Sitting of 8 July 2004

Preamble
The House met at half-past Eleven o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  TRADE AND INDUSTRY
  The Secretary of State was asked—
  TRADE AND INDUSTRY

    Workplace Rights
    Mr. John MacDougall: What further changes to workplace rights she expects to be in place by 2007. [182677]
    The Secretary of State for Trade and Industry (Ms Patricia Hewitt): The Government will continue to find the right balance between establishing fair standards for workers and creating more jobs. As we have already announced, we will introduce regulations on age discrimination and implement the information and consultation framework, on which we published a draft for consultation yesterday. We are committed to reviewing our family-friendly package of laws in 2006.
    Mr. MacDougall: I thank my right hon. Friend for that response. She mentions family-friendly rights; how successful have such initiatives been, and what progress has been made on issues such as age?
    Ms Hewitt: The new law that we introduced last year, which gives parents with young children the right to request a change in their hours, has already been enormously successful. Nearly 1 million parents—about a quarter of all parents with children under six—asked for a change in their working hours. Eight out of 10 of those requests have been granted in full, and a compromise was agreed in respect of a further one in 10. That is extremely encouraging, and we now want to extend much greater choice to older workers, who all too often are locked out of the labour market. This is not about "work till you drop", as the press likes to suggest, but about "choose when you stop". My right hon. Friend the Secretary of State for Work and Pensions and I will invite employers, employees and their unions, and others with a direct interest, to sit down with us and agree a way forward that will promote choice for older workers without imposing burdens on employers.
    Mr. Andrew Mitchell: Conservative Members are enthusiastic supporters of developing the work-life balance, as I told the general secretary of the TUC when I met him recently, but
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    unlike the right hon. Lady we recognise that it has to be paid for. Does she not understand that the plethora of directives, consultations and burdens under which British business is groaning today will be paid for in jobs, time and competitiveness?
    Ms Hewitt: As the hon. Gentleman and his colleagues have made it clear that they would cut public spending, the one thing of which we can be certain is that they would not pay for maternity pay and leave, and that they would not keep the rights that we have already introduced. [Interruption.] The hon. Member for Eddisbury (Mr. O'Brien) shows that he simply does not understand that it is the Government and taxpayers who pay for statutory maternity pay. What is more, at the request of small businesses we compensate them for more than the cost of maternity pay, in order to help them cover the administrative costs. There are no burdens from us; instead, there are better rights for parents at work. If the Conservatives were in government, they would cut them.
    Mrs. Anne Campbell: Does my right hon. Friend agree that high-performance workplaces are those in which employers look very carefully at staff flexibility and make every attempt to allow staff to cope with their domestic, as well as their professional, responsibilities? Does that not reduce stress and absenteeism and mean that staff are more productive in the long term?
    Ms Hewitt: My hon. Friend is absolutely right. Businesses, particularly public sector employers, who organise their work flexibly are increasingly finding that doing so is good not only for their employees but for their organisation. So there is a very strong business case for family-friendly working, and that is the basis on which we have introduced the law.

    Technology Start-up Businesses
    Mr. Archie Norman: What proposals she has to encourage technology startup businesses. [182678]
    The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): The university challenge seed fund, the grant for research and development and the UK high technology fund are three ways in which the Government help technology start-ups. As a result, some 17,000 start-ups are assisted every year.
    Mr. Norman: Would the Minister like to comment on the report in today's edition of The Times that the Chancellor plans to cut £300 million from the DTI's business support division? Can he also confirm that flagship support for technology start-up schemes—the grant for research and development—has already been cut, that the number of grants will be reduced this year from 900 to 300, and that the waiting list for grants has already been extended from two months to five months? Does he not agree that if anything should be cut, it is the cost of running the DTI, rather than support for new start-ups?
    Nigel Griffiths: The hon. Gentleman is wrong on both counts. On grants for research and development, over the last five years the number of applicants for grants—all accepted because the criteria were met—resulted in a 17 per cent. underspend on the allocation, and in the past two years we have been able to supplement the allocation by up to £10 million over and above what we expected to spend. The eight new products offered by the Department of Trade and Industry will guarantee future success. Our track record on start-ups is very good. On 31 March the Barclays survey of start-ups showed that 465,000 companies or businesses started up last year—a 19 per cent. increase on the previous year and the highest since Barclays started the survey in 1988. Our track record on start-ups is rather good.
    Mr. David Chaytor: Does my hon. Friend accept that there is a risk of making it too easy to start up a small business? I would like to tell him about the scandal of the start-up and rapid collapse of Classic World of Fitness, a small private health club in my constituency. Its director, Mr. Robin Brown, who lives in Warwickshire—I have his address and details if anyone is interested—appears to be refusing to pay thousands of pounds to my constituents. If I provided my hon. Friend with the full details, would he be prepared to look further into the case?
    Nigel Griffiths: I am happy to ensure that the appropriate authorities investigate that regrettable case. I am pleased to tell my hon. Friend and the House that that sort of case is an exception, but if the allegations are corroborated, we will be able to bring down all the resources of the law on the case. In the meantime, we want to make it easy for people who have good ideas to take them to market and to start up companies. As my previous answer showed, we have been able to help record numbers of people to start companies and I am pleased to tell the House that survival rates are very strong as well, but that will not deter us from ensuring proper consumer protection.
    Mr. Julian Brazier: Is it not the case that overall levels of business start-ups today are significantly lower than in the last three years of the last Conservative Government? Is not the major reason for that simply the ever-increasing burden of bureaucracy, which deters people from starting up companies?
    Nigel Griffiths rose—
    Mr. Brazier: Come on.
    Nigel Griffiths: I am puzzled about whether the hon. Gentleman has a comprehension problem or some other problem. Let me give him the facts. The Barclays survey of start-ups, which has been operating since 1988, shows that last year record numbers of businesses started up in this country. The figure is 465,000. If it is a record number of start-up companies, it will obviously be higher than under the last three years of the Conservative Government. We all remember—and we do not have to go back much more than a decade to find out—that 422,000 manufacturing jobs were lost in one year alone. If the hon. Gentleman wants a figure higher than 465,000, he could go back to the Conservative
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    Government's first recession, during which 900,000 manufacturing jobs were lost in a single year. We are not going to take any lessons on start-ups from the hon. Gentleman. I will send him the details if he needs them to be repeated a third time.
    Mr. Stephen O'Brien: Let us look into the outcomes of all these breathless claims from the Minister. He did not dare to mention the Chancellor's research and development tax credit, which is not surprising because the April KPMG survey established that 48 per cent. of small and medium-sized businesses either found that the tax credit was too complicated to apply for and administer or did not know about it at all. Only 3 per cent. of respondents said that it had been a significant benefit. How does the Minister reconcile his boasts with those depressing facts?
    Nigel Griffiths: Let us provide the hon. Gentleman with the facts—not directly from me, but from the chief executive of Isis Innovation in Oxford, who commended the Government. He told the Financial Times that the Government had done a great deal to facilitate spin-outs from universities. I recognise that there is a problem with the tax change that was necessary to close a loophole. When I spoke to Tim Cook, the chief executive whom I have just mentioned, and to the director of Exeter Innovation Centre this morning, they told me that they accepted that the loophole had to be closed and agreed with me that we must work to ensure that, in closing it, the Inland Revenue in no way restricts our excellent track record of encouraging spin-outs. We are addressing the problem directly by talking to two of our most successful academic spin-out company directors. In contrast, I do not think the hon. Gentleman has spoken to either of them.
    Mr. O'Brien: We can all read, as well as speak to people. Interestingly, the latest comments from the academic community suggest that the system is not working as the Minister claims, because spin-out companies do not have enough connection with that community. So the Government's proposals are flawed. It is important that Ministers are good at more than reading off jargon phrases in Hewitt-speak—but yet again, we have had another smug response.
    On Monday next week, the Chancellor is due to announce cuts in the DTI's role and spending. In light of that, what urgent and independent post-audit process have the Secretary of State and the Minister ordered to be carried out to demonstrate how much of the Department's current £8 billion of expenditure has been wasted?
    Nigel Griffiths: This Government have spent £3 billion on the science and innovation framework already, and that is due to increase. The Opposition propose to freeze or cut public expenditure, which means that that budget would be diminished. Over the past seven years, the Government have worked with people who have succeeded in starting important spinout companies. They tell us that they want the start that we have made, and the billions of pounds that the Government have invested, to continue and expand in the way that I have described. They do not want the cuts that the Opposition propose.

    Textile Industry
    Mr. Gordon Prentice: What recent steps she has taken to promote and support the United Kingdom textile industry. [182681]
    The Minister for Industry and the Regions (Jacqui Smith): The Government continue to promote and support the textile industry by working with the industry-led textiles and clothing strategy group to build a sustainable future for it in the face of globalisation. Since 1997, the Government have provided more than £100 million worth of support on a range of activities to promote productivity, competitiveness and diversification into new markets.
    The DTI has launched its new business support products in respect of innovation, best practice and raising finance. They are available to all eligible companies, including those in the textile industry. Ministers also take available opportunities to promote the sector through participation at industry and other relevant events.
    Mr. Prentice: That is all very encouraging, but a textile firm in my constituency recently lost out on a contract for waterproof breathable garments for the Army. I learned from the correspondence that UK contractors can subcontract work to weaving companies in Pakistan.
    I took the matter up with Lord Bach, the Minister for Defence Procurement. He said that UK companies using overseas contractors were beyond the reach of the regulations, because "we cannot dictate" where manufacture takes place. Surely that matter is crying out to be looked at, as so much textile work is being allowed to seep overseas?
    Jacqui Smith: I understand that companies in the textile and clothing industries are concerned about the problem that my hon. Friend has identified, especially as UK prime contractors increasingly source from overseas. Officials from the DTI and industry representatives recently met officials from the Ministry of Defence to achieve a better understanding of the processes involved in, and the opportunities that arise from, procurement strategy. The aim is to ensure that both Departments are able to deliver better value for money for taxpayers, and that UK producers enjoy the best possible opportunities.
    I hope that my hon. Friend will join me in congratulating Panaz Ltd., a company in his constituency. It has developed a very innovative furnishing fabric that has particular importance in health care environments, and today is being presented with the Queen's award for enterprise by HRH Prince Andrew.
    Sir Nicholas Winterton: Having been involved in the textile industry for more than three decades, may I ask whether the Minister recognises that, in western economies, clothing industries remain successful only when a country operates a profitable textile industry—that is, spinning and weaving—where fabric is provided in domestic mills equipped with the latest high-tech machinery, which dispenses with cheap
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    labour? Will the Minister have a word with the Chancellor of the Exchequer to see whether incentives can be given to the industry to purchase the latest equipment to compete with cheap labour outside this country?
    Jacqui Smith: I agree with the hon. Gentleman that the way forward for our textile industry—and our manufacturing industry generally—is to invest in high-tech and innovative production. That is why we have supported the Textile and Clothing Industry Forum in a four-year programme to help to engage the supply chain, manufacturers and designers; to focus on issues such as process mapping and fast fashion; and to ensure that such innovative investment happens. As previous answers have made clear, we are a Government who have focused our attention on innovation and on innovative investment. I am sure that the hon. Gentleman will make a strong case to his Front-Bench colleagues that it is important to maintain such support for business, even in the face of the cuts their party proposes.
    Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I seek the co-operation of the House. We have had a classic example of long answers and long questions, and we shall not get much further down the agenda if that remains the case.

    Fireworks
    Shona McIsaac: How many responses she has received to the consultation on "Proposals to Tackle the Anti-Social Use of Fireworks through the Regulation of Use and Supply." [182682]
    The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): To date we have received approximately 720 responses, the majority of which were collected from constituents of Members of Parliament both at Westminster and at the Parliament in Scotland.
    Shona McIsaac: I appreciate that answer. Perhaps my hon. Friend can confirm whether that figure includes the 480 responses from residents of Cleethorpes constituency, who overwhelmingly backed tougher restrictions to deal with the misuse of fireworks. I make an appeal to my hon. Friend on noise limits, because 120 dB is far too high a level for fireworks. Will he consider the noise limits, and when will the regulations become law?
    Mr. Sutcliffe: I congratulate my hon. Friend the Member for Cleethorpes (Shona McIsaac) and all her colleagues on the all-party fireworks group, who have worked with us to try to make the regulations appropriate for the firework season. The noise level is a particular problem, but we have worked with the industry and the community to establish an appropriate level. The figure of 120 dB seems to be the fairest option. We take into consideration all the recommendations put to us, and the regulations will—I hope—be announced very soon.

    Travel Industry (Unfair Trading)
    Mr. Mark Lazarowicz: What steps she is taking to prohibit unfair trading practices in the travel industry. [182683]
    The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): The Government continue to do their utmost to promote the competitiveness and success of all businesses in the UK travel industry, while ensuring an appropriate level of protection for consumers and business against those who would trade unfairly.
    Mr. Lazarowicz: Osprey Holidays, a travel company based in my constituency, has to pay a large sum of money as a bond every year to ensure that customers who book a package holiday with them are properly protected for flights and accommodation, whereas some of its online competitors, which offer accommodation as an add-on through their websites, do not have to provide a similar level of protection for their customers. Will my hon. Friend look into that practice, which deprives customers of adequate consumer protection and puts companies such as the one in my constituency at a competitive disadvantage?
    Mr. Sutcliffe: I am grateful that my hon. Friend has raised that point, which is a concern for the industry and which was raised with me at a meeting in March. I am talking to colleagues in the Department for Transport who are considering the response to the issue of bonded travel by the Civil Aviation Authority. I hope that we will have a response for my hon. Friend in the autumn.
    Miss Anne McIntosh: I know that the Department for Transport is considering the ATOL aspect and it is not in the Minister's remit, but is he aware that the European package directive is being revisited by the Commission? Would that not be a better mechanism to use to ensure that EU-wide cover is provided for both accommodation and flights if an airline goes bust?
    Mr. Sutcliffe: I agree with the hon. Lady that this is an issue that needs to be addressed because of the potential damage to consumers. If that is an appropriate route, we will consider it in conjunction with the discussions with the Department for Transport.
    Malcolm Bruce: Will the Minister tell the House how he is getting on in his consultations with the travel industry about excessive premiums charged during school holidays? In some cases, they are 50 per cent. to 100 per cent., and out of all proportion to the costs incurred by the operators. Will he also investigate the activities of holiday clubs that use high-pressure selling techniques to obtain thousands of pounds from people for activities which, if covered by the timeshare rule, would allow a cooling-off period? Indeed, under that rule, certain practices would be debarred. Does he agree that the law should be extended to include holiday clubs?
    Mr. Sutcliffe: It was important in discussions with the travel industry to look into its and our concerns, one of which is the price of holidays during the school holiday period. I am happy to say that the industry indicated that it would consider what could be done. Loyalty arrangements have been developed with some travel agents, giving people a reduction in price, and that is the sort of thing we want to see. We are looking at many of the issues relating to holiday clubs and I hope to be able to report to the House in the autumn about the issues Members have raised.

    Manufacturing
    Jim Sheridan: If she will make a statement on how public procurement affects productivity and innovation in the UK's manufacturing sector. [182684]
    The Secretary of State for Trade and Industry (Ms Patricia Hewitt): The Government spend £109 billion a year on goods and services, which can be a powerful incentive to businesses to develop new products, processes and services. That is why I have brought together industry leaders and trade unions, to ensure, with the Government, that innovation is in fact supported and encouraged by the procurement system.
    Jim Sheridan: I thank my right hon. Friend for that response. Does she agree that, in terms of the £109 billion procurement budget, a successful strategy to support manufacturing must make full use of both EU and international law? Does she also agree that the basis for the award of the procurement contracts should not just be the cheapest option, but should take into account the benefits to the British taxpayer, British industry and, most important, British workers?
    Ms Hewitt: I entirely agree with my hon. Friend that instead of looking at the cheapest price the criterion has to be, as it is, best value for money. We shall not abandon competition in public procurement, because it delivers best value to the taxpayer and the best result for public services, but I agree that the ideal outcome is to get best value for money and to have the goods made in Britain. That is why we are bringing together manufacturing industry and the Ministers and officials who make procurement decisions. That is why we are backing British manufacturing.
    Mr. David Kidney: There is a growing manufacturing industry in this country in terms of renewable energy. Can my right hon. Friend do anything to encourage the use of renewable energy in public buildings for their heat and power supplies?
    Ms Hewitt: My hon. Friend raises an extremely important point. As I think he knows, we have put renewable energy, along with energy efficiency, at the heart of the new energy policy. We are investing substantially in the renewables sector and we are of course encouraging and, in some cases, requiring the public sector to improve its energy efficiency and thus to make more use of renewables.

    Inward Investment
    Bob Spink: How much inward investment there has been into the UK in each of the last five years. [182685]
    The Minister for Trade and Investment (Mr. Mike O'Brien): UK Trade and Investment published the following numbers for inward investment decisions by foreign-owned companies to invest in the UK. In 1999–2000, there were 757 projects; in 2000–01, 869 projects; in 2001–02, 764 projects; in 2002–03, 709 projects and in 2003–04, there were 811 projects.
    Bob Spink: I am grateful to the Minister for that response. Does not the Organisation of Economic Cooperation and Development report showing that inward investment to the eurozone is poor while inward investment to the UK—which of course is outside the eurozone—is relatively good, show how wise it is for this country to keep the pound?
    Mr. O'Brien: We believe that long-term investment in the UK, especially foreign direct investment or FDI, would improve if Britain were a member of the euro. However, that would depend on the circumstances in which the UK entered the euro. If we entered at the right time and in the right circumstances we would obviously benefit substantially, but we have learned from the failure of the Conservatives in 1992, when they entered the exchange rate mechanism at the wrong time, for the wrong reasons and certainly at the wrong exchange rate. We have our five economic tests, which will, I am sure, enable us to make the right decision at the right time and for the right reasons.
    Mr. Martin O'Neill: Does my hon. Friend agree that it is not only the extra, new foreign direct investment that is important, but continuing investment by foreign companies in existing UK plants? Is he aware that when members of the Trade and Industry Committee visited the United States last week, we received the impression both in Chicago and in Silicon Valley that Britain is still the preferred European location for inward investment from the US, for all the obvious reasons?
    Mr. O'Brien: My hon. Friend is entirely right. There were 285 expansions by existing investors—up 22 per cent. on 2002–03—so, as he says, we are seeing that the economic stability; the investment in skills and education; the support provided by the DTI to industry, which is very much a factor that foreign investors see as welcoming for Britain; and the flexible labour market that we have created all ensure that the United States and other countries continue to see Britain as the place to do business. The US improved its investment projects in the UK by 11 per cent. last year, so the US and other foreign investors reckon that Labour has made Britain a good place to do business, which is why the economy is so successful today.
    Mr. James Arbuthnot: What an incredibly complacent answer. The
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    OECD report last month, to which my hon. Friend the Member for Castle Point (Bob Spink) referred, said that the foreign direct investment
    "flows into the United Kingdom fell almost by half in 2003, from a level that was already unimpressive by historical standards."—
    in other words, by comparison with what happened under a Conservative Government. Why is it that, under Labour, we have falling investment, the lowest economic growth in the Anglo-Saxon world, the biggest trade deficit in 300 years and a collapse in competitiveness and productivity? Is that anything to do with the fact that the hon. Gentleman is in his position?
    Mr. O'Brien: The statistic from the OECD that the right hon. Gentleman quoted relates to investment flows. Under those statistics, Luxembourg, not the UK, is the country that benefits, but no one tends to use those statistics to compare foreign direct investment. No one does. Under the method of collating statistics that considers stocks, the UK is clearly the country in Europe to which most foreign investors want to go. We can compare the statistics under the Conservatives: whereas, this year, 811 projects from abroad have been invested in the UK, 10 years ago under the Conservatives the figure was 431—less than half. Under the Conservatives, when we also saw the disease of Euroscepticism putting Britain at the margins, causing squabbling with European partners and internal divisions in the Government, FDI was going elsewhere. Under Labour, stability is ensuring that foreign direct investment comes to this country.
    Mr. Peter Pike: Does my hon. Friend agree that inward investment into the regions of this country is very important? If we choose to have elected regional assemblies, will they not, in fact, give us more power in the north-west to ensure that more of that inward investment comes to the north-west to create jobs in the manufacturing sector?
    Mr. O'Brien: My hon. Friend is entirely right: if we support regional development, as we have been doing, foreign direct investment will flow to the regions, and regional assemblies would certainly enhance that prospect. Our work with the regional development agencies has shown that they are an enormous success. We want to continue that success in the regions.
    Sir Robert Smith: It was intriguing that the Minister used the number of projects as a measure of inward investment, rather than the impact on the economy of the jobs involved or the value of those investments. Obviously, one large project can have more impact than several small projects that do not add up to the same impact on the economy. Will he explain why the Department considers the number of projects?
    Mr. O'Brien: One reason why we consider the increasing number of new projects that find their way into the UK is that they are often high-tech and the number of jobs involved in the UK will expand in the years to come, and the quality of the jobs that we are getting is improving enormously. For example, a manufacturing plant, Abbott Laboratories in Dartford, has set up a substantial new project—one third of new

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    projects coming to the UK from foreign direct investment are in manufacturing—in which 80 per cent. of the employees must be graduates, and 20 per cent. of them are PhDs. Those are high-tech, highly paid jobs, and that is why getting large numbers of new projects into the UK is so important.

