickenham convened a public meeting—with the local Anglican priest—to draw attention to serious concerns among some of his parishioners about care in this home. I attended that meeting, at which I heard a horrifying succession of deeply felt, very emotional presentations by relatives about the experiences that their mothers and fathers had had.
    There was a common thread to the reports. Despite paying extremely large fees—typically, £30,000 a year—the residents had experiences such as sitting for very long periods, being unable to attract attention after ringing bells, sitting in their own waste and being unable to attract any nursing or care attention in an understaffed environment. Perhaps most serious of all was the climate of bullying that existed. Examples were given of old people in their 80s or 90s being expelled or being threatened with expulsion because they had complained about the problems associated with care in the home.
    What was worse was that the residents and their relatives told me that they had approached the local health authority—the regulatory body in this instance—and had not been able to attract a reply. They had been reassured that everything in the home was absolutely fine. My concerns developed in the wake of the meeting even further when I was approached by a judge, who asked to meet me anonymously. Despite his senior position in public life, he was clearly a frightened man. He said that he wanted to tell me some things that had happened in the home, but did not wish his name to be used. He was afraid that, if it were, there would be retaliation against his mother who was in her mid-90s. I also spoke to the local GP who told me similar stories about what had been going on. She expressed her concerns and told me that she had approached the health authority, but had been unable to attract a response. She was assured that the home had been inspected and that everything was absolutely fine.
    I then wrote a letter to the chairman of the health authority, drawing these points to her attention. Somewhat to my surprise, a few days later I was contacted by the head of Westminster Health Care, Dr. Patel, the owner of the home. Without my knowledge, the health authority had copied to him my letters of complaint, so he said that he wished to set up a meeting with me. We met over breakfast, and that was very charming at one level. However, he threatened me with legal action because I, as the Member of Parliament, had written to the health authority asking for an investigation into conditions at the home. That brought home to me strongly the type of experience to which people at the home were subjected. There were threats of intimidation and legal action if perfectly legitimate points were brought into the public domain.
    I then asked the chairman of the health authority, Councillor Julie Ray, to institute a full inquiry into the home and, much to her credit, she agreed. One of the positive elements of this case is the fact that the health service is publicly accountable. She acknowledged that

    975
    there was a problem, and agreed to set up an independent investigation under a well respected, independent person, Mary McLaren.
    Although it was far from the end of the saga, the report was completed last December and January. It did not appear. I was informed that it was stuck because of objections made by Westminster Health Care lawyers. 'The matter went on and the report was refined. It was officially reported to have been finished by May, but it could still not be released because of objections from lawyers. A public report instituted by the health service and of wide public interest could not be released into the public domain because the company objected to its findings.
    The report was eventually released, but I shall not test the Minister's patience by going through it in excruciating detail. However, I wish to report simply for the record some of the main conclusions. They were extremely hard hitting, and half a dozen or so of the main points will capture the flavour of what was found to have happened in the home. The report said that the home:
    "Allowed insufficient levels of staff to operate on occasions which did not meet the high level of resident need…Allowed inadequately trained staff to undertake the care tasks and procedures required … Allowed nursing staff to continue to undertake poor practice i.e Wound Care, Record Keeping, Drug Administration, Ear Syringing…
    Failed to ensure that housekeeping and cleanliness standards were maintained at all times as domestic staff only worked until 14:00 hours … Allowed unacceptable levels of maintenance of hoists, wheelchairs and other equipment, which put the safety of residents at risk … Allowed the unacceptable provision of equipment that did not meet Health and Safety Legislation … Allowed an Internal Complaints Management system … to continue that made access to … Senior Managers seem impossible … Allowed an apparent climate of fear and intimidation as perceived by some relatives and residents … Allowed an apparent closed organisation that did not encourage `whistleblowing' by staff when some were very unhappy with certain situations despite a written policy and in our discussions with some staff … Undertook a recruitment process … that allowed appointed care staff to undertake tasks without fully assessing their competence in a working knowledge of English."
    That was in a home that charged fees of £30,000 a year.
    The criticism did not end with the home. There were also strong criticisms of the national health service in its capacity of regulator. Two in particular merit comment. The first is that
    "The Health Authority failed to implement a robust complaints system in relation to Lynde House which investigated in-depth, repeated concerns raised by relatives…when it was evident that according to the allegations the care was less than adequate".
    The second criticism is that it
    "Failed to recognise deficiencies during the team visits and inspections".
    Subsequent to the report, the new strategic health authority for south-west London convened a public meeting. It is greatly to the credit of that body that its representative made a public apology on behalf of the NHS by admitting that it had failed in its supervisory responsibility, and apologies were expressed for the distress caused. However, no apology or regret has been expressed by the company. Indeed, it published a rebuttal of every criticism made.
    We know from hearsay that Dr. Patel has left the company. I believe that he has also resigned from a series of Government working parties on which he was
    976
    an adviser and from other charitable bodies. Some of the senior management associated with the home have been moved, or possibly dismissed, although that has never been explained. However, the company has made no public acknowledgment that it was at fault, and that remains the position to this day.