    Coal Miners' Compensation
    Mr. Eric Illsley: If she will make a statement on the progress of coal miners' compensation claims. [182686]
    The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): To date, more than 353,000 payments have been made to former miners and their families under the main health schemes, totalling more than £2.1 billion. We continue to pay out a further £1.8 million a day, and I am grateful to all hon. Members for their help in ensuring that we are delivering the biggest health compensation scheme in history.
    Mr. Illsley: I am grateful for that reply, and I congratulate the Government on what they have achieved so far on coal health claims. Has any progress been made in negotiating settlements for those categories of workers who are currently excluded from compensation claims, such as surface workers who contracted chronic bronchitis and emphysema through working in dusty conditions, albeit on a colliery surface?
    Nigel Griffiths: I am grateful to my hon. Friend for giving me the chance to update the House on that. Mr. Justice Turner asked the miners' solicitors for evidence to support claims for compensation for surface workers. I made sure that the solicitors had our full co-operation and access to all the British Coal dust records. I understand that the solicitors have identified lead cases, which they intend to present to Mr. Justice Turner next week or the week after. As always, the DTI will meet the full liability to any miner determined by the courts.
    Mr. Roger Williams: Undoubtedly, compensation claims and compensation are flowing through the system. Apart from surface workers, however, there are real problems for miners who worked in small private mines, particularly those who fall outside the qualifying period and who are finding it difficult to have that period disregarded and their claims considered. Will the Minister assure us that those miners will have their claims considered quickly?
    Nigel Griffiths: I share with other hon. Members concerns about the small mines. I am happy to say that the claimants' group representing the miners reached agreement with the small mines representatives on their outstanding issues in February. Measures are being put in place to ensure that the necessary systems exist to make full and final offers, and those include amendments to the claims handling agreement, software adjustments to the calendar models and other things. I should appreciate it if the hon. Gentleman and others kept me posted on the impact that that is having on their constituents. We have a common aim.
    Jon Trickett: The miners helped to make this country the wealthy place it is today. Many became ill in the process because of the negligence of the coal board. It is to the Government's great credit that they have secured the largest compensation package in history, resulting in more than £30 million being paid out in Hemsworth alone.
    May I draw my hon. Friend's attention to one small group of individuals? The burden of proof is on the miners to demonstrate that they worked in the mining industry. Some are old and their colleagues have died, leaving no evidence around that they worked down the pits and are now suffering as a result. If I write to my hon. Friend, will he look into that problem?
    Nigel Griffiths: Yes, I should of course be grateful to hear about that. We want to rectify any outstanding injustice. My hon. Friend takes a close interest in these matters and will realise that we need some evidence, although records may not be available. We are going as wide as possible in accepting evidence, but I shall be happy to examine in some detail the case that my hon. Friend mentioned.

    Energy Supply
    Anne Picking: What assessment she has made of the security of energy supply. [182687]
    The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms): We set out our market-based approach to the delivery of energy in last year's White Paper. It worked well to deliver secure energy supplies last winter, and we expect it to continue to do so. My right hon. Friend the Secretary of State has tabled an amendment to the Energy Bill, which has attracted wide support, requiring an annual report on security of supply for debate in Parliament.
    Anne Picking: I am sure that my hon. Friend agrees that the renewables agenda is laudable; however, if the wind does not blow, we are snookered. My constituency has Torness power station, which guarantees a regular supply, and Cockenzie power station, which has the flexibility to kick in and generate when security of supply is at risk—indeed, it is a flagship power station in Britain and Europe for its capacity to do that. Does my hon. Friend agree that security of supply is paramount, even if new nuclear replacement is required?
    Mr. Timms: I agree with my hon. Friend about the importance of security of supply, which is one of the four key goals set out in the energy White Paper. I also agree with her about the flexibility that we enjoy, with coal-fired generation and with an important contribution made by nuclear power stations such as Torness. The White Paper stated that we should not become over-dependent on any one fuel, but I believe that the development of renewables will help us by providing another independent source of power. On that basis, I think that we can look forward with confidence to continuing security in future.
    Dr. Vincent Cable: The Government have used security of supply arguments to justify subsidising nuclear power, but now that energy prices, especially power prices, have recovered strongly, how can they justify placing hundreds of millions of pounds of taxpayers' money at risk through a continuing line of credit?
    Mr. Timms: It is important that we enjoy continuing security. British Energy is working through a restructuring, which we all hope will be successful, and the Government provided a line of credit to facilitate that process. The European Commission is examining the state aid implications of that and we expect its decision before long. Our approach to British Energy's restructuring is the right one. It provides good grounds for optimism about—to echo my hon. Friend the Member for East Lothian (Anne Picking)—the security that we need in future.
    Mr. Geoffrey Robinson: I am sure that my hon. Friend is aware of the Prime Minister's recent remarks about nuclear energy. Can he confirm that it remains Government policy—as set out in the White Paper—to retain the basic engineering skills in the sector, so that if a decision were made to embark on a new nuclear programme, we would be able to carry it through?
    Mr. Timms: I can confirm that earlier this week my right hon. Friend the Prime Minister repeated the statement in the energy White Paper that we need to keep the nuclear option open, including by ensuring that we maintain the necessary skills, because we may well need new nuclear power stations in future. He also pointed out that we had first to overcome two major barriers. First, the economics of nuclear are pretty unattractive at present. Secondly, we need good answers to the question of what becomes of nuclear waste; work on that is ongoing. None the less, I agree that it is important that we keep the option open.

    Power Generation
    Mr. Bob Blizzard: What assessment she has made of the future contribution of carbon capture and storage to the power generation process. [182688]
    The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms): We published last year the conclusions of our "Review of the Feasibility of Carbon Dioxide Capture and Storage in the UK". We see the technology as potentially playing an important role in the long term, but the report identified a number of major hurdles that still need to be overcome.
    Mr. Blizzard: Is it not the case that even if we meet the difficult target of generating 20 per cent. of our electricity from renewable sources by 2020, there will still be a gap in meeting our carbon dioxide emissions target? Is it not vital that the Government act now to develop carbon capture and storage technology in order to bridge that gap? That would be compatible with investment in renewables, but if the Government do not—
    Mr. Deputy Speaker: Order. The hon. Gentleman asked at least two questions, which is sufficient.
    Mr. Timms: The programme that we have set out for achieving our ambitious goals on reducing CO2 emissions includes the development of renewables, as my hon. Friend said, big programmes, ambitious efforts on energy efficiency and other initiatives. CO2 capture in power generation needs considerable research and development, as it is still rather costly. The USA's FutureGen project, for example, will cost about $1 billion, but will not be ready until 2015. There are important opportunities, but it is difficult to envisage carbon capture and storage becoming viable before 2020.

    Bank Holidays
    Mr. John Grogan: What recent representations she has had asking for an increase in the number of bank holidays. [182689]
    The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): The Department receives a variety of requests for new bank holidays. Over the past three months, we have received six requests to make St. George's day a bank holiday, one request for a UN day of peace, and one request to recognise a Bengali religious holiday. Only one request was received asking for a one-day increase to the number of bank holidays on an unspecified date.
    Mr. Grogan: Given that it is many weeks before the next bank holiday, that most European countries have far more bank holidays than we do and Ministers' emphasis on the work-life balance, is it not time that they show they retain their joie de vivre and launch a consultation on the number and nature of our bank holidays?
    Mr. Sutcliffe: May I congratulate my hon. Friend on his linguistic talents? The notion of extra holidays is attractive, and he will acknowledge that this Government, unlike the previous one, introduced the concept of four weeks paid annual leave. We have to balance the issue of bank holidays with the costs for businesses, which are about £2 billion a day. There is a balance between costs and extra bank holidays, but we will keep the matter under consideration.
    Adam Price: I am glad that St. George has at least six supporters, but may I make a bid for St. David? The National Assembly for Wales recently supported a proposal to make St. David's day a national public holiday in Wales, so will the Minister agree to meet a small delegation from the Assembly to discuss that proposal?
    Mr. Sutcliffe: I am always happy to meet delegations, but I fear that I could meet large numbers of them if I gave way on this issue. People feel strongly about St. David's day, as they do about St. George's day, and if they and the hon. Gentleman write to me, I will provide a response.

    Broadband
    Mr. David Cameron: What recent representations she has received about difficulties in accessing broadband technology in rural areas; and if she will make a statement. [182691]
    The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms): My Department has received over 100 items of correspondence on this subject since January. The proportion of rural households within reach of a broadband service is rising quickly, and there is a realistic prospect that every community in the country will have broadband by the end of next year.
    Mr. Cameron: I am grateful for that answer. Trigger levels have been set for all the exchanges in my constituency, and they have all been reached, so does the Minister agree that the next big issue—he did not really address this in his reply—is how we get broadband to homes, farms and businesses that are some distance from the exchanges? Many groups such as Oxfordshire Rural Broadband provide community service solutions, but how will the Government help to tackle a pressing problem that will become more acute in rural areas as businesses and farms realise that they cannot get the service that the Minister talked about?
    Mr. Timms: The hon. Gentleman makes a fair point. Some 87 per cent. of UK homes and businesses have access to broadband, but only 72 per cent. in market towns, and 22 per cent. in rural villages. There is still a big job to do, which is why the DTI and the Department for Environment, Food and Rural Affairs jointly set up a rural broadband unit that has carried out important work. The hon. Gentleman will be encouraged by British Telecom's progress in extending the distance over which its exchanges can support an asymmetric digital subscriber line. We are working closely with regional development agencies on the issue, and the rural broadband unit is working through the community broadband network to support communitybased providers such as the one in his constituency to which he referred. I very much support that work and we are, in a variety of ways, encouraging and promoting further progress.
    Mrs. Ann Cryer: I wonder if my—
    Mr. Deputy Speaker: Order. At this stage, the hon. Lady just has to ask Question 15.

    Company Directors (Remuneration)
    Mrs. Cryer: If she will take steps to stop the practice of continuing to reward company directors who fail to fulfil their duties. [182692]
    The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): Directors' remuneration is a matter for companies and their shareholders. It is a provision of the combined code that remuneration committees should avoid rewarding poor performance. Best practice guidance issued by the Association of British Insurers, the National
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    Association of Pension Funds and the Confederation of British Industry also makes it clear that that is unacceptable.
    Mrs. Cryer: I apologise, Mr. Deputy Speaker, for my mistake. I was watching the clock instead of looking at the list of questions.
    Does my hon. Friend agree that rewarding company directors for failing to fulfil their duties sends out the wrong message to shop floor workers and trade union members in my constituency? They would be amazed were they to receive bonuses for shoddy work and lessening productivity.
    Mr. Sutcliffe: I agree with my hon. Friend. She will acknowledge the work that my right hon. Friend the Secretary of State has done on issues relating to the Higgs report on corporate governance and the Tyson report about the make-up of boards of directors. Clearly, failure should not be rewarded, and that should act as a motivation to make sure that people who are productive get their just rewards. That should apply in the boardroom, as well as on the shop floor.

  The Minister for Women was asked—
  MINISTER FOR WOMEN

    Domestic Violence Victims
    Bob Spink: What assessment she has made of the services available for women fleeing domestic violence or abuse. [182669]
    The Deputy Minister for Women and Equality (Jacqui Smith): Domestic violence accounts for one fifth of all violent crimes, affects one in four women and causes the death of two women each week. Those are shocking statistics that we are determined to tackle. Our hand will be strengthened by the new Domestic Violence, Crime and Victims Bill, which includes a range of measures and services that will provide additional protection and support for victims and help to bring perpetrators to justice.
    Bob Spink: Could the Minister ensure that the services that must be available to women in those circumstances always take children into consideration, and that women, particularly those with children, who have to flee from violence, perhaps to a women's refuge, can get on to the local council's housing register without any impediment?
    Jacqui Smith: The hon. Gentleman makes an important point. Frequently, children, too, are victims of domestic violence. That is why we need more refuges and why the increase in Government support of between £7 million and £9 million this year and next year will be important. The hon. Gentleman is right—I am sure he has had constituency cases, as I have—that we need to ensure that our housing authorities are open and responsive to the needs of women fleeing domestic violence, especially those with children.
    Kali Mountford: Does not the Domestic Violence, Crime and Victims Bill, together with the Children's Bill, mark a unique step forward in protection and security for families in their home? In addition to that legislative framework, should not the inter-ministerial group consider the wider social context and encourage collaborative and partnership working not just with local authorities, but right across the social framework, in order that the legislation can do its work effectively?
    Jacqui Smith: My hon. Friend is right. There is a series of responsibilities at national and local level, in the voluntary sector and more broadly for ensuring that the widest framework of support is available, helped by additional Government investment through the supporting people programme, which received £57 million this year for housing-related support services. That is backed up by the activities of housing associations and other support organisations, and by the important work of voluntary organisations in this area, particularly Women's Aid and Refuge, which are working together to provide a single national 24-hour freephone helpline.

    Iraq
    Mrs. Ann Cryer: If she will make a statement on the representation of women in positions of power in the new Iraqi Government. [182670]
    The Minister for Women and Equality (Ms Patricia Hewitt): I am delighted to say that six women have been appointed as Ministers and seven women as Deputy Ministers in the new Iraqi Interim Government. That includes a Minister for Women.
    Mrs. Cryer: I thank my right hon. Friend for that encouraging list of appointments in Iraq. Will she have any input into the organisation of elections to the National Assembly, which I understand may well have a reserved list for women, perhaps even of 25 per cent.? Will she have a word with Members of the National Assembly of Pakistan, who were elected on such a list and who are pretty well disregarded by their colleagues because of the way in which they were elected?
    Ms Hewitt: My hon. Friend raises an extremely important point. As she knows, we have throughout supported Iraqi women who want and, I believe, deserve a strong voice in the future government of their country. I am delighted to say that two of the seven commissioners on the Independent Electoral Commission for Iraq are women. There is indeed a commitment that 25 per cent. of the candidates for the new Transitional National Assembly should be women. That is being taken forward by the United Nations, which will facilitate that election and electoral system.
    Malcolm Bruce: Although it is welcome that women are involved in the new Government, the role of women in the new Iraq needs to be at least as good as it was under the previous regime,
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    which ironically, in its general treatment of women, was better than many other states in the middle east. With regard to the question from the hon. Member for Keighley (Mrs. Cryer), is not the problem the fact that we have transferred sovereignty to the people of Iraq? Our job is not to tell the people of Iraq how to organise their society, but to ensure that there is a democratic framework that enables women to prosper and thrive in that society and in its Administration.
    Ms Hewitt: I must say that the Iraqi women with whom I have worked closely over the past 12 months would not recognise the hon. Gentleman's description of the previous regime, under which many of them and their families suffered and from which several of them were forced to flee. We do not seek to dictate how the Iraqi people should shape their future society and Government, and we support Iraqi people, and in this case Iraqi women, in having their voices heard. Iraqi women insisted on the transitional council withdrawing its proposal to reinstate sharia law, and they also insisted—we supported them—on the inclusion of women in all the new power structures. Many of those strong and courageous women will be elected to the Transitional National Assembly, and they will play an important role in building a strong, stable and democratic Iraq.

    Professional Qualifications (Government Support)
    Ms Sally Keeble: What support the Government are providing for women returning to work who want to acquire professional qualifications. [182671]
    The Deputy Minister for Women and Equality (Jacqui Smith): We recognise the barriers that women face in returning to work and acquiring professional qualifications, and consequently we have introduced a raft of measures to help ease the transition. Those measures include the new deal for partners, the new deal for lone parents, the new deal 50-plus, new rights for working parents, a national child care strategy, tax credits and financial support as part of the lifelong learning programme.
    Ms Keeble: Is my hon. Friend aware that University college Northampton in my constituency runs very good nursing and teaching courses? However, women find it difficult to complete those courses and return to work because they have problems paying for child care, and other problems arise during holidays. Such women say that the schemes help them return to work to stack shelves, but not to do professional jobs. Will she talk to her colleagues in the Department for Work and Pensions and the Department for Education and Skills—some of them are sitting on the Front Bench—about integrating benefits and the student support system to allow women to qualify as nurses and teachers and to take degree courses rather than just diplomas? [Interruption.]
    Mr. Deputy Speaker: Order. I do not want advice from Opposition Front Benchers. The hon. Lady knows that her question was far too long and rambling.
    Jacqui Smith: My hon. Friend rightly identified not only the challenges faced by those who want to return to teaching or the health service, but the importance of bringing back into those sectors those women and their skills. Progress has been made on bursaries and child care support in both education and the national health service, and I shall bear my hon. Friend's comments in mind and report them to my colleagues.
    Mrs. Eleanor Laing: Is the Minister aware that it takes a long time to obtain a professional qualification in child care and that the need for more people to work in child care is urgent? Does she agree that a mother who has successfully brought up a child to school age has effectively served a rigorous apprenticeship in child care? Will she consider accrediting that experience towards a professional qualification for mothers who want to return to work in the child care profession?
    Jacqui Smith: The hon. Lady is right. The massive expansion in child care under this Government has placed child care workers' skills at a premium. The hon. Lady makes a fair point about the skills that women gain by bringing up their own children. My right hon. Friend the Minister for Children and other ministerial colleagues are examining how we can recognise those skills, while also recognising the importance of high quality training for our child care workers.

    Gender/Trade Issues
    Mrs. Anne Campbell: What action she is taking on gender and trade issues.[182672]
    The Minister for Women and Equality (Ms Patricia Hewitt): Yesterday, I published a White Paper on trade and investment that makes the case for global trade that is fair, as well as free, and stresses the need for trade policies in developing countries to be integrated with programmes for development and poverty reduction and to ensure that the position of women, who are the majority of the poor in those countries, is taken fully into account.
    Mrs. Campbell: Does my right hon. Friend agree that women are often more adversely affected than men by trade globalisation issues? For instance, they are more likely to be affected by the transfer of call centres abroad. Will she ensure that her policies take account of gender issues and that our trade rules mean that globalisation is good for women as well as for men?
    Ms Hewitt: I absolutely agree with my hon. Friend that we have to consider the differing impact that growing trade and technology can have on men and on women. It can work in both directions. The manufacturing jobs that we have lost to global trade have often been male jobs, but the new jobs created in developing countries have often been taken by women. The point is to take such factors into account to ensure that women as well as men, in developing as well as developed countries, can benefit from the growth in the world economy.

Education and Skills (Five-year Strategy)
12.30 pm
The Secretary of State for Education and Skills (Mr. Charles Clarke): Today, I am proud to publish the Government's five-year strategy for education and skills and for children's services.
Since 1997, substantial new investment and significant reform have brought education, skills and children's services to the centre of our national life. A powerful alliance now exists for higher standards, embracing parents, our schools, colleges and universities, the voluntary sector, local authorities and employers. Improvements can be seen across the board: nursery education is now available for all three to four-year-olds; our 10-year-olds are among the best readers in the world; specialist schools are producing our best-ever results in secondary education; record numbers of young people are going on to university; and adults at work are gaining new skills.
That progress has reversed years of under-investment and complacency; but more than that, it has lifted expectations in communities all over the country where educational failure had become entrenched. People know that education provides the key to lifelong achievement, and they now believe that it can be for them and for their children. They are right to have those expectations, challenging though they are to all of us in Government. Most parents do not want good schooling to depend on the ability to pay or to be rationed by admissions to selective schools. For many years, a quality education was the prerogative of the few: it must now become the entitlement of all.
Five key principles of reform will underpin our drive for a step change in children's services, education and training: first, greater personalisation and choice, with children, parents and learners centre stage; secondly, opening up services to new and different providers; thirdly, freedom and independence for front-line head teachers and managers, with more secure streamlined funding arrangements; fourthly, a major commitment to staff development, with very high-quality support and training; and fifthly, partnerships with parents, employers, local authorities and voluntary organisations to maximise the life chances of children, young people and adults.
Our five-year strategy is ambitious for children and learners at every stage of life. In the early years, all parents will be able to get one-stop support through children's centres that provide a combination of child care, education, health and advice services, and there will be a flexible system of "educare" that joins up education and childcare to provide 12½ hours of free support a week for three to four-year-olds before they start school, with more choice for parents about when they use it. Local authorities will play a major new role, through children's trusts, in joining up all local services for families and children.
In primary schools, we will continue to drive up standards in reading, writing, numeracy and science, but also to enrich the school curriculum and to give every child the chance to learn a foreign language and to take part in music and competitive sport. We will develop more dawn-to-dusk schools offering child care and after-school activities to help children and busy parents.
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Those extended schools, as they are called, will combine with early years and with family learning providers to provide a genuine educational centre to every local community.
In secondary education, we will build on the achievements of the past seven years to increase freedoms and independence, accelerate the pace of reform in teaching and learning and extend choice and flexibility in the curriculum. Driving our reform will be a system of independent specialist schools—not a new category of school, but more independence for all schools.
Independence will be within a framework of fair admissions, full accountability and strong partnership. We will never return to a system based on selection of the few and rejection of the many. The strict national requirement for fair admissions will remain and we will not allow any extension of selection by ability.
We will put in place eight key reforms. First, real freedom for schools will come only with secure and predictable funding in the hands of head teachers. Every penny meant for schools must get to them. We will therefore introduce guaranteed three-year budgets for every school from 2006, geared to pupil numbers, with a minimum per pupil increase for every school each year. That dedicated schools budget will be guaranteed by national Government and delivered through local authorities. We will consult in the autumn on the practical arrangements and on ensuring there are no adverse effects for other local government services.
Secondly, we expect all secondary schools to become specialist schools with a centre of excellence. They will now be able to take on a second specialism. Highperforming specialist schools could become training schools or leaders of partnerships.
Thirdly, every school will have a fast-tracked opportunity to move to foundation status, which will give them freedom to own their land and buildings, manage their assets, employ their staff, improve their governing bodies and forge partnerships with outside sponsors.
Fourthly, there will be more places in popular schools. There is no surplus places rule. We already enable popular and successful schools to expand—we have a special capital budget for that. Now we will speed up and simplify the means to do it. There will be more competitions for new schools, which will enable parents' groups and others to open up schools.
Fifthly, a new relationship with schools will be established to cut red tape without abandoning our ambitious targets for school improvement or intervention in failing schools. We will halve the existing inspection burden on schools, with sharper short-notice inspection. Schools will have a single annual review carried out by a school improvement partner—typically, a serving head teacher from a successful school.
Sixthly, in areas where the education service has failed pupils and parents, sometimes for generations, we will provide for 200 independently managed city academies to be open or in the pipeline by 2010. About 60 of those new academies will be in London.

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Seventhly, through the "Building Schools for the Future" programme, and a sevenfold increase in the capital budget for schools since 1997, we will refurbish or rebuild every secondary school to 21st century standards in the next 10 to 15 years.
Eighthly, foundation partnerships will enable schools to group together to raise standards and take on wider responsibilities, such as special educational needs or hard-to-place pupils.
Local authorities will play a key part as champions of pupils and parents, setting a strategic vision for services in their area, encouraging and enabling strong partnerships of schools, holding schools to account and intervening where standards are at risk.
In each school, every pupil should have the personalised teaching they need to succeed, backed by excellent training for teachers, a broad and rich curriculum and more sport, clubs, societies and trips. We will continue to crack down on truancy and poor behaviour wherever it occurs, giving new powers to schools and local authorities.
From the age of 14 onwards, there will be a much wider choice of subjects, with better vocational options delivered in close collaboration with employers, and the opportunity to start an apprenticeship at 14. There will be more choice after 16, with high-performing specialist schools opening more sixth forms where there are not enough.
There will be a new framework for the curriculum and qualifications following the Tomlinson review. I appreciate the Conservative party's support in working with us. That will help the reform process. I also appreciate the strong support that the director general of the Confederation of British Industry gave yesterday for working together. That is a positive step.
In the autumn, we will publish a Green Paper on bringing together activities and services for young people. The structure of what is currently offered to young people is too complicated and unclear, and we will tackle that.
For adults developing their skills, there will be free tuition for basic skills and for those going on to level 2 qualifications, which is equivalent to five good GCSEs. There will be a leading role for employers through sector skills councils and a reformed further education sector, rewarding success and closing weak courses and colleges. For those going on to university, there will be grants for students who need them, an end to up-front fees and a fair system for graduates to contribute to the cost of their course. There will be foundation degrees in vocational subjects, designed with and for employers, and world-class research to maintain our leading edge, particularly in science and technology.
This ambitious programme of reform is backed by the further investment announced by the Chancellor in his Budget statement in April. Spending on education will rise by more than £11 billion to £58 billion by 2008 and—through the efficiency review and the 30 per cent. reduction in the Department's main staff—will be focused more than ever on front-line services.
The dividing lines for the future of children and schools are clear: whether we select a few, or raise standards for all; whether there is no role for local
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authorities, or a new role for local authorities; whether we take funding out of public services, or put it in; whether there is freedom for all, or a free-for-all; and whether some children matter, or every child matters. On this side of the House, we have made our decision: for excellence, for opportunity, for choice, but, importantly, for all.
Mr. Tim Collins: I am grateful to the Secretary of State, not only for his customary courtesy in letting me have early sight of his statement, but for ensuring that every Member of the House could thoroughly familiarise themselves with its contents by reading the papers in recent days.
They say that imitation is the sincerest form of flattery, in which case Conservatives should feel really flattered today. There is much in what the Secretary of State has said that we can and do welcome: making it easier for good schools to expand; putting choice at the heart of the drive to raise standards for all; giving schools new independence; redefining the role of local authorities; and sharply increasing spending on schools. That all sounds rather familiar. Indeed, all of it was lifted from the Conservative policy document that was launched last week. Much of today's announcement is a tribute to the power of the photocopier; it is a product not so much of Blair or Clarke as of Xerox.
We welcome the Secretary of State's renewed commitment to early-years education and the concept of the extended school. A three-year budget for schools, geared to pupil numbers, is getting towards the idea of funding following parental preference, which we also welcome, and I certainly support what the right hon. Gentleman said about our wish to play our part in finding consensus on vocational education, in particular for 14 to 19-year-olds.
The Secretary of State said that parents must have more choice. Does he accept, however, that such a statement is meaningless without a commitment to create more capacity in the system? Why did he say this morning,
"we haven't got a new places figure"?
Why will he not match the Conservative pledge to create 600,000 extra school places to ensure that at least 100,000 additional parents can gain their first choice of school within four years? He also said this morning,
"we will encourage new providers to come in",
but he will not, will he? He will not match our pledge to pay for any child at any school a parent chooses, so long as everyone there is charged the basic state rate, so he is not really offering choice at all, is he?
The Secretary of State says that he wants to create more city academies, which are a rebranding of the Conservatives' city technology colleges. Will he confirm, however, that future waves of city academies will receive far less funding from the state than those being set up at the moment? He says that he wants to create more sixth forms, which is an astonishing statement given that, under this Government, learning and skills councils up and down the country are driving through plans to close existing excellent sixth forms. Will he tell the LSCs to call off their attacks on sixth forms, or is his affection for sixth forms only skin deep?

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In his statement, the right hon. Gentleman made great play of saying
"we will not allow any extension of selection by ability."
However, he also said this morning that
"specialist schools are allowed to select up to 10 per cent. of their children by aptitude".
That means that all the schools that he now intends to turn into specialist schools—all secondary schools—will be able to select. Or does he seriously expect us to believe that there is a real difference between selection by ability and selection by aptitude? If selection is such a bad idea, why was the BBC briefed this morning to say that under the Government's plans
"comprehensive schools will be swept away"?
Is not the truth that he wants to be able to tell the middle classes that selection will come back, while telling his Back Benchers that selection will be kept out?
Will the Secretary of State's proposals require primary legislation? If so, when will we see it?
The Secretary of State said this morning that his main theme was that
"we want to give more independence to schools."
Therefore, does he agree with the unnamed Cabinet Minister who told a newspaper this weekend that
"if you want to say these are like grant-maintained schools, I couldn't disagree"?
That is the big idea: new Labour, new grant-maintained schools. They will seek a mandate for a third term promising to do the exact opposite of what they did in their first term. It is not much of an election slogan: "Vote Labour to reverse everything that the dreadful Labour Government have been doing."
Will not teachers and parents recognise that if even Labour now admits that only choice, diversity and deregulation can raise standards, they should have a Government who believe in such ideas in their bones, not in their focus groups? Will not everyone know that the only way to get real choice and a real lift in standards is to vote Conservative?
Mr. Clarke: Let me address those points one by one.
First, on the question of mechanisms and capacity, let me remind the House that this Government are increasing investment in schools and school places by massive numbers. We are building the new schools, we are putting in the places, and we are offering the capacity to take the choice forward, on the back of a position of cuts, cuts, cuts during the Tory years.
Secondly, I am glad that the hon. Gentleman has clarified that his policy is to put more money from the state sector into private schools. When that is quantified, which his noble Friend in the other place has done, we realise that between £1 billion and £1.5 billion a year would be taken from state schools and put into private schools.
Thirdly, on future waves of city academies, the commitment is to ensure that city academies reach 21st century world-class standards. It is not a commitment to a particular amount of money—some can be refurbished, some can be built, and that is the position. But they will reach those top-quality standards.
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Fourthly, it is completely untrue to suggest, as the hon. Gentleman does, that learning and skills councils are launching an assault on sixth forms, to use his words. Learning and skills councils in every part of the country have a programme to consider what is the best provision locally, to widen choice and to widen opportunities. That is what they are doing.
As I think the hon. Gentleman will know, 94 per cent. of specialist schools offer no selection whatever on aptitude or anything else. The aptitude tests that we are talking about relate to sport, music and such directly related issues. I am glad, however, that he raised the issue of selection as he did. The truth is that that is the dividing line between the parties in the House: we say that there should be a code of admissions and no selection on the basis of ability; the Conservative party says that every school should have the ability to select its pupils with tests, in every circumstance, not only at the age of 11 but at the age of 5. That is a massive difference and the people of the country will know it.
The hon. Gentleman asked about primary legislation. There are aspects of our proposals that require primary legislation, which will be introduced in due course.
Finally, I remind the hon. Gentleman that grant-maintained schools were funded by a national funding agency, which we are not reintroducing—we are funding through local government. Let me remind him that they had beneficial levels of funding compared with everybody else, whereas our specialist schools, city academies, non-specialist schools—all schools—are funded on the same basis, without the discrimination that was established through the Conservatives' system. Therefore, whoever the anonymous Cabinet member was, they were wrong, and I am glad to say that in public. No doubt he can tell me who that individual was.
There is a choice facing the country—it is the choice that I have set out. I hope and believe that the country will vote for progress in the way that I have established.
Mr. Phil Willis: I echo the thanks to the Secretary of State for an advance copy of his statement and of the five-year plan.
Having spent a lifetime in education, it is very sad that I should respond to a five-year statement by saying that the hon. Member for Westmorland and Lonsdale (Mr. Collins) has summed it up right: it is Tory policy being delivered by a Labour Government, and I find that absolutely scandalous.
We support much of what is in the mission statement launched by the Secretary of State today and by the Prime Minister yesterday, in his evangelical announcement in Camden. No one could deny that we need to raise standards for all, to eradicate educational failure, to extend educational achievement and to give schools more autonomy and freedom. It is strange to think that two years ago the Secretary of State vetoed a Liberal Democrat amendment to what became the Education Act 2002 that would have given all schools earned autonomy. That has now become standard policy.
We support those objectives. Our differences with the Secretary of State lie in how they are to be achieved. We welcome the move to three-year budgets, which I think will be welcomed by every head teacher in the land, and the sensible change to a budget year beginning in

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September and ending in August. Why, though, did the Secretary of State not support the idea of an activity-led funding model, particularly for higher schools and particularly for the 14-to-19 phase? We also welcome his commitment to early-years centres. He said that all parents would have access to them, but will he confirm that by the end of the five years 80 per cent. of the poorest boroughs will have no early-years centres? I do not know how he can reconcile that with his commitment.
Few Members would oppose the concept of excellence and opportunity for all, but the Secretary of State's plan seeks not to erase but to widen division. We were told that there would be no selection—that schools would not be allowed to choose students. How on earth can any Secretary of State try to persuade the House and the public from the Front Bench that that can be achieved by giving specialist schools the right to choose 10 per cent. of their pupils, and dancing on the head of a pin when it comes to aptitude and ability? How can it be achieved by allowing 500 new independent specialist schools to select 100 per cent. of their students on the basis of ability or similar criteria, and allowing 200 academies to select for whatever purpose they choose? [HON. MEMBERS: "You got it wrong."] With respect, we got it wrong when Ministers said that there would be education for all. Saying that there will be no selection and then allowing virtually every school in the land to select is an illusion worthy of David Blaine.
We are not concerned about academies or specialist schools. We are concerned about ensuring that children gain access to good local schools that receive state funding. Can the Secretary of State explain how—given the increased plethora of admission arrangements that he has announced—it will be possible to give all children, irrespective of postcode, ability, social class or religion, an equal chance to gain access to the schools of their choice? If he cannot guarantee that, yesterday's claim by the Prime Minister of excellence and opportunity for all was little more than a cruel deception.
The deception does not stop there, however. How can the Secretary of State believe that creaming off £5 billion from the capital budgets of "schools for all" to pay for 20 new academies will do other than provide fewer resources for the rest? Will he confirm that local authority asset management plans are now redundant, and that a deprived community will be able to acquire a new school only if it is an academy? If the 500 new foundation schools all expand with the help of additional capital and revenue, what will happen to the others—the schools that are left with falling roles and fixed costs? How can that give the poorest of our kids the opportunities that they so richly deserve?
This Government came to power promising standards, not structures; but today's statement was all about structures. It contained nothing about standards. Where was there mention of a curriculum in the new five-year arrangement? What is happening to the vocational offer? As for special educational needs, they have been parked out of sight.
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The Secretary of State ought to look around the country. He would find that not all schools are like London schools. Many are in rural areas where there is no choice because there is only one school.
This is not a five-year plan. It is an election plan, launched in an attempt to steal the Tories' clothes before the next general election and next week's humiliating by-election results in Leicester and Birmingham.
Mr. Clarke: Out of respect to the hon. Gentleman, I was not going to mention the by-elections, but as he has mentioned them himself, perhaps I will. I was in both Birmingham, Hodge Hill and Leicester on Monday. In both cases specialist schools had been announced last Thursday, and in both cases the Liberal Democrats had opposed those schools from the outset. The Liberal Democrats twist and turn on these issues all the time.
The hon. Gentleman got four things completely and utterly wrong. First, we are not saying that only 20 per cent. of wards in Britain will have children's centres and support for them; he will realise that if he reads the document. We have identified financial priorities, but we intend to provide children's centres for all people throughout the country. That is what we are seeking to do, and that is what we will do.
Secondly, the hon. Gentleman was wrong about selection. There is a code of admission for city academies, specialist schools and all other schools, which rules out selection on the basis of ability. It applies to all schools in those circumstances. City academies and specialist schools have mixed-ability intakes, should have mixed-ability intakes, will continue to have mixed-ability intakes and, beyond that, will have a responsibility—set out in this document—to work together to do far better for excluded pupils and pupils with special educational needs than they do at present.
Thirdly, the hon. Gentleman simply failed to grasp the massive implications of our "Building Schools for the Future" programme. I said in my statement that spending on capital is now seven times as great as it was in 1997. We have a programme, set out in the April Budget statement, to ensure that every secondary school in the country has world-class resources and will continue to do so over the next 10 to 15 years. My hon. Friend the Minister for School Standards has already announced the first wave, and later this year we will announce the second group of local authorities involved. Academies are included in that programme, are working on it, and are a key element in it. The hon. Gentleman's suggestion that the only way in which a school can secure modernisation and investment is by becoming an academy is completely and utterly wrong.
Fourthly, the hon. Gentleman asserted that none of this was about the curriculum. Next time, I will not make the mistake of giving him a copy of a document in advance. If he had taken the trouble to read this document even at the most elementary level, he would have seen that the curriculum and everything about it is at the centre of our proposals. That applies to enrichment in primary education, to choices for 14 to 19-year-olds in secondary education, and to academic vocational courses. It is central. The hon. Gentleman is

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right to say that it is central, but he should not pretend that it is not central for us. We are driving curricular standards up: that is what our programme is all about.
Several hon. Membersrose—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I realise that there is a great deal of interest in the statement, but we have the business statement to come, and the subsequent debate, which is on a highly important matter, has had to be time-limited. I therefore hope that Members will make their questions extremely brief, and that the Secretary of State will respect that in his answers. I should add that, in line with Mr. Speaker's practice, I do not intend to call Members who were not present for the beginning of the statement.
I now call the Chairman of the Select Committee on Education and Skills, who I hope will get us off to a crisp start.
Mr. Barry Sheerman: I congratulate my right hon. Friend on what was, for me, a clear indication that the Government's obsession with education continues. That gives great pleasure to a Chairman of the Education and Skills Committee. I am reminded of the 1995 commitment of the then leader of the Labour party, now the Prime Minister, to both diversity and an end to selection.
I have one brief point to make about something that concerns me. The three-year commitment to schools will be widely welcomed, but I have a little query about the extent to which the strategic role of local education authorities will be enhanced.
May I end with a short request for information? I have tried to visit every specialist school that selects on the basis of aptitude, and have managed to find only schools specialising in music and the performing arts.
Mr. Clarke: My hon. Friend is entirely correct on his last point, and that is a key issue on which his Committee will report shortly. We will study that report very carefully, and I appreciate the work that we have done with the Committee. Local education authorities have a key strategic role to play through the children's trusts, but more importantly through their involvement in the single annual review of every school, so that we can move towards higher standards. The local authority role is enhanced strategically, but the important issue is the budget that we have established for every school.
Sir Patrick Cormack: Why, in six pages of this statement, is there no mention of discipline? Does the Secretary of State not understand that what is undermining his efforts to bring better standards to many schools is the collapse of discipline in them?
Mr. Clarke: I used the word "behaviour" rather than "discipline", but I did deal with that issue; indeed, the document contains a lengthy passage on it. The hon. Gentleman is right to refer to the need for good behaviour and discipline, and the document sets out a number of suggestions on how to address that issue. I shall not repeat them now, but I am happy to discuss them with him further.
Jeff Ennis: Given that more than 91 per cent. of parents already get the school of their choice, how will that statistic be increased as a result of today's announcement? More importantly, how will choice be given to poorer parents who do not have their own means of transport?
Mr. Clarke: My hon. Friend is right to point out that the overwhelming majority of parents do have choice. However, the areas in which parents do not enjoy choice are not spread evenly throughout the country, and in some areas the level of choice is inadequate, which is why we are investing in them. As my hon. Friend suggests, the level of choice is least in those workingclass areas in which education provision has failed for a number of years. That is why we are investing in them through independent specialist schools and the city academies, and it is to those areas that resources should be directed. Through programmes such as excellence in cities and those that deal with behaviour in schools, we will continue to focus on extending choice in those areas where the level of choice is least.
Mr. John Maples: Whatever the rights and wrongs of selection, Warwickshire has several very popular grammar schools and, at the same time, a Labour-led local education authority. Unfortunately for the Secretary of State, those grammar schools are among the most popular and successful schools in the county. The Government scheme for funding the expansion of popular and successful schools, to which he referred, rather trivially and unnecessarily specifically excludes grammar schools. Is the scheme that he announced today going to include or exclude grammar schools, or will his plan to encourage the expansion of popular and successful schools specifically exclude the most popular and successful ones of all?
Mr. Clarke: The plan will not exclude them. It focuses on specialist schools, rather than schools that select by choice, but as I said to my hon. Friend the Member for Huddersfield (Mr. Sheerman), we will consider what the Select Committee has to say about selection and then decide how to proceed in respect of Warwickshire and elsewhere.
Ms Karen Buck: There are quite exceptional intake variations between inner-London schools in terms of the proportion of pupils with special needs, the proportion of looked-after children and the proportion receiving free school dinners. What measures are in place to ensure that all schools take a fair proportion of children who present the greatest challenge to the school intake?
Mr. Clarke: My hon. Friend is right to draw attention to this issue, with which two of the measures that I set out today deal. First, the single annual review will ensure that all agencies can work with schools to determine whether they are taking the range of pupils that they need to take. Secondly, we want to establish foundation groups, through which headmasters come together and take responsibility for children in such circumstances. There have been some very positive