    On the back of that, I want to pose a series of policy implications that arise from the events. How will the commission manage and supervise a system in which one of its largest private providers is in default of its obligations and refusing to accept any admission of failure? There is a distinction between a home that gives problems and a company that gives problems. The report makes that clear when it says that
    "Under the registered homes act"
    Westminster Health Care
    "is a corporate organisation and the body corporate is the one registered and accountable."
    We have to deal with how far the company as a whole is responsible for the deficiencies in one of its establishments.
    Since the report was published—it received a great deal of publicity in the national press—I have been deluged with letters from people around the country, bringing my attention to abuses in other Westminster Health Care homes. I now have a substantial dossier of cases, some of which are very serious, relating to at least seven homes owned by the company. I intend to ask the commission if it will investigate the company as a whole.
    Let me cite one problem. It is not in my constituency, so I cannot follow up the individual case, but it gives a flavour of the difficulty. A former nurse who worked at one of the homes in Southgate wrote to me. She said that she
    "became seriously concerned about dangerously low standards of care and incompetent management, which eventually forced me to whistleblow to the Health Authority … I was appalled that my grave concerns were ignored by WHC and the Health Authority. I was constructively dismissed … and forced to pursue a new career … Westminster Health Care use bullying and intimidatory tactics to silence anyone who questions and complains about the standards of care."
    That is exactly the pattern of behaviour that we saw in Twickenham and has been reported across the country.
    Many individual patients and their relatives and carers have written to me. One particularly distressing case concerns a former Labour MP, Michael English, who may be remembered, who was the victim of some of these difficulties. I intend to bring those cases to the attention of the commission.
    How will the Government, through the commission, deal with such cases? If a company is in denial and is comprehensively mismanaging its collection of homes, the commission has only a nuclear option—it can withdraw the licence, which means that large numbers of residential care homes are taken out of use. Is it possible to have a graduated response? Are there any penalties or sanctions that can be applied to signal to a major private provider that its service is not acceptable and that it is behaving arrogantly in refusing to accept the judgments of independent inquiries appointed by the NHS? The point could then be made without closing down a share of the private sector.
    My second set of questions relates to how standards are to be applied within the new regulations, and I am concerned about two or three in particular. It is clear

    977
    from the Lynde House experience that the contracts between the families and the home were not satisfactory. They provided insufficient protection and were insufficiently clear. Does the commission have it in mind to consider the nature of contracts in the private sector? Will it provide model contracts or explore how existing contracts can be improved?
    Is it proposed that bigger companies, which clearly have more resources and are better able to meet standards than one-man, one-house companies, can be asked to operate at higher levels of performance? I am thinking particularly of training. The level of training in the company that I have mentioned was seriously deficient. Would not it be good practice to ask the company to have its own training institution? How can the commission advance that process?
    My final question relates to staff and to a problems with staff who are unprofessional and who create serious disciplinary problems. Is there any system within the commission's approach to enable such people to be tracked, so that other homes that hire them have some cross-reference? At the moment, such staff seem to disappear into a void. Will there be a central register of staff so that issues pertaining to a lack of professional conduct can be addressed?
    I want to pay tribute to those who have brought this matter to the attention of the public. Many are vulnerable people who have had a devastating personal experience, and they have been very brave. They were initially threatened with legal action and bullied, but they have come forward and made their case in public. I am bringing it to the House because it is part of the process of ensuring that they receive justice.
    10.23 pm
    The Parliamentary Under-Secretary of State for Health (Mr. David Lammy): I congratulate the hon. Member for Twickenham (Dr. Cable) on securing this debate, which is clearly topical and important. All hon. Members want the best for our older citizens, and their treatment is crucial in any civilised society. For that reason it is vital for people to be able to depend on the quality of care homes, and the best way to ensure that quality is through a sensible regulatory regime. I am therefore pleased to have the opportunity to discuss that regulation.
    The hon. Gentleman began by bringing to the attention of the House the article on the front of today's Evening Standard, which claims to have carried out an investigation into a care home in Birmingham. The paper's reporter was in the Alexandra nursing home for three weeks, and alleges that she uncovered a catalogue of abuse and neglect.
    I make it clear, on behalf of the Government, that care homes for older people look after some of the most vulnerable people in our society. That is why the Government set up the National Care Standards Commission. The commission has been given the power to ensure that poor standards are a thing of the past and together with it, we are committed to tackling the abuse and neglect which sadly still take place in some of our homes today. It is important to point out that we provided local authorities with £300 million, half of
    978
    which has been used to support the care homes sector. More than £9 million of that money has been allocated to Birmingham city council.
    I shall meet the hon. Gentleman on the historical point with which he began. In the 1980s there was a huge expansion in the number of care homes, when uncapped social security money was available for publicly funded people entering residential care. Money flowed from the public purse into the care home sector. Indeed, it was the Conservatives, then in power, who sought to limit severely that unplanned and uncontrolled growth. In those days, entry to a care home was not based on need or user choice, but was driven by providers in the independent sector, which led to the unnecessary and completely avoidable admission of many older people and others into institutional care.