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developments in this regard, and we will work to deal with this issue in a way that meets my hon. Friend's concerns.
Mr. David Curry: Will the whole of the three-yearly budget for schools, which presumably will increase year on year, be funded by the central formula grant, without taking into account local authority demands for annual increases in council tax, and will local authorities influence the distribution of the grant within their areas?
Mr. Clarke: Yes.
Jonathan Shaw: Given that my right hon. Friend wants to give parents more choice, and that the state has parental responsibility for looked-after children, what is he going to do to address the fact that 73 per cent. of such children leave school without any educational qualifications? Is it not about time that children in care got access to the very best and most popular schools?
Mr. Clarke: I strongly agree with my hon. Friend and pay tribute to his record in campaigning on this issue. There are some 60,000 looked-after children, and their educational achievement is very poor. I can confirm that we have agreed a public service target to drive up educational standards for such children; indeed, this will be a central theme, as I said in answer to my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck).
Dr. John Pugh: On the surplus places rule, are local authorities still obliged to do something about a problem that they can no longer realistically control, or is their new role to be the unwelcome undertaker for unlucky schools?
Mr. Clarke: Absolutely the opposite: their new role is to drive up standards in the existing area and to focus on doing so in a proper way. Every local authority, including the hon. Gentleman's own, will have identified areas of educational failure, particular groups who are not getting the education that they need, and subjects that are perhaps not being taught as well as they should. It is the role of the LEA to drive up standards, and the proposals that I have announced today will assist in that regard.
Glenda Jackson: Who will decide what constitutes a fair admissions policy? For example, if local parents want their children to go to a specialist and/or foundation school that is single gender and faith-based, will its policy have to be adapted so that it becomes co-educational and takes children with or without any religion?
Mr. Clarke: The short answer is that the Secretary of State decides on such matters by establishing a code of admissions that applies to all schools, including the ones to which my hon. Friend refers. It is a major subject of discussion as to whether the code should make statements on gender, single-sex education, faith
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schools and so on, and what those statements should be. The Secretary of State will continue to deal with such matters—in contrast with the policy of the Conservatives, who argue that they should be dealt with instead by each individual school.
Mr. Henry Bellingham: Bullet point 4 states, "More places in popular schools. There is no surplus places rule." Is the Secretary of State aware that many parents in my constituency want to send their children to King Edward VII school or to Springwood high school, but are being told that those schools cannot expand so long as there are surplus places in King's Lynn? What are his views on that?
Mr. Clarke: I hope that, in the light of our proposals, the hon. Gentleman will be an enthusiastic supporter of them.
Mr. David Chaytor: I welcome my right hon. Friend's recognition of the fact that the vast majority of parents do not wish to have their children's access to good schools denied on the ground of a spurious test of ability at the age of 11, and his commitment to a code of practice on school admissions that excludes ability as a criterion for selection. But does he agree that there is a fundamental contradiction between a policy that places parental choice at its heart, and a policy that enables 3,000 secondary schools to become their own admissions authorities, and thereby to establish the oversubscription criterion? Either parents choose the schools or schools choose the children; which is it going to be?
Mr. Clarke: A national code of admissions deals with the point raised by my hon. Friend. I pay tribute to his involvement in this debate over many years, and I know that he was very keen that the Select Committee of which he is a member should conduct the inquiry it is in the process of concluding. I shall certainly look very carefully at its recommendations.
Mr. Graham Brady: Given the Secretary of State's clear assertion that there is no surplus places rule, will he give an equally clear guarantee now that any oversubscribed school that wants to expand will be able to do so immediately?
Mr. Clarke: I cannot give that absolute assurance for a very simple reason: in deciding what to do, such schools have to take account of the local situation, of other schools in the area, of the adjudicator, and so on. [Interruption.] Of course they do. The idea that they can have an unequivocal right in this regard is simply not correct. The question is: can we achieve more flexibility? We believe that we can.
Mr. Clive Betts: Does my right hon. Friend accept that, by definition, more places in popular schools means more unfilled places in other schools? Does he understand that some of us are concerned about the potential disadvantage of a policy that is based on even more choice? One pupil's choice can be another's half-empty, struggling and inferior school.
Mr. Clarke: I accept that my hon. Friend raises serious issues. When I visited a school in his constituency a few months ago, we discussed that matter. However, I would say that the genie of parental choice cannot—and, in my opinion, should not—be put back in the bottle. The fact is that the exercise of parental choice is an important process and I believe that we need as flexible a system as possible to meet the choice agenda. I acknowledge the fears that my hon. Friend reflects, but I believe that the system that we have established meets them.
Dr. Vincent Cable: How does the Secretary of State expect to meet his very ambitious school building programme when the leading private finance initiative contractor for schools is currently on the brink of bankruptcy? Has he conducted any discussions to establish how massive disruption and cost escalation can be avoided when PFI contracts go belly up?
Mr. Clarke: The issue raised by the hon. Gentleman refers to only one of a series of contractors, and we are keeping a close eye on the situation. The fundamental issue is that the PFI is only part of our overall schools capital programme. Moreover, the performance or otherwise of a particular contractor is not the central theme of the whole capital programme and will not direct it in any particular way.
Claire Ward: My right hon. Friend will be aware that nationally 10 per cent. of children do not succeed in getting into one of their choices of school. In the Watford area, about 15 per cent. do not get into one of their three choices of preferred schools. What message does my right hon. Friend have for parents—[HON. MEMBERS: "Vote Conservative."] That would make it worse. Can my right hon. Friend assure parents in Watford that this package of ideas will improve their choices and that schools will not be able to continue to act, as they do now, on the basis of partial selection?
Mr. Clarke: I have spoken to my hon. Friend on a number of occasions about the circumstances in her constituency. To illustrate my earlier answer to my hon. Friend the Member for Barnsley, East and Mexborough (Jeff Ennis), there are some patches of the country where the problem of lack of choice is more acute than in others—and that certainly applies to Watford where there have been lengthy discussions, as well as legal challenges, between Watford schools and the adjudicator. Gradually, there has been a diminution in the ability of certain schools to admit pupils on the basis of parental choice. I believe that the message that we are sending out, both through the single annual review and the foundation groups of schools, will work in the right direction towards achieving my hon. Friend's objectives. I commit myself to working with her to ensure that the choices of Watford's parents are properly met.
Gregory Barker: What is the real difference between allowing city colleges and specialist schools partially to select on the basis of aptitude as opposed to ability? Is not the Secretary of State's language bogus and a sham?
Mr. Clarke: Not at all. First, there is a difference between 10 per cent. and 100 per cent. Secondly, there is a difference between recognising aptitude in music and art in the terms described by my hon. Friend the Member for Huddersfield (Mr. Sheerman) and conducting 11-plus type examinations, which the hon. Gentleman wants to set for all schools. Those are fundamental differences and I am amazed that the hon. Gentleman cannot see them.
Lynne Jones: My right hon. Friend spoke about establishing a framework for strong accountability and fair admissions. What will be the mechanism for strong accountability and how will the national code on admissions ensure a more balanced intake into our schools and an end to admissions by selection or by postcode?
Mr. Clarke: First, through the profile that we have set out, we will ensure that each school is directly accountable to parents in the area. Secondly, local education authorities will be accountable to the public on the strategic issues that will be the subject of a single annual review. Thirdly, I believe that there are ways of intervening to encourage schools to accept people from across the whole range of selection and to work together. I believe that will make a major difference.
Bob Spink: The right hon. Gentleman seems to have forgotten our wonderful special schools. Will he give greater encouragement and support to moderate learning difficulty schools such as Cedar Hall school in Thundersley? Inclusion is not right for all MLD children. Parents must have choice: they know best what is right for their children.
Mr. Clarke: Absolutely. We do not ignore the special schools. Indeed, we recently announced that such schools could join the specialist school programme. The key thing is to secure genuine partnerships. I do not know whether the hon. Gentleman has seen it happen in his own constituency, but specialist schools are working with special schools in the locality to develop stronger learning arrangements. That partnership will continue.
Mr. Gordon Prentice: Of the 200 city academies, how many will be new-build and how many will be re-badged? What is the mechanism for rebadging them and who will run them in the long term?
Mr. Clarke: As each one develops, there will be a development programme, which may include rebuilding and refurbishment. As I said earlier, their objective is to attain world-class standards for the poorest communities in the country that have lacked them in the past. The decision to establish a city academy is a matter for the Secretary of State, but partnerships will be made to make that happen effectively. If my hon. Friend visited city academies—I hope that he will—he would recognise their positive impact in communities where education has been backward looking for many years.
Geraint Davies: The Harris city technology college in Croydon secures better academic results than any other state school, including religious schools, in the area. It allocates places on the

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basis of a representative range of abilities across the community in nine streams. Does the Secretary of State believe that it would be good to extend that practice to all state-funded schools and, if so, how would he achieve it—by regulations or some other mechanism?
Mr. Clarke: That is one of the ideas that we will consider after the publication of the Select Committee report in a couple of weeks.
Mr. Harry Barnes: In my right hon. Friend's statement, there were two separate sentences on the roles of local authorities. He elaborated partly on that in response to a question from my hon. Friend the Member for Huddersfield (Mr. Sheerman), but can he say how much of the traditional role of local authorities will go?
Mr. Clarke: To answer my hon. Friend candidly, the most important aspect of that traditional role to go is the ability of local authorities to take allocated money from schools. In future, such allocations will be ringfenced. This is a significant issue for local government, as my hon. Friend's question suggests. Those authorities will be able to top up education funding by choice, if they wish, but I have clearly explained the major change. I know that it gives rise to concerns among some of my hon. Friends, but I believe that the gain from allowing schools to run three-year budgets themselves will be a massive one in respect of educational standards. That means that that change is worthwhile.
Mike Gapes: There are four specialist secondary schools in my constituency, each doing extremely well. Unfortunately, the policy of the Conservative leadership of the local authority has led to serious shortage of school places being made available. Will my right hon. Friend consider how to force incompetent local authorities to ensure that all parents have the right to get their children into school without the stress and anguish, currently suffered by many of my constituents?
Mr. Clarke: Yes, together with my hon. Friend I will pursue the issues about Redbridge that he has raised.
Mr. Hilton Dawson: My right hon. Friend has set out a dynamic and exciting vision for the future, but if we are to achieve excellence, opportunity and choice for all, do we not have to ensure that the opportunities provided for schools are rooted in the Government's commitment to end child poverty? That will assist the integration of services across the board, particularly across the crucial boundary with health.
Mr. Clarke: I agree with my hon. Friend, who has campaigned on that issue for a long time. One aspect of my announcement—I referred to it in my statement but it has received little attention—was a major uplift of everything we do for under-fives in early years provision. We want education, health and social services to work together to provide a strong offer of assistance to individual parents and families. Through the
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extended school programme for primary schools, we are specifically encouraging joint work with social services and health, which I believe is the key to what I and my hon. Friend want to achieve.
Jon Trickett: I represent 20 highly deprived mining communities where there are low levels of educational attainment. Given the geographic spread of those villages, the poor infrastructure and low car ownership, is not the offer of choice of school a false prospectus? Would it not be better if the four excellent comprehensive schools were properly managed, well funded and provided a full curriculum?
Mr. Clarke: That is true, but let me add a point of view not from a mining community but from rural Norfolk, where there are a number of schools in small villages and towns that educate only up to the age of 16. There is no choice at that point, just as there is no choice in my hon. Friend's area. Those schools are banding together to see if they can jointly offer proper sixth-form provision. I believe that that is the way forward, which is why I commend our proposals for foundation groups of schools to my hon. Friend as they extend choice in a way that we both want.
Peter Bradley: If choice is to be available to all parents, it is accepted that we will need spare capacity in our school system. As has been suggested, that will arise in the less popular schools, which will lose per capita funding and risk further decline. Will the radical reform of the school system be accompanied by a radical review of school funding, so that we can ensure that all schools achieve the excellence needed to give all children real choice?
Mr. Clarke: The short answer is yes. I believe that my statement today offers the most radical change to school funding systems for decades. The commitment to three-year budgets enables us to address those questions. I acknowledge that there are issues about managing change in these circumstances, and that is why I came to the view that national funding for education should be through local authorities. They are better able to manage the process of change than the national funding agency that would have been an alternative.
Kali Mountford: In recent years, standards in all Colne valley schools have risen phenomenally, but they have risen fastest in the poorest community. That is a remarkable achievement. Moor End high school has become Moor End technical college, through the hard work of Steve Morris, the head teacher, and of Molly Walton, the chair of governors. That phenomenal change will need to go further as a result of today's announcement. Will my right hon. Friend look at how we support school governors, on whom we will rely to bring that further change about?
Mr. Clarke: I am glad to say that the phenomenon described by my hon. Friend—of better performance in schools that used to have the worst performance in the past—is not confined her constituency, and it stems from this Government's policies. Today's announcement will accelerate that process and lead to greater fairness.

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I agree that the governors' role is central. We are exploring a variety of ways to improve the quality of governors, and the training and support available for them. In that way, we can achieve a much stronger position. I believe that the foundation status announcements that I have made today will assist that process.
Mr. Deputy Speaker: I am grateful to all right hon. and hon. Members for helping us to achieve such good progress.

Business of the House
1.22 pm
The Leader of the House of Commons (Mr. Peter Hain): With permission, I should like to make a statement about the business for next week.
MONDAY 12 JULY—Consideration of Lords amendments to the Asylum and Immigration (Treatment of Claimants etc.) Bill.
TUESDAY 13 JULY—Proceedings on the Statute Law Repeals Bill [Lords], followed by remaining stages of the Energy Bill [Lords].
WEDNESDAY 14 JULY—Remaining stages of the Patents Bill [Lords], followed by a debate on public expenditure on a motion for the Adjournment of the House.
THURSDAY 15 JULY—Motion to approve a Ways and Means resolution on the Traffic Management Bill, followed by consideration of Lords amendments to the Traffic Management Bill.
FRIDAY 16 JULY—Private Members' Bills.
The provisional business for the following week will be:
MONDAY 19 JULY—Consideration of Lords amendments, followed by remaining stages of the Health Protection Agency Bill [Lords]. Followed by remaining stages of the Public Audit (Wales) Bill [Lords].
TUESDAY 20 JULY—A debate on Iraq on a motion for the Adjournment of the House, followed by consideration of Lords amendments.
WEDNESDAY 21 JULY—A motion to approve three regional assembly and local government referendums orders, followed by consideration of Lords amendments.
THURSDAY 22 JULY—If necessary, consideration of Lords amendments, followed by a motion on the summer recess Adjournment.
Mr. Oliver Heald: I thank the Leader of the House for the business.
May I congratulate the Father of the House on winning the award of parliamentarian of the year? In his speech, he highlighted the current difficulties in mounting campaigns here, the lack of debates in which the Prime Minister participates, and the shortage of time available for hon. Members.
Does not the Leader of the House have a responsibility to strengthen Parliament? In particular, he should allow sufficient time for the really important debates—something he signally failed to do over tuition fees, the Hutton report and the local government settlement.
May I also ask the right hon. Gentleman why nothing has been heard of the review of Select Committee powers—the Osmotherly rules—following the Hutton report? Why should we always have to bring in a judge when we want a serious inquiry?
More than six months ago, the European Scrutiny Committee asked the Leader of the House to change Standing Orders so that it could sit in public. Why has nothing happened about that?

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The Leader of the House announced that the three regional assembly referendum orders will be discussed on 21 July, before the Electoral Commission has even reported on the postal ballots fiasco, and before the debate—or indeed the publication—of the draft regional assemblies Bill. This morning, the Liverpool Echo reported that the Government will not publish that draft Bill before the House rises for the summer, even though we have been promised it time and again. Will the right hon. Gentleman confirm that that is the case? How are we expected to judge all-postal balloting and the proposals for regional assemblies if the report has not been published and we have not seen the draft Bill?
Will the Prime Minister be publishing his response to our request for independent Electoral Commission observers at the two upcoming by-elections? Given the recent evidence of postal vote manipulation in Birmingham and elsewhere, surely that is necessary.
I thank the Leader of the House for finally announcing the debate on Iraq, which I have been seeking for many weeks. Is he able to confirm that the statement by the Prime Minister on the Butler report will definitely be made on Wednesday 14 July?
Finally, will the Leader of the House be taking part in the debate to explain why he pre-empted Lord Butler on GMTV by saying that whatever the verdict, no heads would roll? Surely those found to have made serious mistakes, including Ministers, should take the rap?
Mr. Hain: On the hon. Gentleman's final question: if he is doing me the courtesy of quoting what I said on GMTV, he should do so accurately and not rely on newspaper spin. I said:
"I do not know whether the Butler report will be critical or not but let's just wait for Lord Butler to report and then we will make a judgment. There may be lessons to be learned."
Then I said:
"I think the secret intelligence service MI6 and the domestic security service MI5 do a fantastic job for us. That is not to say that they do not make mistakes from time to time any more than Government Ministers like me or … the Prime Minister. But overall they do a fantastic job so I am saying in advance that this Government will not be a party to any kind of witch hunt against anybody"—
especially the intelligence services. That is the point that I am making. I hope that the hon. Gentleman will defend the intelligence services, and the work that they do on behalf of our national security, as vigorously as do the Government.
The hon. Gentleman asked about a statement on Iraq and the Butler report. I understand that Lord Butler will indeed publish his report on 14 July. My right hon. Friend the Prime Minister will make a statement to the House, in accordance with arrangements to be agreed with Mr. Speaker, as soon after that as is appropriate and when Lord Butler has informed us of the precise arrangements for making his report public. That is a matter for him. In the usual way, there will be discussions with Opposition Members about where they fit into that picture. We are anxious to be helpful in whatever way that we can, but I stress that this is not a
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matter for me or the Prime Minister, primarily. The hon. Member for North-East Hertfordshire (Mr. Heald) will understand that it is a matter for Lord Butler.
Mr. Heald: On the same day?
Mr. Hain: On the same day, indeed. Shortly after Lord Butler's report has been made public and he has been able to explain it, the Prime Minister will make a statement, as is appropriate and with the agreement of Mr. Speaker.
The hon. Member for North-East Hertfordshire asked about the Father of the House. I, too, congratulate my hon. Friend on his well deserved award of parliamentarian of the year. He is one of our greatest parliamentarians, even if he makes life uncomfortable for Ministers from time to time. He did that for me when I was the Foreign Office Minister covering Iraq, but he is a man of tremendous courtesy, and he is one of the best Members of this House.
The hon. Member for North-East Hertfordshire referred to the Prime Minister reporting back to the House. Like me, the hon. Gentleman is a member of the House of Commons Commission, and he therefore will have studied every page and line of the Commission's report in great detail. It shows conclusively that the number of debates and the opportunities for debating time have remained the same. The changes made by this Government have strengthened Parliament. My right hon. Friend the Prime Minister appeared before the Liaison Committee only the other day. He appears before it twice a year, and that is a novel feature that we introduced. He has made many statements and come before the House pretty well whenever he has been asked to do so. On the issue of the Osmotherly rules, my right hon. Friend made it clear at the Liaison Committee earlier this week that I will bring before it the Government's suggestions and proposals for updating the rules. No dates have yet been agreed with the Committee, but it will be sometime in the autumn—whether early or late has yet to be decided, as I am sure the hon. Gentleman will understand.
On the European Scrutiny Committee's vote to open its proceedings, we have not changed the Standing Orders because there has been no opportunity, in business terms, to do so. The hon. Gentleman is a member of the Modernisation Committee, so he will know that it is considering the question, and he will be able to contribute to that consideration.
I have not seen the Liverpool Echo. It remains, as I have said before in business questions—perhaps even in answer to the hon. Gentleman—our objective to publish the draft Bill for pre-legislative scrutiny before the House rises. We want to achieve that.
On the issue of postal votes, we await the Electoral Commission's report, which will appear in September. The commission, as the hon. Gentleman knows, has been enthusiastic about promoting wider postal voting and I am sure that its report will be read with great interest in respect of elections and referendums of all kinds.
On the issue of election observers, my right hon. Friend the Prime Minister has written to the Leader of the Opposition following his request that the Electoral Commission should appoint observers to the

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by-elections in Birmingham and Leicester. My right hon. Friend makes it clear in his response that the decision about whether the commission should observe those elections is a matter for it to decide.
Mr. Paul Tyler: We, too, congratulate all the winners last night, including the Father of the House. I was also delighted to see that my right hon. and learned Friend the Member for North-East Fife (Sir Menzies Campbell) received an award from the Leader of the House. They were able to exchange greetings as former Young Liberals.
The Leader of the House may wish to give us some information about the hunting Bill and his further plans. Has he noticed that the hon. Member for West Ham (Mr. Banks), who chairs the Committee responsible, has recently hung a huge picture of a hunt in full cry in the Members' Tea Room? Is he trying to tell us something?
Both the Secretary of State for Defence and the Secretary of State for Health have been invited to give evidence to the independent inquiry, chaired by Lord Lloyd, into the illnesses suffered by troops in the first Gulf war. Will a statement be made on how the two Secretaries of State intend to respond to that invitation? It is an important independent inquiry into a very serious issue, and it concerns many veterans in all our constituencies.
The Leader of the House has already referred to the excellent report from the House of Commons Commission and I pay tribute to all those who contributed to it. I should point out that I am not a member of the Commission. The Leader of the House is right that the report should be given more coverage. I know from his work on the Modernisation Committee that he is anxious that people outside the House should be fully aware of all the work that takes place here, and given that it is our principal role to hold those who spend the taxpayer's money to account—some £140 million of that money is spent at this end of the building—how and when can we debate that report? For example, will we have the opportunity to do so in Westminster Hall?
Mr. Hain: On the latter point, I will look sympathetically at the hon. Gentleman's request. As he said, the report contains much fascinating and important information, although I am not sure that it will make the front page of the tabloids. I think that the hon. Member for North-East Hertfordshire (Mr Heald) will agree with him that it is an excellent report and deserves wider coverage. I also agree that the work of the House is not just about the cock pit of the Chamber: it is also about Select Committees, Standing Committees, other domestic Committees and a range of activities that keep almost all Members busy from dawn to dusk in their work as parliamentarians. That message needs to be spread more widely. We have agreed a series of recommendations in the Modernisation Committee report entitled "Connecting Parliament with the Public", and I hope that the House will take them forward. It is up to many other bodies in the House to take the practical suggestions forward and I hope that they will do so.
I very much endorse the hon. Gentleman's praise for the right hon. and learned Member for North-East Fife (Sir Menzies Campbell). As I said last night, he is one of
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our greatest parliamentarians and a wonderful person. That was not because of my history in the Young Liberals 30 years ago; it was because I think that he is a genuinely nice person, which cannot be said for all 650-odd Members of Parliament. [HON. MEMBERS: "Name them."] No, I will not be led further down that road.
On the picture in the Tea Room, I have had it reliably whispered in my ear that it is of a steeplechase, not a hunt, and that it has been there for three years. It is nothing to do with the issues that the hon. Member for North Cornwall (Mr. Tyler) raises, but hunting is a matter that has been raised with me repeatedly at business questions. I cannot add anything to what I have already said and I do not intend to do so. The position is clear.
On the issue of Gulf war syndrome and illnesses, I am sure that my right hon. Friends concerned will want to take close notice of the hon. Gentleman's important points. He properly raises the genuine concern about the issue.
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I have in mind the time that I want to move on to the next business. Whether hon. Members can read my mind or not is up to them, but I appeal once again for brevity and for proximity to next week's business. I shall not call any hon. Member who was not here for the start of the statement.
Sir Gerald Kaufman: Has my right hon. Friend noted that early-day motion 978, in my name and those of several of my right hon. and hon. Friends, has now attracted 269 signatures?
[That this House looks forward to the early reintroduction of the Government's Hunting Bill; recalls its own votes to ban the cruel sport of hunting with dogs on at least nine occasions since 1995; welcomes the Government's commitment to resolve the issue in this Parliament; notes, in the event of a further rejection of this legislation by the House of Lords, that the provisions of the Parliament Acts will apply; and looks forward to seeing a ban on hunting on the statute book by the end of this parliamentary session.]
Last week, my right hon. Friend told my hon. Friend the Member for Cleethorpes (Shona McIsaac) that there were two more business statements before the recess. There is now only one more business statement before the recess. I have assured the enormous number of people who have written to me about this issue that my right hon. Friend can be trusted to do what our early-day motion says, which is to ensure that the ban on hunting is on the statute book by the end of this parliamentary Session. I would like my right hon. Friend to confirm that our trust is justified.
Mr. Hain: I fully understand why my right hon. Friend asks that question and has signed that early-day motion. Indeed, had I been on the Back Benches, I would probably have signed it myself. I can assure him that all those concerned in government are well aware of the obligations that we have to resolve the matter. He can be assured on that issue, as I have assured him in private before and as I have assured many hon. Members in the Chamber before.
Mr. Bernard Jenkin: Will the Leader of the House find time for an early debate about telecommunications masts, a matter that is exercising my constituents in Great Bentley because Orange proposes to install a controversial mast there? Could we also use that debate as an opportunity to discuss why the Deputy Prime Minister is mounting a challenge in the Court of Appeal to his own guidance? That guidance resulted in a mast in Harrogate being sited very near a school, but many people regard it as a health risk and believe that the precautionary principle should apply. Why is the Deputy Prime Minister attacking his own guidance in the Court of Appeal, unless the Government's policy is a mess?
Mr. Hain: The Government's policy is not a mess. We are seeking to provide certainty on the matter, under the law. We are clear that it is not the Government's objective to have telephone masts dumped in school playgrounds, although I recognise the proper constituency issues that the hon. Gentleman raises. The same issue has been raised in Birmingham where the Liberal Democrat candidate, who has been dubbed Nokia Davies, is a lobbyist for a telecommunications company that seeks to spread telephone masts all over the Hodge Hill constituency, which would be dreadful for the local constituents.
David Winnick: Is my right hon. Friend aware of the growing concern and anxiety among Labour MPs that the hunting Bill will not become law and will miss its chance, as it did in the last Session? As time is very short indeed, and bearing in mind the possible date of the next election, can my right hon. Friend give a firm promise that the Parliament Act will be used and that the Bill will become law and that a vile and barbaric so-called sport will come to an end?
Mr. Hain: I have repeatedly made my position very clear, including to my hon. Friend. I appreciate why he asks his question, but time may not be quite as short as the tone of his question suggests.
Mrs. Angela Browning: I was very concerned that the Leader of the House did not announce a date during the next two weeks for the Second Reading of the Mental Capacity Bill, as the Government have published the Bill and we have had First Reading. I serve on the Bill's Scrutiny Committee, and have held discussions with Lord Filkin on the Bill's possible passage, so I hope that the Leader of the House can reassure me that we shall see the Bill before the Queen's Speech.
Mr. Hain: Obviously, as business unfolds I shall be able to answer the hon. Lady's question more specifically. From what I said earlier, however, she will know that a lot of business is coming back from the Lords, so it would be sensible to dispose of that before the recess, not least so that Royal Assent can be given to many urgently needed pieces of legislation.
Keith Vaz: May we have an urgent debate next week on the shocking statistics published by the Home Office, which show that the number of stop and searches of people of Asian origin
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has risen by 38 per cent. since September 2001, and by 36 per cent. for those of Afro-Caribbean origin? That is of concern to the people of Leicester and also to the wider community, so does my right hon. Friend agree that we should have a debate about that important issue?
Mr. Hain: I know that the matter is of concern to the people of Leicester and I am grateful that my hon. Friend has raised it. The Government are concerned about any issue of disproportionality and those figures suggest that pretty conclusively. We are committed to improving and developing a close partnership with the Muslim and other communities, with the shared aim of combating terrorism, as I know those communities want us to do, and we are undertaking specific work to reassure Muslim communities that counter-terrorism powers are being used proportionately and appropriately and that that will continue to happen in the future.
Rev. Martin Smyth: Can the Leader of the House tell us whether we will have a statement on the situation in Darfur before the House rises for the summer recess? There has been speculation that armed elements from the African Union and elsewhere will be going there to defend the people. When will they be in place and what other help is being given to the 1 million people who are under threat every day?
Mr. Hain: As the hon. Gentleman knows, my right hon. Friend the Secretary of State for International Development made a statement two weeks ago. We all share the hon. Gentleman's concern. The Prime Minister is well seized of the matter and has been actively engaged, along with the Foreign Secretary, and there will be an opportunity for the hon. Gentleman to raise the point again next Wednesday.
Mr. Dennis Skinner: Is the Leader of the House aware that on the basis of what he has already said to my right hon. Friend the Member for Manchester, Gorton (Sir Gerald Kaufman), it would seem that waiting until 11 October will be a bit too late to get the hunting measure through? Will the Leader of the House confirm that it is in his mind that when we come back in September would be the most appropriate time, as there is not much time left now? It would make those eight or nine days very exciting—although we only need one—if we got the measure through and put the House of Lords firmly in its place.
Mr. Hain: There speaks the voice of experience and great wisdom in Parliament, but as my hon. Friend also knows from his long experience I have not yet announced any business for September.
Mr. Alistair Carmichael: Will the Leader of the House ensure that next Tuesday's business finishes promptly so that as many Members as possible can watch the excellent BBC programme "Restoration", which as it happens, features a project in my constituency, Clestrain hall in Orphir in Orkney? It is not just about the restoration of a building but about the belated restoration of a man's reputation—that of the late Dr. John Rae, who was vilified by the

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19th century establishment as a result of the evidence he brought back about the fate of the Franklin expedition in the north-west passage. Will the right hon. Gentleman ensure that we are not forced to miss that televisual feast?
Mr. Hain: It sounds fascinating and the hon. Gentleman has given it a fantastic plug.
Mr. Graham Allen: Neither the House nor I, as a Nottingham Member, has been directly informed about this: I read in the newspaper this morning that my city of Nottingham is to be rate-capped. The council tax payers will be billed, at a cost of £250,000, for an over-budget of £180,000. Does my right hon. Friend accept that that is arrant nonsense and that over-centralisation has reached a ridiculous pitch? The orders are before the House at present. Will my right hon. Friend ensure that the matter is debated on the Floor of the House, rather than being tucked away in a Committee Upstairs, so that Members from Nottingham can bring the Deputy Prime Minister to the Dispatch Box instead of the Minister for Local and Regional Government, who is fully conversant with the fact that it is ridiculous to save £180,000 by charging council tax payers £250,000?
Mr. Hain: Both the Minister for Local and Regional Government and the Deputy Prime Minister will have carefully noted my hon. Friend's statement. The Minister for Local and Regional Government made a written ministerial statement today, which outlines the whole position, and my hon. Friend will be able to have sight of it now. Notwithstanding the issues that he properly raised about Nottingham, I am sure he will understand that it is in the interests of all council tax payers and of the country that local authorities keep their council tax rises to an absolute minimum, especially for people on fixed incomes.
Mr. Bill Wiggin: The Leader of the House will be aware of the fantastic job that the Royal Welch Fusiliers are doing in Basra. Will there be an opportunity to discuss, debate or even prevent the cuts that may be coming to the manpower in our armed forces because the Ministry of Defence has probably spent too much on equipment?
Mr. Hain: As Secretary of State for Wales, I was in Brecon on Thursday night, watching a marvellous display of beating the retreat performed by Welsh regiments. I share the hon. Gentleman's view that the Royal Welch Fusiliers have done a fantastic job in Basra, as have many other Welsh soldiers. Some of them have just returned from action there and some are about to go out. Perhaps we can at least unite in applauding all their work.
Mr. Tony Banks: Speaking as a chairman of the works of art committee, I confirm my right hon. Friend's observation that the painting in the Members' Tea Room is indeed of a parliamentary steeplechase. The only dog that appears is a Jack Russell, clearly an unsuitable beast for chasing foxes. Perhaps the hon. Member for North Cornwall (Mr.
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Tyler) should have listened more closely to his mother's strictures when she told him that if he carried on doing it his eyes would eventually fail him.
May I tell my right hon. Friend that, although he is trusted implicitly on the Labour Benches on the abolition of hunting wild mammals with dogs, there is also a degree of nervousness? It is a problem for us, and I hope that he will not misunderstand the fact that my right hon. Friend the Member for Manchester, Gorton (Sir Gerald Kaufman) and various right hon. and hon. Members will be going to see the Prime Minister to ensure that his firmness and integrity on the issue are the same as my right hon. Friend's.
Mr. Hain: I am sure that there is no question about the Prime Minister's views on the matter. Just as I am on the same side of the football pitch as my hon. Friend, as a Chelsea supporter, so, too, I am on the same side as him in the argument about hunting.
Bob Spink: May we find time for a further debate on choice in education? I can then show how wrong it would be to close one of Canvey's three excellent secondary schools, not least because it would frustrate both parties in developing policies on choice in education and would prevent the Conservatives from giving the people of Canvey real choice following the next election, which we will win.
Mr. Hain: Obviously, I cannot speak of the situation in Canvey, which the hon. Gentleman quite properly raises as a local Member of Parliament, but the people of Canvey will be very clear about the choice before the next election: continued massive investment under Labour, with more and more public provision for schools free of charge, and the Conservatives' policy of taking money from the state system and shipping it down the road to private schools to subsidise with taxpayers' money private schools that only a minority of the country can attend. We are in favour of choice and high standards for everyone, not a tiny, Conservative few.
Mr. John Lyons: The Leader of the House will be aware of early-day motions on the future of the Forensic Science Service. He will also understand that there is widespread support throughout the House to keep that service. Will he urgently find time to hold a debate on that issue?
Mr. Hain: I will certainly ensure that the Home Secretary hears what my hon. Friend has said—my right hon. Friend is sitting next to me—but the Forensic Science Service has played a very important part over the years and will continue to do so.
Bob Russell: Has the Leader of the House had any notification from the Secretary of State for Defence that he will come to the House before the summer recess to announce the downsizing of Her Majesty's armed forces? If that is to happen, will the Leader of the House guarantee that that statement will not be made on a quiet day to bury bad news? Does he not understand that there is great unease in military circles, particularly in garrison towns, such as Colchester, which are already suffering from the

1037
overstretch and undermanning of the Army? If the Government are planning to downsize the armed forces, let us at least have a debate, let us have it before the summer, and let us have all the cards on the table.
Mr. Hain: The Secretary of State for Defence will want to come to the House as soon as it is possible for him to do so, and practical in business management terms, after the comprehensive spending review has been announced on Monday, when the hon. Gentleman can raise those issues. I am sure that he will agree that what we have seen over recent years and what will continue is massive investment in our defence forces on a scale that has not occurred before under any Government, especially a Conservative Government. I do not know how far back he wants to go in terms of a Liberal Government, but that support for our armed forces and the work that they do will continue under this Labour Government. Of course, under a Conservative Government there would be cuts in defence spending, along with many other cuts as well.
John McDonnell: May I ask the Leader of the House to allow an urgent debate next week on the district auditor's role in ensuring probity in local government? As a result of an Adjournment debate last month, we exposed the fact that the London borough of Hillingdon was forging and fiddling its planning performance figures to gain Government planning service delivery grant. The district auditor has completed his inquiry and is preparing his report but has not interviewed all the relevant former staff or the councillor who exposed the scandal, has not approached me or the residents who are coming forward with other planning scandals, exposing them individually, and proposes to provide the report to the London borough of Hillingdon's senior members and officers, who will decide whether that report is published or sees the light of day. I ask that with a sense of urgency.
Mr. Hain: I understand my hon. Friend's concern, and the Ministers concerned will have noted it very carefully.
Mr. Wayne David: The Leader of the House will be aware of early-day motion 1473, on the activities of a company called Walters (UK), which is removing contaminated waste from my constituency, but in doing so is causing extensive atmospheric pollution of the local area.
[That this House expresses its concern about the operation of Walters (UK) in removing contaminated waste from the Castlegate development (Penrhos) in Caerphilly; believes that the people of Caerphilly are having to endure unacceptable noxious odours because of the failure of the company to prevent atmospheric pollution; points out that the company has belatedly brought in additional equipment, owing to public concern, and that this equipment should have been onsite from the first day of the operation; calls upon Walters (UK) publicly to apologise to the people of Caerphilly for the noxious odours which their operation has released; and suggests that all honourable Members should examine carefully whether this company should carry out future work in their constituencies.]
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Will my right hon. Friend join me in condemning that company's activities in having total disregard for my constituents' interests? Will he call on the company to consider compensating my constituents for the inconvenience that it has caused?
Mr. Hain: I understand the strong feelings that my hon. Friend has properly expressed on behalf of his constituents. I understand that the situation has been constantly monitored by the local authority, which has appointed specialist consultants to advise it, and that the Environment Agency is also monitoring any impact on ground and surface water. Although the smells are very unpleasant, the regulators are apparently satisfied that no health risk is involved. I am told that work on removing the wastes that are causing the odours should be completed by mid-July.
Alan Simpson: May I repeat the request to hold a debate on the Floor of the House about the written announcement about the designation of authorities subject to council tax capping made by the Minister for Local and Regional Government? The statement gives central Government a bad name. The words "mind-bogglingly" and "stupid" spring to mind when considering the fact that Nottingham faces an overspend of £180,000 and a cost of £250,000 to re-bill every council tax payer to give them a rebate of £1.75—less than the cost of a pint. As we will have to defend that to local ratepayers, will the Leader of the House ask the Minister to explain why he refused to allow Nottingham to address that in the current year's budget, make the adjustment in the year that follows, use the £250,000 for productive purposes and not put us in an absurd position? If that was being done by the councillors themselves, we would demand resignations or sackings—
Mr. Deputy Speaker: Order. The hon. Gentleman is packing a speech into a question.
Mr. Hain: The Minister for Local and Regional Government will, in due course, read with close concern the points that my hon. Friend makes, but I repeat what I have said already. The Government are between a rock and a hard place: local council tax payers, including his constituents, naturally become very angry about unacceptable council tax rises, and it is important that the Government maintain close control over excessive council tax increases. Of course, Nottingham and other local authorities were given plenty of notice to allow them to adjust the situation before such action was necessary.
Mr. Gordon Prentice: My right hon. Friend knows that the Public Administration Committee, on which I serve, will publish a hugely significant report next week. May we have an early debate on whether we really need lords and ladies, knights and dames in this day and age? There is huge interest about that subject outside the House, and I hope that we can debate the report.
Mr. Hain: I cannot comment on a report that has not been published.
Mr. Clive Betts: May I draw my right hon. Friend's attention to early-day motion 1448, on the regulation of estate agents?