    Until 1993, the care home market was not strongly regulated. There were registration and inspection processes, but they were nothing like as robust as those which the Government have put in place. The system of standards introduced by this Government replaced a system in which care homes were regulated by about 250 local authorities and health authorities, each applying its own standards. The old regulatory system had been criticised for many years for lacking independence, consistency and coherence. In the absence of proper checks of individuals and homes, the most dreadful abuse was perpetrated. It was not by any means confined to the independent sector but was very significant in the public sector during the 1980s and 1990s. Indeed, independent providers themselves have been the strongest lobbyists before and after the introduction of the 1990 Act to remove regulation from local control and introduce a level playing field for independent and local authority provision. They have argued strongly for consistency through the use of national standards. It is this Government who have answered those concerns. We have gone one step further than our predecessors and created a regulation body wholly independent of local health and social care agencies.
    The hon. Gentleman asked a number of questions about the National Care Standards Commission, which is rightly independent of the Government—it would be wrong for me to attempt to tie its hands at the Dispatch Box. I heard what the hon. Gentleman said about seeking a meeting with the commission to draw these matters to its attention, and I do not doubt that members of the commission will read Hansard tomorrow, and the issues that he has raised can be addressed. However, I am advised that the nature of the allegations mean that legal action may take place so I must be careful about what I say.
    Under the Care Standards Act 2000, we made the National Care Standards Commission responsible from 1 April 2002 for regulating—registering and inspecting—all care homes. The commission is part of the Government's programme for modernising social care, particularly for improving quality and protection for people in care services. It is a major non-departmental public body, independent of government.
    The commission's main aim, rightly, is to drive up the quality of services and improve the level of protection for vulnerable people in our society, by the regulation of social care and independent health care services.

    979
    The commission has taken over the regulatory responsibilities of local authorities and health authorities.
    We believe that people's safety and well-being are paramount. The new standards will ensure that poor-quality care is a thing of the past. They give care home owners a clear idea of the standards that they have to meet to gain and maintain registration, and users and their carers know what they can expect as a minimum. At the outset, we were aware of concern shown by care home owners that they would struggle to meet some of the standards. That is why we decided that the more challenging standards need not be implemented until 2007, and providers will be given realistic timetables to meet them.
    However, we went further than that—the Government also issued comprehensive statutory guidance to the commission setting out the supportive way in which the standards should be applied. The guidance indicates that the standards should be used to help guide care homes on action that they can take to improve their services. Most importantly, the guidance also states that the commission should consider whether care homes could fulfil the needs of service users without making environmental changes to meet the standards. The guidance particularly covers the issues of room size, lifts, baths and shared rooms and has been welcomed by the major associations representing care homes.
    The hon. Gentleman spoke eloquently about the problems at the Lynde House care home. I have every sympathy with the concern of the relatives of the residents of Lynde House nursing home to ensure that their relatives are properly cared for, and that where failures in care are identified, those responsible are brought to account. However, I hope that the hon. Gentleman will understand that I am unable to comment in detail on complaints about the running of individual care homes, such as Lynde House. It is not that I intend to be unhelpful in this regard, but the responsibility for ensuring the quality of care provided by care homes lies clearly with the regulator, and proceedings against an individual for neglect or abuse is a matter for the courts.
    Until April this year, nursing homes were regulated under the Registered Homes Act 1984 by the health authority in which they were located. Responsibility for considering complaints about nursing homes rested primarily with the relevant health authority as the regulator and the health services ombudsman. I understand that Lynde House was first registered with
    980
    Kingston and Richmond health authority in 1996. Kingston and Richmond's regular inspections led to recommendations being made to the home owners, who complied with those recommendations.
    As a result of on-going concerns expressed by relatives of the residents of Lynde House, Kingston and Richmond health authority commissioned an independent inquiry into the home. The McLaren report was published on 21 August. Kingston and Richmond health authority was dissolved in April 2002, and responsibility for the findings of the McLaren report falls to Richmond and Twickenham primary care trust and the South West London health authority.
    How we care for vulnerable people is a matter that we consider to be very important. That is why we introduced the Care Standards Act 2000 to improve the regulation of social services, including care homes. Under the Act, the National Care Standards Commission now regulates all care homes in England. Although the commission has no jurisdiction over the McLaren report, it has completed its first inspection of Lynde House. The commission's inspection report was made available to the residents and relatives of Lynde House on 18 July at the regularly scheduled residents meeting. Action plans have been agreed with Lynde House to address the issues that have arisen out of the inspection, and time scales have been set for requirements to be met. That should ensure that residents receive appropriate good quality care that meets their needs.
    The commission will, of course, be monitoring Lynde House on an on-going basis, and we would expect it to take swift action to deal with any failures by the home. I understand that the National Care Standards Commission, the local strategic health authority and primary care trust are also working together to ensure that lessons are learned from the events at Lynde House. I hope that this sorry episode can be brought to a satisfactory conclusion for all those involved.
    In conclusion, I stress that we have ensured that the introduction of the standards will safeguard and maintain high quality care homes. The emphasis will be on ensuring people's safety and not on instantly de-registering—
    The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
    Adjourned at twenty-five minutes to Eleven o'clock.