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[That this House recognises the Government's proposals to regulate the buying and selling of homes by the introduction of home information packs; notes that, while solicitors, surveyors, home inspectors and financial advisers are all subject to regulation, estate agents, who are responsible for the co-ordination of the buying and selling process, are not subject to any regulatory or licensing arrangements; and believes that, in light of the abuses and bad practices highlighted by the Consumers' Association and the BBC's Brassed Off Britain, and with the support of the UK Association of Estate Agents and the Royal Institution of Chartered Surveyors, all estate agents involved in the buying and selling of homes should be subject to statutory regulation, including an independent disputes resolution process with compensation arrangements for disadvantaged customers.]
Given the proposals in the Housing Bill on the introduction of home information packs, will my right hon. Friend arrange an early debate, so that those who are central to the most important financial transaction that most people will undertake in their lives are first, fit and proper people, secondly, properly licensed, and thirdly, qualified to do the job? May I suggest that he will make himself extremely popular with the general public if he accedes to that very modest proposal?
Mr. Hain: I well understand the point that my hon. Friend makes. The Department of Trade and Industry is considering the Office of Fair Trading report on the estate agency market in England and Wales, which includes recommendations on the future regulation of the industry. We aim to publish a response shortly.
Mr. David Chaytor: In previous years, I have always noticed that my constituents' complaints about antisocial behaviour—everything from neighbour nuisance to under-age drinking and even the misuse of air rifles—increase as we enter the summer period. As local authorities and the police can now enforce antisocial behaviour orders, may we have a debate next week to assess the effectiveness of those orders? That would also enable us to tell the public why the Liberal Democrats oppose them.
Mr. Hain: There is a great deal of concern about hypocrisy on this matter. We find that hon. Members—mostly Liberal Democrats—vote against speeding up the process of evicting noisy neighbours, against issuing fixed penalty notices for antisocial behaviour and dispersal orders to tackle antisocial behaviour, against closing down crack houses in 48 hours and against fines for the parents of truants, and so on. Yet the Liberal Democrat candidate in Hodge Hill says that she supports all those measures. The voters will understand that that is plain hypocrisy.

Points of Order
1.58 pm
Mr. Graham Allen: On a point of order, Mr. Deputy Speaker. It is clear from the newspapers this morning that the press were informed last night—well before Parliament was informed today, and I have not yet been informed—of the decision to rate-cap certain authorities. May I ask you to underline the strictures that we have heard from you before—that the House should be informed of those matters, so that the Members of Parliament who represent those constituencies can, even at the last minute, make representations to Ministers, rather than being pre-empted by briefings given to the press the day before?
Mr. Deputy Speaker (Sir Alan Haselhurst): I think that Mr. Speaker has great sympathy with hon. Members who find themselves in that position, but I venture to suggest that such matters may involve difficult questions of timing. The hon. Gentleman has put his point on the record, and no doubt Ministers will consider what he has said.
Alan Simpson: Further to that point of order, Mr. Deputy Speaker. May I ask you to consider the fact that before today's business questions Members were not able to get the written statement on rate capping that was issued at 10 am today? I was able to obtain it only by getting a copy from the Library. No copies were made available for Members through the Vote Office before business questions.
Mr. Deputy Speaker: The hon. Gentleman has reinforced the point made by the hon. Member for Nottingham, North (Mr. Allen), and I am sure that the matter will be examined.
Mr. Paul Tyler: On a point of order, Mr. Deputy Speaker. We have been told that the Butler inquiry report is expected to be published next Wednesday and that the Prime Minister will make a statement thereafter. Not necessarily today, but in due course and perhaps early next week, can you give some indication of the likely timetable for that? It is an extremely important issue about which many Members will be concerned. If the statement is not immediately to follow Prime Minister's questions, which I understand may be the case, it would be helpful if, on Monday, Tuesday or whenever, the Chair could indicate when the statement is expected to be made.
Mr. Deputy Speaker: I will ensure that the hon. Gentleman's point is brought to the attention of Mr. Speaker. There may also be activity in the same direction through the usual channels.

ROYAL ASSENT
Mr. Deputy Speaker (Sir Alan Haselhurst): I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
Appropriation Act 2004
Age-Related Payments Act 2004
Gangmasters (Licensing) Act 2004
University of Manchester Act 2004

ROYAL ASSENT

  Intelligence and Security Committee Annual Report 2003—04
  Motion made, and Question proposed, That this House do now adjourn.—[Joan Ryan.]
  2.1 pm
  The Secretary of State for the Home Department (Mr. David Blunkett): As the House will be aware, my right hon. Friend the Foreign Secretary and I interchange presentations on Intelligence and Security Committee reports, and it is my duty to lead this afternoon.
  I thank the Committee for another thorough and constructive report, which scrutinises, examines and holds to account those in the services and the Ministers who oversee their work in an absolutely critical area. For myself and my right hon. Friend, I express appreciation for the unstinting work of the Chairman of the Committee, my right hon. Friend the Member for Dewsbury (Ann Taylor). She would be here this afternoon if she were not attending a more joyous occasion—celebrating the graduation of her son, whom we wish well. My right hon. Friend the Member for Rother Valley (Mr. Barron) will do a sterling job in her place.
  Our thanks are due, once again, to the security and intelligence services, to GCHQ, to the counter-terrorism branch and special branch forces across the country, and to the police. Their work stands between us and disaster. On a number of occasions, my right hon. Friend the Foreign Secretary and I have made it clear that whatever we do in terms of internal resilience and whatever steps we take in foreign policy, diplomacy and the tackling of causes across the world, the work of the intelligence and security services is vital in protecting our interests, and we thank them again for what they have done over the past 12 months, which has safeguarded us so far.
  My right hon. Friend will reinforce my thanks to the outgoing head of the security and intelligence service and to his successor. My thanks are also due for the work of the commissioners for intelligence and interception, of the chief commissioner for surveillance and of the chair and members of the investigatory powers tribunal. I thank them because it is important to highlight on this annual occasion the level of scrutiny and oversight that takes place in those critical areas, in a way that does not exist anywhere else in the world. We are proud of that, and it is important in ensuring that my right hon. Friends the Foreign Secretary and the Secretaries of State for Northern Ireland and for Defence can undertake our duties knowing that there is proper scrutiny and that we are held to account through the monitoring of those bodies and by the House of Commons. Today is one of those occasions on which there is often more light than heat and on which we receive less coverage than we would on a subject featuring more hot air than considered judgment. Nevertheless, this is Parliament doing its job, ensuring that scrutiny is real.
  As my right hon. Friend the Foreign Secretary will outline, there have been horrendous examples across the world over the past 12 months of how the threat is real and how we, in this House, were right in the way that we tackled matters in the aftermath of the events of

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  11 September 2001. From Istanbul to Madrid and from Saudi Arabia to Morocco, we have seen incidents over the past few months involving real terror and the taking of life. We have seen, too, the preparation of that terror in other countries. I was with the Spanish Interior Minister when he made a presentation to European Interior Ministers earlier this week. He outlined the material that Spain has gathered, the lessons learned, and how critical it is to be able to track those who prepared the attack in Madrid on 11 March. He outlined the way in which that preparation spread its tentacles across national boundaries, and how people going about what appeared to be their normal business were actually preparing to turn into terrorists. Those people were not suspected, and they were holding down normal, professional jobs. They were not on the very edge of disadvantage, alienated and disaffected. They were, in the old cold war term, sleepers, waiting their opportunity to wreak terror and death on innocent civilians in Madrid.
  We are beholden, as we consider how we undertake the work of protection and how we respond to the Intelligence and Security Committee report, to remind ourselves that people, in the House and outside, have been sceptical about whether measures were necessary, whether the threat would continue for years to come, and whether what my right hon. Friend and I have described in relation to franchised terrorism—the network that exists and the loose associations—really constituted a threat that could really require a war on terror. We believed that it could, and the tragic examples that we can give emphasise that that is the case.
  In the United Kingdom, we have seen the superb work of our services disrupting and foiling potential attacks. The Metropolitan Police Commissioner, when reporting this morning on his decision to conclude his term in office in January—I thank him for his work, although there will be other opportunities to do so—described the way in which often hidden, unspoken, unpresented work can safeguard our interests in the capital and across the whole country. There are case-by-case incidents of which we do not hear publicly, and when we do hear about them there is often too much heat and not enough light, which gets in the way of the necessary investigations.
  Often, cases are continuing. Often, there is an inability to spell out why statements cannot be made. That is just part of dealing with the kind of terror we face. We simply ask, as we have on other occasions, that people be patient about what we can do to make that work more apparent. We have seen how the much maligned and traduced part 4 of the Anti-terrorism, Crime and Security Act 2001 has worked in practice. Over the past 12 months, since we last debated it in the House, and since February, when we debated the Newton Committee, Lord Carlisle's report and the annual renewal of provisions, the Special Immigration Appeals Commission has dealt with continuing cases of appeal. Fourteen cases have been dealt with, and 13 led to the original decision to certificate being upheld. I was grateful for how Lord Carlisle's report upheld the process by which those certifications had taken place.
  I am grateful to the Special Immigration Appeals Commission, a court of superior record chaired by a High Court judge, for its work. One individual was released, which shows that the fear voiced by some MPs
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  when the Act was passed that the commission would act as a rubber stamp was unfounded. The commission did not believe that the individual in question was free of connections with terrorism, but was unable to conclude that he had links with al-Qaeda and the international terrorist network.
  Mr. Mark Oaten: The Home Secretary will remember that when we debated the Act and the Newton report, he said that he was moving towards examining intercept communications as a means of securing more evidence. Will he expand on that this afternoon?
  Mr. Blunkett: I did not intend to go into the matter in depth, although we have given a commitment that should our policy change—I shall discuss the steps that we are taking in that respect shortly—it would be right and proper for the House to debate it thoroughly. A tide of opinion in favour of some adjustment is running in all three major political parties and beyond.
  Before I move on to that matter, let me say that one individual subject to the Special Immigration Appeals Commission arrangements has been bailed to remain under surveillance at home because of mental health problems. I wish to assure the public that close surveillance is being kept and we are ensuring that no risk arises from that decision.
  In response to the hon. Gentleman's intervention, let me set out our current position. Given the concerns expressed and the long-running debate on intercept, we indicated that we would ask for a review that examined in detail the way in which it would be possible to use intercept in individual cases, in terms of intelligence and evidential presentation. That work is continuing—an interim report will be presented to the Prime Minister shortly—because of the important issues touched on in the 27 February debate relating to the ability to separate intelligence from work that would prove to be usable as evidence presented to a court, and therefore usable in terms of charge. We have to determine how to separate the two and what to do with those aspects that do not fall neatly into the intelligence or signal system, which obviously will not be suitable for intercept, and those aspects that fall into the category of potential evidence to be presented to a court. The difficulty is substantial, because one has to devote resources to being able at the end of the process to present material in a form that is usable without knowing at the beginning of the process that one will wish to use it or that it will become usable. When we debate the subject in full, we shall have to address some of those issues.
  Let me make my position clear. I was deeply sceptical, but I am prepared to be won over to the view that, in limited circumstances, intercept might be of value. However, we need to be won over to its use. We cannot presume that it can be used and live with the consequences in ignorance of the detail and the damage that might be done. I do not have a closed mind, and I do not believe that my right hon. Friends the Foreign Secretary and the Prime Minister have. However, we must not be carried away by enthusiasm for a new way to present material in evidence; we must deal with the difficulties that the services have presented to the inquiry. We must also bear in mind the differences between our system and the one used in Europe, not

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  least in terms of the nature of investigating magistrates and the preparation of cases, and the differences between our system and the one used in the United States and north America. I hope that we can produce a measured report, but I think that my right hon. Friend the Foreign Secretary agrees that, whatever decision we reach, we should present it to the House so that we can have a debate on that important issue and thrash out the questions raised, not least by the Intelligence and Security Committee, which knows about the ongoing work and which will take our evidence and report back to the House itself.
  Let me return to the way in which existing powers are being used. Since the attack on the World Trade Centre and the Pentagon, some 562 arrests have been made under the Terrorism Act 2000, which was introduced by my right hon. Friend the Member for Blackburn (Mr. Straw) when he was Home Secretary. Of those arrests, 97 have led to charges being made under the Act, and other charges under other legislation and other powers have been made in other cases. It is worth reflecting on the changes in the nature of the threat, on why the Antiterrorism, Crime and Security Act 2001 was necessary, and on why the terms on which we have used other parts of the 2000 Act have been important.
  Last week, there was controversy about the use of powers under sections 41 and 44 of the 2000 Act. We have the matter under scrutiny; that is why we published detailed figures and set up an action team. We are keen to ensure that intelligence-based policing, rather than wholesale sweeps, drives the necessary work and the use of those powers. Inevitably, there has been a massive increase in the use of the powers, particularly those in section 44, illustrated by the fact that the number of incidents of their use has increased from just over 8,000 to 21,500. That increase has affected all racial and ethnic groups, but disproportionately the Asian and black communities, which is why we are taking a close look at the matter. However, we recognise that use of the powers and designation of areas under section 44 inevitably centre on certain areas of the country—the figures reflect changes in practice not throughout Britain, but only in areas that are more likely to be affected by known danger, and are therefore likely to be targeted for the necessary use of police surveillance.
  I am encouraged by the way in which the police have responded. There are good examples, including in south London, of detailed work with the community. Part of securing our safety and stability—part of the work of intelligence, security and policing forces, domestic and foreign—is securing the confidence and therefore the engagement of the communities most affected. The communities that are most likely to be targeted and traduced by those who are intent on using terrorist methods and on funding and planning terrorism need to be part of the solution. I welcome strongly the work of Iqbal Sacranie of the Muslim Council of Britain. It has taken brave steps to encourage everyone in the Islamic community in the UK to assist and support our efforts and to understand that, as citizens and residents of this country, we are in this together. It is therefore encouraging that communities in south London which, because of their nature and that of the dangers that they face, have been the subject of interventions under
  1046
  sections 41 and 44, have been drawn into understanding the nature of stop and search. Their members have been monitoring with the police the reasons for such interventions and have been applauding and welcoming police action to protect their communities. I want that work to be extended to other parts of the community in Britain, so that we can engage everyone in feeling that they are part of the solution.
  Together, the four strands of our internal work on resilience—prevent, pursue, protect and prepare—make sense. If I were still a Methodist local preacher I would say that the greatest of those four is prevention. We are in the process of drawing up better, more relevant information and guidance for the public on their role and what they can do, and we will make that available shortly.
  Turning to the report and the way in which it affects areas for which I am responsible—my right hon. Friend the Foreign Secretary will obviously deal more broadly with global issues—I shall concentrate on domestic security and policing. We have increased resources dramatically, and that will be reinforced in the vote on the allocation for the security and intelligence services following the spending review. We will expand the capacity of the Security Service, for example, by 50 per cent. over the next three years, and the work that it, the intelligence services and GCHQ do will be substantially underpinned in the spending review. The joint terrorism analysis centre—JTAC—was established exactly a year ago, and is a model of inter-agency working. Everyone involved would commend the work that it has done since its inception. The national security advice centre is working with the business community to look at the forthcoming challenges, not least electronic intervention and terrorism, and has been assisted by information and other support provided by the police.
  The eight regional intelligence cells that have been created following the reorganisation of special branch are up and running, and Bryan Bell, the director in charge of reorganisation, has continued his work. As the House knows, we provided an additional £15 million for that work. The House has debated at length the relationship between serious and organised crime and terrorism. The serious organised crime agency is taking shape, and the necessary posts have been advertised. It will help to tackle that relationship more effectively, linking the work of immigration agencies, Customs, the National Crime Squad and the National Criminal Intelligence Service. The underpinning will remain the work of the Security Service, and I stress that while the percentage of resources has remained steady, there is no less a commitment from the Security Service to supporting cross-boundary and international operations.
  The Chair of the Intelligence and Security Committee referred to espionage in the publication last week. I shall make the position clear—we are spending a smaller percentage of the enhanced and expanded budget on counter-espionage, but in fact we are spending more than we did last year. The service is using new techniques in addition to tried and tested methods to make its surveillance more effective. We give an assurance to the House, the country and people overseas who may be attempting to intervene, whether from former enemy countries or friendly nations, that the services do not merely stand ready—I apologise for that terrible civil service phrase—but, in fact, are ready to intercept and

  1047
  are doing so. If there is a dramatic increase in resources re-prioritisation is inevitable. By increasing the sums available we can ensure that work will continue even if the percentage allocated has been adjusted.
  Counter-terrorism is receiving the support and resources that it requires, as well as the domestic backup to reinforce resilience. The Intelligence and Security Committee has, with considerable fervour, ensured that this year the intelligence services committee chaired by the Prime Minister has drawn together all the relevant services and Ministers to co-ordinate and pull together the various strands of that important work. My right hon. Friend the Member for Rother Valley will speak about other areas that the Intelligence and Security Committee has touched on, including the BBC monitoring facility. As for information, we are keen that the national infrastructure security co-ordination centre, which my right hon. Friend the Member for Blackburn set up in 1999 when he was Home Secretary, should examine areas outside the scope of its existing operations. I thank its chairman for his work in creating a one-stop shop to develop awareness and new approaches to threats that have not previously existed.
  Expertise is essential if we are to link the work of the Secret Intelligence Service to an understanding of what is happening across the world and an awareness of our vulnerabilities. Many desktop exercises have taken place over the past year and, as we discussed in February, there was an up-front exercise at Bank tube station on 7 September last year. We learned many lessons and are keen to develop further exercises, including a joint exercise with the United States in the spring. I suggested to Dominique de Villepin, the French Interior Minister—he was previously the opposite number to my right hon. Friend the Foreign Secretary—that we undertake additional joint work with the French, and he agreed to that earlier this week.
  It is incumbent on all of us to come up with ideas, questions and proposals to monitor what we are doing, as I spelled out at the beginning of my speech. We cannot guarantee 100 per cent. success, but we can ensure that 150 per cent. effort goes into protecting our country and the effective use of our resources to do so. The most fundamental duty of Government is to ensure the security of the nation. We must balance reassurance and confidence building with honest and transparent dialogue about the dangers.
  We must balance the necessary steps for security, as we spelled out at the end of February, against the necessity to provide freedom and liberty without encroaching disproportionately on individuals' rights. Getting that right is a difficult task. We believe that so far we have done so, and when we published a consultation paper on the recommendation of the Newton committee at the end of February we asked people to give us their thoughts on further developments including, for example, new legislation on association with terrorism. Over the summer, we asked people to examine the relationship between domestic and foreign terrorist acts, and between individuals. Following the consultation, we will establish a way forward and present proposals before the spring so that the House can debate them in time for the renewal of the necessary orders and in preparation for the sunset clause which, the two Houses of Parliament agreed, would come into force in 2006.
  1048
  We must be sensitive to difficult issues on which party divides have often broken down—people of all persuasions have been convinced to set aside the usual adversarial approach to get things right. It is in that spirit that my right hon. Friend the Foreign Secretary and I address those issues this afternoon.
  2.29 pm
  David Davis: I, too, received a very courteous letter from the Chairman of the Intelligence and Security Committee, explaining that she could not be present today. We quite understand why. I am sure she will be well represented by the right hon. Member for Rother Valley (Mr. Barron), but he will forgive me if I say that we will still miss her presence, as she is a formidable Chairman.
  There was much to agree with in the Home Secretary's opening remarks, even his lay preacher quote, which I think was from I Corinthians 13. I join him in paying tribute to the intelligence and security agencies and the whole of the UK intelligence community for their constant hard work—so far, fortunately, successful hard work, and I am touching wood, as is the Foreign Secretary—at a time when the threats and challenges we face have never been so great.
  I join the Home Secretary in thanking the Intelligence and Security Committee for its persistent scrutiny of intelligence undertaken on behalf of the House, and I also pay tribute to the Committee. Looking back through previous debates, it seems traditional to tease the Committee for the sheer number of asterisks in its reports. Paragraph 37, for example, reads:
  "We have been told that ***
  ***.
  We are concerned that ***
  ***
  ***
  ***
  ***
  ***.
  We will return to this matter."
  That was an interesting paragraph. The Government's response states:
  "The government notes the Committee's concern and its intention to return to the matter."
  I wonder, frankly, whether there is any point in including such a paragraph in the report. I understand the redaction process that goes with it. As hon. Members have said in previous years, we should consider how liberal we can be with information. Some of it could be more forthcoming, particularly on financial figures—an issue that I raised before in a previous incarnation.
  As the Home Secretary said, the threat that we face is real and immediate. It is sad that historically we—the UK is not alone—have consistently underestimated the threat to our security. The Committee states:
  "The number of people willing to become involved in terrorism is rising",
  and
  "They are fanatical in their determination to succeed".

  1049
  The Director General of the Security Service tells us at paragraph 9:
  "The initiative generally rests with the terrorists. The timing of any attack is of their choosing".
  That is why we must always be ready and, in the words of the Home Secretary in his White Paper, I think, be one step ahead.
  I welcome the Home Secretary's comments on resources. Because we are dealing with the security services, he is in a considerably better position than I am to make a judgment about the exact numbers involved. The ISC report goes into resources in some detail and states that resources should be made available sooner. The report analyses the shortfall in funding and comments, at paragraph 135:
  "A turning point could have been the East African Embassy bombings in 1998, which first demonstrated the power of Usama Bin Laden and the A1 Qaida network, but this resulted in no significant changes to priorities or resources."
  It goes on to analyse the continuing shortfall in funding at the turn of the century, points up the delays implicit in training staff, and says of the agencies' request for a sizeable increase last year:
  "This was too late and it is why they do not have the level of resources that they need for all their priority requirements. We hope that the period of under-expansion has now been ended by the significant increase in funding for the Security Service. However, we remain concerned that the SIS and GCHQ will need further additional funds if the collection gaps are to be reduced and the UK's ability to identify, monitor and disrupt threats from abroad is to be improved."
  At paragraph 125, the Committee goes on to identify another key failure. It states:
  "We were also informed that the JIC had not assessed the threat to the CNI"—
  the critical national infrastructure—
  "from electronic attack since 2002. Capabilities to attack the CNI exist, and, while both NISCC and CESG sought to reassure us that they were reducing the vulnerability of the CNI to technical attack, we were not convinced."
  That is entirely consistent with the rather slow response elsewhere by Government to the more unglamorous parts of defending ourselves against terrorism—the important services to deal with the aftermath of an attack, such as the NHS's ability to deal with chemical, biological and nuclear attack, the failures of the emergency planning mechanisms, or the lack of urban search and rescue equipment for fire fighters. If there was ever a need for joined-up government, it is now and in this area. The critical national infrastructure is a key part not to be forgotten.
  Before I turn to the fundamental issue of intelligence in the report, I shall ask some specific questions relating to the Home Office. I am happy to take an intervention from the Home Secretary, as I did not quite pick up the timing of one or two aspects to which he referred. The ISC notes that the Home Office paper on the formation of the Serious Organised Crime Agency states that the review of whether intercept evidence should be admissible as evidence in court was to be completed by June 2004—in other words, already.
  To say that the report was time critical would be an understatement. The liberty of individuals and the safety of the whole nation will be materially affected by
  1050
  its conclusions. The Home Secretary did not mention that in his general or specific remarks. Will the report be available very soon, or was this the report he referred to for next year? I hope the Foreign Secretary will pick up the issue later. We need to know what progress has been made.
  We welcome the work set out in paragraph 60:
  "As part of this work a group, led by NCIS, will produce a new national intelligence requirement by June 2004. We will monitor how this requirement for crime-related intelligence will feed into the JIC Requirements and Priorities for secret intelligence and we will take evidence on the impact that the formation of SOCA will have on the Agencies."
  That is one of the Home Secretary's better inventions, if I may say so. It holds out hope for serious improvement in the way we deal with international crime, in particular.
  One of the specific criminal and security concerns that the ISC raises is the possible threat to national security posed by the importation of dangerous goods via the post. Paragraph 149 notes that the Committee warned the Government about "this potential vulnerability" two years ago. This is not just a terrorist issue; it is a criminal issue too. There is considerable anecdotal evidence of readily convertible imitation weapons coming in by post from overseas suppliers, for example. Although we appreciate and support the role of the police intelligence systems in detecting the flow of such weapons, we believe that much more widespread screening of packages from abroad should be instigated. That is a matter of relatively straightforward policy. I should be interested to hear the Government's proposals in that regard.
  Before I deal with the general intelligence picture, I shall raise one question about a paragraph in the report that struck me as surprising. It is about the performance of GCHQ. My question is aimed at the members of the Committee. The report states in paragraph 55:
  "GCHQ has successfully managed the PFI contract".
  I accept that GCHQ is world class in its capabilities in decoding, interception and intelligence gathering, and the ISC reflects that. However, in relation to the management of the private finance initiative, the Public Accounts Committee heavily criticised the GCHQ management. In addition to the six specific criticisms in the report, the Chairman of the PAC said:
  "There have been unwelcome cost increases on this programme. The process of moving the technology so critical to GCHQ's business will take longer and cost well over £300 million more than initially estimated, including extra running costs during the transition period. It is astonishing that GCHQ did not realise the extent of what would be involved much sooner, given how critical these systems are to its core business."
  Perhaps the Committee could explain whether it took the PAC report into account, or whether it simply disagrees. That is rather important.
  I turn to the central issue: intelligence. Intelligence is gathered to assess threats. That is self-evident. The purpose of intelligence is to inform policy-makers. The question that has been hanging over us with the Butler report and which cannot be avoided in this debate is whether we have used intelligence in such a way that the Government got what they wanted to hear, rather than what they should have heard. That means, of course, that intelligence ceases to be useful. The ISC report on weapons of mass destruction cast serious doubt as to

  1051
  whether that line was crossed. The issue comes up again in this report. Before I turn to the substance of that issue, I shall raise a number of apparent failures to keep the ISC properly informed during the course of the year.
  The ISC itself raised the Government's failure to provide it with eight Joint Intelligence Committee papers relating to Iraqi WMDs and UN inspections, and it was mighty generous to accept the Government's apology and statement that no deliberate attempt was made to withhold information. It seems extraordinary that the Cabinet Office's intelligence and security secretariat, an arm of Government whose sole function is information handling, was incapable of handling information on that occasion.
  In its investigation for last September's report on WMDs, the ISC was not told that two members of the Defence Intelligence Staff had registered their concern about the 24 September dossier. Indeed, it was told that no such concerns had been expressed, but the report states that three members of GCHQ and the Secret Intelligence Service were moved from Gulf war duties, presumably because of similar concerns. I am not sure of the extent to which the Committee was made conscious of the level of dissenting opinion in the agency in drawing up both its September report and this report.
  In paragraph 87, the Committee states:
  "we are not satisfied with the Government's response"
  to the September report on WMD
  "It emphasised only four key conclusions while either rejecting or failing to address fully"
  the other 24
  "conclusions and recommendations. We regard this as extremely unsatisfactory and we recommend that the Government explicitly address each of our recommendations and conclusions in future responses."
  The Government response, which was published this week, states:
  "we regret the Committee found its response unsatisfactory … The government accepts the Committee recommendation and future responses and will adopt the format used in this response".
  After one ISC report and a Government response, and another ISC report and another Government response, we still do not have the answers to the fundamental questions raised by the ISC. If I ask the Government some of those questions again today, perhaps we will be lucky.
  I will not go through all the fundamental questions, but I shall ask four of them. First, why did the JIC assessment not precisely reflect the intelligence provided by the SIS? Secondly, why did the JIC assessment not highlight in its key judgments the uncertainties and gaps in the UK's knowledge about Iraq's biological and chemical weapons? Thirdly, do the Government not accept that through deleting comments on the nature of the threat to the UK, the case was not balanced? A rounded judgment on the threat to the UK should have been reached. Finally, the failure to be specific in the dossier was irresponsible and misleading. The Government should have provided the public with clear and accurate information. Those concerns highlight an uncertainty or lack of knowledge about the real threat, which stands in stark contrast to the confident public position initially struck by the Government.
  1052
  The simple truth is that only four of the conclusions and recommendations were dealt with explicitly because that suited the Government's agenda at the time, which is another example of an Administration caught up in denial and blame. Let me remind the House of the Prime Minister's statements on the matter. In the preamble to the September dossier, the Prime Minister said:
  "What I believe the assessed intelligence has established beyond doubt"—
  beyond doubt—
  "is that Saddam has continued to produce chemical and biological weapons".
  He also said:
  "I and other Ministers have been briefed in detail on the intelligence and are satisfied as to its authority"
  In July 2003, the Prime Minister told the Liaison Committee that he had
  "absolutely no doubt at all that we will find evidence of mass destruction programmes".
  However, in his evidence to the same Committee earlier this week, he contradicted himself by saying:
  "I have to accept that we haven't found"
  WMDs
  "and that we may not find them".
  What is the Government's position? Is it that the weapons existed, but that we have not found them, or is it that they did not exist all along? That issue is unavoidable in a debate addressing the effectiveness and use of our intelligence gathering services.
  The Prime Minister said that he and other Ministers
  "were satisfied as to the authority"
  of the intelligence. Was he referring to the Home Secretary and the Foreign Secretary? If so, will the Foreign Secretary tell us whether he is still satisfied as to the authority of that intelligence? When Ministers reached those opinions, was it on the basis of knowing the qualifications and possible weaknesses of the intelligence or was the intelligence that they saw stated as a certainty? Was the intelligence changed or were qualifications and doubts removed in order to satisfy the Prime Minister's agenda? Was the intelligence changed in order to persuade the public that Iraq was an imminent threat when it seems now that that may not have been the case?
  The normal procedure, where there is doubtful intelligence, is that the chairman of the JIC attaches a caveat note to the Prime Minister. Did those caveats remain attached to the intelligence containing information provided by, for example, dissident Iraqi cells, and if not, why not? If so, why did the Prime Minister allow dubious intelligence to be included?
  The aim of the intelligence dossiers in the run-up to the war in Iraq was to outline the current threat in the context of UN resolutions to the public. It is fundamental in a democracy that such a document should give a balanced view, and documents of such importance should have been analysed word by word. This question must be answered, and we may get the answer today or we may get it after the publication of the Butler report: were the public let down, not through the inaccuracy of the agencies, but through the selective

  1053
  and improper use of information? Did our Government subordinate the nationally vital issue of intelligence to the politically convenient demands of propaganda?
  Madam Deputy Speaker (Sylvia Heal): Order. I remind all hon. Members that Mr. Speaker has imposed a 12-minute time limit on all speeches by Back Benchers.
  2.45 pm
  Mr. Kevin Barron: First, I want to pass on the apologies of the Chair of the ISC, my right hon. Friend the Member for Dewsbury (Ann Taylor), for her absence from this important debate. She has written to hon. Members to explain that today is her son Andrew's graduation day, and I am sure that hon. Members understand why she is absent.
  I am grateful to my right hon. Friend the Home Secretary and the right hon. Member for Haltemprice and Howden (David Davis), both of whom referred to our report. Our report commends the agencies for the work that they have done in the past year, most of which will never be made public. It is right publicly to thank the staff of the Secret Intelligence Service, the Security Service, GCHQ, the Defence Intelligence Staff and the assessments staff for their important work and their contribution to the protection of UK interests, both here and abroad.
  The ISC performs an important role in the oversight of the UK's intelligence community, and I should like to pass on our Chair's thanks to all members of the Committee and our secretariat for their work over the past year. The work load has been heavy, especially for the secretariat, over the past 12 months—the Committee produced two substantial reports during the course of the year. The first report was published in September 2003 and concerned intelligence on and assessments of Iraqi WMDs. The second report, which we are debating today, is the annual report that the Committee is statutorily required to produce and which the Prime Minister is required to present to Parliament.
  During my years as a member of the Committee, we have always debated the annual report. I welcome those debates and hope that other hon. Members welcome them too. We completed the report in May this year, the Prime Minister published it on 29 June and the Government produced their response on Tuesday of this week. Our report contains a number of conclusions and recommendations, which the Government have, for the first time, separately addressed in their response.
  The right hon. Member for Haltemprice and Howden mentioned recommendation C, which he quoted in full, including the asterisks. The Committee felt that it was important to include recommendation C. We knew what would happen to recommendation C and that the issue of asterisks had been raised in previous debates, but we included it in the interests of good housekeeping and to bring an important point to Ministers' attention. I have no doubt that recommendation C will appear in the press, who will no doubt have fun with it.
  David Davis: I did not raise recommendation C simply to tease the Committee—amusing as it is. Redaction is a matter of judgment, and it is not a clinical exercise. For
  1054
  example, when the Public Accounts Committee produced a report on the overrun on MI5 and MI6 buildings, the redactions were reduced by about 90 per cent. by the use of a rigorous approach, which might have been applied to this report. I do not know about the current procedure, but it is well worth reviewing.
  Mr. Barron: That may be so. Most of the report that we produced earlier this year would not have been in the public domain unless it had been crafted so as not to identify sources. We have moved on substantially in that respect. We realised that recommendation C would be treated in that way. I assure all hon. Members, and anyone who may read or listen to these debates, that any redaction in any of our reports is agreed by the Committee. We unanimously agreed this report and the previous report on Iraq. If we were unhappy with any redaction made in this report or any previous one, we would say so.
  We welcome the Government's detailed response to our recommendations. The key point is that we are still taking evidence on the nature and circumstances of the interviews of US-held detainees that are conducted by or observed by UK intelligence personnel, and on the usefulness of those interviews. We intend to carry on doing that.
  We comment that, owing to the necessary additional efforts allocated to counter-terrorism, risks are being taken in the area of counter-espionage, and that collection gaps exist in other areas.
  My right hon. Friend the Home Secretary was right to raise the issue of money. Having a bigger pot and a smaller percentage does not mean that there is not more money. As experience moves from one area to another, counter-espionage develops some gaps, as I am sure my right hon. Friend recognises.
  We note that the agencies were given additional resources in the 2000 and 2002 spending rounds which they were not able fully to spend, partly because, although they have embarked on recruitment campaigns, it takes time to train staff to be effective. That is not a question only of languages, but of dialects. Some agencies have to undertake a complicated and difficult process in that respect.
  The Committee concludes that the scale of the challenge posed by international terrorism was underestimated by the agencies at the end of the millennium. However, the formation of the joint terrorism analysis centre in 2003 addressed the concerns about co-ordination and timeliness of reporting that we raised in our report on the Bali bombings. Although the agencies were expanding and receiving additional resources, they did not reassess the threat and challenge that international terrorism posed until late 2003, partly because the scale of the problem became apparent only through increased co-operation with partners. That reassessment prompted Ministers to agree to a significant increase in Security Service staff over the next four years. We believe that that significant increase should have occurred earlier—hence our view that it was too late—and remain concerned that the SIS and GCHQ will require additional resources in terms of people and funding if collection gaps are to be filled. We got that message across to Ministers very strongly in the course of our deliberations with them.

  1055
  We state our intention to take additional evidence on the Defence Intelligence Staff, particularly on how its analysis work links with that of the assessments staff and how its collection effort supports national requirements. We have received good co-operation from the DIS in that regard. We will also take evidence on the internal systems of the intelligence and security secretariat, which contains the assessments staff, and its structures and resources. I agree with the right hon. Member for Haltemprice and Howden about the absence of the eight reports, which did not reach us for logistical reasons. We did not understand why that happened, but we received a good explanation and accepted an apology, which will be put into the annual report. I hope that the ongoing work that we are doing will ensure that we have effective systems whereby material is retrievable if required.
  We intend to complete our work on the relationship between the intelligence community and the media. In that regard, we would welcome comments from the media on the contact and information that they receive from the agencies. We said in our report on Iraq that we would undertake that work, but it is not yet complete.
  The right hon. Member for Haltemprice and Howden mentioned the Public Accounts Committee. He quoted from paragraph 55 of the report, in which we said:
  "GCHQ has successfully managed the PFI contract, which has provided them with an excellent facility, and the fact that the sigint service to customers has been maintained (during the transition is welcome."
  People may have become confused about that. We were referring specifically to the private finance initiative contract for the new building, which was the biggest single PFI project undertaken in Europe. There is a long history of comments about cost overruns and time overruns on PFI hospitals and other public buildings. However, this project was successful. The PAC looked into the transitional cost in terms of the upgrading of new equipment and so on, and made certain recommendations and conclusions. Having taken evidence on the matter, we dealt with it in our annual report of 1999—2000 under the heading, "GCHQ New Accommodation Project". We said:
  "We understood that Ministers would be asked to authorise transition costs between four and ten times the original estimate."
  We were well aware of the situation, which the PAC picked up on because it has gone through the system. Indeed, Parliament should have been well aware of it, and not as surprised as was suggested in some of the press reports when the PAC published its report.
  The Committee has a good working relationship with the agencies and Departments. We see relevant Ministers, in terms of responsibility or as users of intelligence, perhaps more than any other Committee of parliamentarians. This year, we took evidence from the Secretaries of State for Foreign Affairs, for Home Affairs, for Defence and for Transport, as well as from the Chief Secretary to the Treasury and the Attorney-General. We also see several senior officials, including the heads of the three agencies and the DIS, the security and intelligence co-ordinator and the Chairman of the Joint Intelligence Committee.
  Our report on Iraq and WMD included two sections entitled "Terminology and Organisation" and "Intelligence Sources", which were deliberately included to inform Parliament and the wider public about
  1056
  matters relating to intelligence. In our latest report, we included a section headed "The Limitations of Intelligence", which is on page 9. That has the same intention—to inform Members of Parliament and the general public of intelligence issues that are not normally discussed. I hope that people read it.
  Before I conclude my remarks, I should like to put one matter on the record. The Committee has been asked to comment on the appointment of people to particular jobs, including heads of agencies. It is not, and never has been, for the ISC to comment on timing or the people appointed. We do, however, comment on the process that has been followed in making the appointment. In the case of the next chief of the SIS, or "C", the Committee is content with the appointment process. In our report, we record that the appointment of a JIC Chairman—
  Madam Deputy Speaker: Order. The hon. Gentleman's time is up.
  2.59 pm
  Mr. Mark Oaten: I join the Home Secretary and shadow Home Secretary in thanking the Intelligence and Security Committee for its work. It is a shame that the right hon. Member for Rother Valley (Mr. Barron) had to be cut off, given his able job in representing the Chairman. We entirely understand the reasons for her absence—she has a happy occasion to attend. I pass on the apologies for absence of my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), who is also a member of the Committee, and whose daughter is having a baby today.
  I want to put on record the thanks of Liberal Democrat Members for the wonderful work of our intelligence committees. The intelligence services in this country carry out marvellous work, much of which we never hear about. It is an incredible achievement and the report and today's debate afford an opportunity to put that firmly on the record.
  We all think back to where we were on 11 September. My mind was racing then about the consequences of those events. I suspect that, like me, many hon. Members were pretty sure that we would face an attack in this country in the ensuing period. Although terrible events have occurred in Madrid, Istanbul, Bali and other places, it is to the credit of those who work in our intelligence services that, so far, we have avoided such an attack in this country. That is a remarkable achievement. If I had been asked to predict events after 11 September, I would not have believed it possible to avoid some sort of atrocity in this country for such a long time.
  The intelligence services have had to adjust to a changing world, which has moved from one of difficulties and problems between superpowers to that of super-terrorists. That means complex changes, which have required the intelligence services to adapt. They require much more resources and their activities have become more important than ever—that is difficult for them. Our ability to scrutinise their activities becomes correspondingly more important as their actions are much more in the public domain. I therefore welcome the debate and believe that we should have an annual occasion to examine their work.

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  Not only the intelligence services but the politicians have had to adapt to a changing world. The Home Secretary was right to reflect on those difficulties and tensions when he clearly set out the tension that he feels as Home Secretary in bearing the burden of responsibility for all of us in ensuring that he and the Government do everything possible to protect our security. There is tension between doing that and ensuring that we do not abandon the freedoms that we are trying to protect.
  I know that the Home Secretary becomes enormously irritated with my colleagues and me. I almost choked on my yoghurt—not muesli—when listening to "Today" and heard myself described as part of the Libertariat—[HON. MEMBERS: "Liberati."] It was "Liberati". [Interruption.] I want to put it on the record that I do not eat muesli; I do not come from Hampstead—I was born in Watford; I started wearing sandals only when I saw David Beckham doing it, and I note with interest that, out of the three Home Affairs spokesmen, the only one with a beard is the Home Secretary. That may suggest that there is a Liberal desperately trying to get out.
  The more serious point is that whatever one's values when taking on the Home Secretary's job, I imagine that the burden of responsibility and the information to which one is made party creates a tension about the direction that one should take. When Liberal Democrats are critical, I hope that the Home Secretary acknowledges that we understand his problems and difficulties and that it is our job in opposition to probe, test and ensure that we are doing what we can to protect values, which are perhaps sometimes not ideal in our changing world.
  Let me consider the report, which begins by dealing with resources. I acknowledge the need for increased resources, but perhaps the Home Secretary or the Foreign Secretary could comment on the dilemma between putting more resources into intelligence services and the knock-on effects on our police. I was greatly struck by the conversations that I have held with members of the Metropolitan police. They said that although they obviously welcomed all the intelligence that they received, the more they get, the more demand it creates for individual police officers to follow it up, participate in raids and deal with the consequences. It is therefore not simply a case of ensuring that we put extra resources into the intelligence services. They must be matched by extra resources for the affected police authorities and forces so that they can conduct the necessary activity on the ground.
  I congratulate the Home Secretary on his discussions with the Chancellor. Press reports and the Chancellor's comments suggest that the Home Secretary has successfully secured considerable resources. That is welcome and appropriate in such times. The Home Secretary mentioned the disparity in terms of the work in counter-espionage and the fall in the percentage figure of the budget devoted to it. Does he believe that, although there is extra money available to the Home Department, next week's spending review announcement will also mean a slight increase in that specific percentage? Will the percentage as well as the money improve?
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  The shadow Home Secretary pointed out that it is ridiculous that page 11 of the report provides a breakdown and a bar chart that examines the resources for the Secret Intelligence Service, the security services and GCHQ, but displays only asterisks from 2001 to 2005. It is hard to make a case for not revealing the amount of resources that goes to the individual services. I cannot understand the security risk involved in that. The advantages in parliamentary scrutiny outweigh the dangers and risks or including those figures.
  Nearly all the consequences of extra resources involve people. Recruiting is clearly a difficult and complex process. For example, the Committee mentions the difficulty in trying to obtain a good ethnic balance in recruiting. That is important not only in its own right but especially because of the types and style of work that we expect our intelligence services to undertake, their understanding with specific communities, and their ability to communicate and gain the confidence of some communities. I hope that the Home Secretary will pick up on the Committee's comments and ascertain whether we can do much more to get a good ethnic mix.
  Some concerns have been expressed to me about the National Criminal Intelligence Service and what happens when it transfers to the serious organised crime agency. I get a sense from people who are connected with NCIS that they are worried that the organisation is suffering from a sort of brain drain and that some of the more senior individuals who have been seconded from police forces are now starting to be taken back into them. That is happening partly because of financial pressure in NCIS to reduce the budget and partly because of the process of moving towards SOCA. It would be worrying if the transfer, which will not happen for 18 months, had an impact on the effectiveness of NCIS as individuals leave before the new agency is established. I hope that those who respond to the debate will tackle that and confirm that the Committee will be able to examine the work of SOCA as well as that of NCIS and that that organisation will be scrutinised properly. The Home Secretary is nodding and that is welcome confirmation.
  The shadow Home Secretary made some strong points about Iraq. Perhaps they would have been more powerful if they had been made during the debate on Iraq rather than after the event. He hoped that the Butler inquiry might be able to answer some of the questions about the interrelationship between the intelligence services and Ministers, but I do not believe that it can provide those answers. That is precisely why Liberal Democrat Members decided not to take part in the process. Somewhat belatedly, Conservative Members made the same decision. I fear that, when the Butler report is published next week, we will all be asking for Butler mark 2 because it will pose a set of questions about Ministers' interpretation of information. Everybody will be dashing around studios demanding a further inquiry to ascertain how Ministers established that information. The Government could have settled this issue once and for all by wrapping those two issues up at the same time.
  I am grateful to the Home Secretary for confirming that he still has an open mind on the issue of intercept communications. Like the shadow Home Secretary, we have moved on this issue. Indeed, I think that all three

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  parties have done so. I have definitely come to the conclusion that it would be better to try to produce proper evidence against people rather than holding them without trial, so the sooner we can complete and see the evidence from that review, the better.
  I was surprised that the Home Secretary did not give us any indication of the progress, if any, made at his summit in Sheffield this week with his counterparts from mainland Europe. I would have been interested to hear what progress had been made on shared intelligence and, particularly, on issues such as DNA and biometrics. We look forward to receiving more information about the progress that is being made on working with our European counterparts in those areas.
  I do not want to drag up the issue of identity cards now but, while we would be very much in favour of shared intelligence and ensuring that such information was passed around, and while the idea of biometric data on passports is worth looking at in principle, I want to put on record again my concern that the Government are implying that biometrics and ID cards would have a role to play in tackling terrorism. I can seem them having a role if the cards were compulsory, or perhaps in regard to the ability of certain individuals to claim benefits, but I remain unconvinced—particularly after spending a couple of days in Madrid last week talking to some of the people involved in these matters—that an ID or biometric card system would create a serious means of preventing terrorism in this country.
  I have one final question, which relates to page 23 of the report, on which the Committee raises concerns about the way in which some of the interviews of detainees took place. The wording is not clear to me, however. The report looked at the way in which detainees in Afghanistan, Iraq or Guantanamo Bay had been interviewed, and the response begins by saying:
  "Interviews of detainees conducted or observed by UK intelligence personnel have"—
  and then goes on to list some concerns about the way in which those interviews had taken place. It is not clear to me whether this section confirms that interviews were conducted by UK intelligence personnel in a way that would go against the Geneva conventions. The wording is not clear, and it is important that we receive clarification on that point.
  Mr. Michael Mates: Just to put the hon. Gentleman right, may I tell him that we received that letter from the Prime Minister just a few days before our report went to the printers? We put it in as he wrote it, and our answer is in paragraph 79, which states:
  "We will take evidence on all these matters."
  So the hon. Gentleman must wait until we report, and then he will know.
  Mr. Oaten: I am grateful to the right hon. Gentleman. He clearly wants to ask the same questions as I do. We hope that there will be a chance to do that, but we could circumvent that process if the Foreign Secretary were able to clarify that matter when he responds to the debate today.
  I said earlier that these are difficult matters, and I want to assure the Home Secretary that, where possible, we shall give cross-party support on many of them.
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  However, it is important that we also probe and test the Home Secretary if we believe that legislation at times crosses into areas that we are trying to protect.
  3.13 pm
  Alan Howarth: The annual report of the Intelligence and Security Committee offers much praise, makes some criticisms, and includes some of our usual painstaking passages of educational material. We are happy to praise MI6 and the Foreign Office in respect of Libya. Alongside that has been the unravelling of the A. Q. Khan network. We praise the establishment of the joint terrorism analysis centre, which is a model of inter-agency and interdepartmental co-ordination and commitment. We were particularly impressed by the speed with which that institution was set up, and by the quality of what it does. The one problem that it has had is that so many people have beaten a path to its door—it has become a popular destination for "spooks' tours" from all over the world—that it has been interrupted in the performance of its duties more often than it might have expected.
  Such good co-ordination is a particular strength of the British system. We see it in the Joint Intelligence Committee, where the heads of all the agencies sit with representatives of other Government Departments. The committee centralises the assessment of intelligence material from a whole range of sources. We are pleased that a new system for establishing requirements and priorities has been achieved, and that the ministerial Committee on Intelligence and Security was engaged in that process. That was something for which we had been calling for some considerable time.
  SCOPE, the computerised database of intelligence data linking 10 different Departments and agencies that is now in development, represents exactly the right way to go. Of course, there are all the problems of big public sector computer systems, and we have raised some questions about training, security and costs, but we have no doubt that it represents the right way to go.
  We make criticisms of the low priority given to counter-espionage. We took a peace dividend after the cold war, but China, Russia and others continue to seek to find out what they usefully can about things that go on in Government and in business in this country that we ought to keep secret. On a visit that the Committee made to the United States of America recently, we were strongly reminded of instances of penetration of the American agencies, and it was impressed on us how important it is to look after our crown jewels, and to keep our secrets secret.
  In the report, we chart the fall in the share of Security Service resources going to counter-espionage from some 20 per cent. in 1999—2000. That share is bottoming out at about 10 per cent. today—as the Home Secretary told us—thanks to the promise of a 50 per cent. increase in funding for the Security Service over the next four years, which is extremely welcome. This has been a calculated risk on the part of the Home Secretary and the director general of the Security Service, and we were pleased to understand from our discussion with the Chief Secretary to the Treasury that he understands the nature of the risk that was being taken.
  The Committee regrets that not enough resource has hitherto been committed to helping the intelligence agencies play their part in addressing serious organised

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  crime. We saw some remarkable models of inter-agency co-operation in dealing with drugs crime at Key West and in Jamaica, and some similarly excellent interdepartmental co-operation centred at Vauxhall Cross relating to various other kinds of serious organised crime. However, those good arrangements were undermined by the lack of resource going into them, when so much more could be achieved. It is very important that we should achieve more in that direction, and investment in this area would certainly yield a quick return. There is a spectrum between organised crime in the drugs trade, for example, all the way through to terrorism. We therefore welcome the commitment of extra resources that the Government have now promised, and we look forward to the serious organised crime agency
  "building on the intelligence capability already available across law enforcement and security and intelligence agencies".
  We draw attention to collection gaps, which are—irritatingly, for right hon. and hon. Members—asterisked in the report, those places that are not named but where we would like to see a stronger intelligence effort. My right hon. Friend the Prime Minister told the Liaison Committee this week of today's threat, which he defined as
  "a new form of global terrorism combined with repressive, unstable states that proliferate or engage in chemical, biological and nuclear weapons development".
  The world is a small place in terms of the capacity of terrorists and proliferators to move quickly from one part of it to another. It is very large, however, when we come to consider how to cover it comprehensively with intelligence, particularly when we bear in mind the length of the lead time to establish an effective intelligence capacity in any particular place.
  It is easy to be wise after the event, and we suggest that the east African bombings in 1998 should have been a wake-up call to the world. It appears that not until 11 September 2001 did the world begin to wake up to the nature of the new threat. I was looking last night at a book called "Among the Believers: An Islamic Journey", written by V. S. Naipaul, which I see that I read in 1982. As long ago as that, Naipaul described a journey through Iran, Pakistan, Malaysia and Indonesia, in which he found Islam in ferment, and more and more people seeking the comforting simplifications of religious fanaticism. He wrote:
  "This political Islam was rage, anarchy".
  For 20 years after that, however, western leaders continued to embrace Saudi Arabian leaders and to ignore Wahhabism. For 20 more years, we were comfortable with the existing concept of threat, our modes of threat analysis, and the ways in which we derived the requirements for the intelligence and security agencies. We took that peace dividend after the end of the cold war, and were guilty of complacency in the 1990s.
  The enemy is an Islamic fundamentalism that is uninhibited in its willingness to use violence: sophisticated, implacable enemies, many of them trained individually in particular technical skills in the west, who exploit the values of our liberal society, our concern to preserve such values as privacy, a refusal to
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  discriminate on grounds of race or religion, and the right to preach. If we are to protect ourselves physically against this kind of threat, we will need huge cultural and institutional adjustments, but if we make those, will it be a victory for us or for terrorism?
  We agonise as to how to respond and deal with threats of this nature. What the hon. Member for Winchester (Mr. Oaten) said just now on that subject was helpful. We find it difficult and painful to judge what we are to do about the authorisation of surveillance, the use of intercept material in judicial proceedings, the development of policy on immigration, naturalisation, passports and ID cards, and the difficult question of detainees, to which we drew attention, and which has been referred to in the debate. The Prime Minister's letter in paragraph 78 of our report describes a detainee hooded and shackled during an interview, which was not reported at the time, and refers to other complaints, austere conditions and inappropriate treatment, and concerns passed on to the US authorities. As the right hon. Member for East Hampshire (Mr. Mates) has just said, we will take evidence. But as the Home Secretary has said, Parliament will need to think hard about where we set the boundaries in these matters.
  Iraq confronted us with a question: to what lengths are we willing to go when intelligence tells us that there is a threat from WMD? There have been, of course, passionate disagreements within our country and internationally. That issue cannot be ducked, and certainly not by political leaders Our Committee reported on the intelligence and assessments made in relation to Iraq, and the House debated our report, albeit perfunctorily. Others have trawled these waters: Lord Hutton, the Butler committee, and Mr. David Kay, the former head of the Iraq survey group, a real expert in these matters, and a revisionist, who said:
  "It turns out that we were all wrong."
  Too much may be being read into those words. Kay accepts that Iraq was at an early stage of renewing its nuclear weapons programme, that it had removed the elements most vulnerable to inspection but kept its scientists and technology, and that research continued on chemical, biological and nuclear weapons. The missile and unmanned aerial vehicle programmes were still moving ahead, and the weapons programmes were designed to allow future production. If Saddam had had the political opportunity, he would assuredly have resumed those programmes.
  Kay thinks that we were wrong to take the view that there were stockpiles, but he also says that there was no evidence either way on that. He describes the difficulties. Given the body of intelligence, over 15 years, it was hard not to conclude that Iraq, in his words,
  "was a gathering, serious threat to the world".
  Saddam lied systematically, the scientists lied, the inspectors caught them lying and in breach of resolution 1441, so the analysts assumed the worse, perhaps wrongly in some respects. But a corrupt, terrorised society was very hard to read, and there was not enough human intelligence to enable us confidently to assess the motives and intentions of the Iraqi leadership at all points.
  Were errors made? Possibly; but given what the intelligence community saw and knew, or thought that it knew, it still seems to me that it reached the only

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  conclusion that it reasonably could. The looting and deliberate destruction of documents and material that took place following the failure of the coalition to achieve physical security in Iraq after 9 April means that the Iraq survey group may never establish the facts as to that period. Perhaps there were no stockpiles, but I do not doubt that the dangers to the region and therefore to the world were very great, that Saddam would have resumed his programmes, and that, already, the risks of proliferation through willing buyers meeting willing sellers in Iraq were very great. If there are questions about the integrity of UK officials and politicians taking decisions in this area, I believe that they are entirely unfounded.
  3.26 pm
  Mr. Michael Mates: It is a great pleasure to follow the right hon. Member for Newport, East (Alan Howarth) and the right hon. Member for Rother Valley (Mr. Barron), beside whom I sit in the Committee Room, and have done for the past seven years—I think that I can say that without asterisks—while we get on with our work. As it was referred to from the Front Bench, it is worth emphasising that in the 10 years since this Committee was formed—I have had the honour of serving on it for all that time—it has been a zone entirely free of party politics. It does not enter into our work at all, and I am grateful that it does not. Indeed, on one visit that we made abroad, after we had been having discussions with some opposite numbers for seven or eight hours, the question of partisanship came up. We asked them to guess which parties we all came from, and they got every single one of us wrong—to the chagrin of some of us. There we are.
  In the report there is a short essay about the limitations of intelligence, which I commend to everyone in the House and outside it. For far too long, people have wrestled with a faint impression that intelligence can tell us everything, and that if we put enough resources into it, and do enough things correctly, we will know what we need to know. That is not the case, and I will not surprise anyone or breach any confidence when I say that in a report that will be published next week, that subject is likely to be raised again. It is important that all of us get it across to the outside world that intelligence really does have limitations, particularly now, since the end of the cold war and the break-up of the two great blocs who aimed almost all their intelligence and security resources against each other. The threats to us today do not come, as they used to, from just one bloc; they come from a disparate group of rogue states, terrorist organisations and countries who are secretly engaged in trying to build up stocks of weapons for illegal and improper use, be they chemical, biological or nuclear or the missiles necessary to deliver them.
  There is not one target for the agencies today but many. Assessing the relative importance of those targets and directing to them resources that are inevitably limited is much more difficult than ever before.
  One difficulty with the agencies' work, which I know is experienced by many hon. Members, is that because all their activities are conducted within a ring of secrecy,
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  scrutiny must of necessity take place within that ring of secrecy as well. As a result we in the Committee must trust the agencies and those who work for them not to abuse their powers, and to be honest with us about what they have done. In the House, we must place a certain amount of trust in Ministers to conduct themselves honourably and not to misuse the agencies or the intelligence they provide for partisan or other purposes. Trust is at the heart of intelligence work.
  Some Members do not place their trust fully in our Committee, because it is not a Select Committee. Those who feel like that should look at the record of our work throughout the last decade. I do not believe that we can be criticised for having been unwilling to ask awkward questions of both agencies and Ministers. We have always taken a robust approach, and the fact that we have not always said what some people want to hear does not mean that we have not investigated issues fully.
  It is the misuse of intelligence that undermines trust in the agencies and reduces the authority of their statements. That trust must be maintained, even if the price is that Ministers—and, indeed, we in the Committee—cannot always make public the intelligence on which decisions have been based.
  I want to raise two small points, or at least points that figure in the report in a relatively small way. The first, which has already been mentioned, relates to the risk that has been taken with regard to counter-intelligence. It has been acknowledged by Ministers, and I think we are right to remain concerned about it. Some years ago, a former head of the CIA said, "There is only one thing worse than finding a spy in your organisation, and that is not finding a spy in your organisation." The risks have been taken because of the reduction in funding suffered in the 1990s, as has been acknowledged, but it is important to point out for future reference that there is no such thing as a quick fix. It is no good suddenly providing more money and expecting everything to be back where it was before, the following morning. It takes months, indeed years, to build up the necessary experience, the necessary organisation, and the right way of conducting counter-intelligence activities before they are up and running properly again, and it will be some years before the agencies are back to where they were before they reduced their staff.
  Postal screening has also been mentioned in passing. Our report expresses concern, and I must say that I have found the Government's response a touch complacent. If I could specify the concerns and the risks I would have the entire House and, I suspect, the entire country behind me, but I cannot do that: if I described the risks, those who wish us ill could use the routes available to them to avoid the risk of being caught out. What I can say is that it is a question of more co-ordination, and of waking up to a problem that is very real before we see another major incident. I am thinking of the occasion on which 100 or so weapons were sent through the post from Florida to Northern Ireland. Quite by chance, an operative in a postal screening depot saw what was happening and stopped it. That is public knowledge because there was a trial and people went to jail, but I must tell the Government that the situation does not just need looking at and—what is the word?—reviewing; it requires action.

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  I hope that the House will think that the report is balanced and does not skate over problems. I commend it, because I know that all of us in the Committee have done a lot of work on it.
  3.33 pm
  Dr. Gavin Strang: I am pleased to follow the right hon. Member for East Hampshire (Mr. Mates), who makes such a big contribution to the Committee's work. As he said, party politics does not enter into our work.
  In last year's annual report, the Committee said that according to the Joint Intelligence Committee al-Qaeda and associated groups continued to represent by far the greatest threat to western interests. As the House will know, al-Qaeda has existed for many years, having evolved from those who travelled to Afghanistan in the 1980s to join resistance to the Soviet Union. It is thought that attacks on the interests of the United States and its allies by groups linked to al-Qaeda can be traced as far back as 1992. The subsequent decade saw several attacks linked to al-Qaeda, including the bombing of US embassies in east Africa in 1998, the attack on the USS Cole in October 2000, the atrocities of September 2001 of course, and the Bali bombing of October 2002. It would be a mistake to see al-Qaeda as a fixed organisation run according to the direct orders of Osama bin Laden. It is an open question as to how—if at all—the activities of the various groups are coordinated, and whether anyone in bin Laden's inner circle is influencing the planning of attacks. But the phenomenon can exist without a disciplined root-and-branch organisation.
  The National Commission on the Terrorist Attacks Upon the United States has concluded that al-Qaeda has fundamentally changed since it lost Afghanistan after 11 September. It is far more decentralised, with operational commanders and cell leaders now making command decisions previously made by bin Laden himself. Instead, bin Laden is the inspiration for the movement, which is a collection of groups with differing characteristics, and agendas that vary according to the politics of each region.
  I want briefly to consider the impact of the war in Iraq on international terrorism. Al-Qaeda was responsible for more than a decade of terror prior to the launching of military action by the US and the UK against Iraq in March 2003. When this House—and, indeed, most of the world—was debating whether it was justified to take that military action, one consideration was the impact that it would have on international terrorism. It was reasonable to assume that launching a war in Iraq against the will of the international community would be detrimental to the international coalition that had formed against terrorism. It was also a reasonable hypothesis that the war in Iraq would cause an increasing number of individuals to identify with al-Qaeda's aims and methods, which in turn would mean more attacks.
  Last September, the ISC report on Iraqi weapons of mass destruction stated that the Joint Intelligence Committee had itself assessed that the threat from al-Qaeda and associated groups would
  "be heightened by military action against Iraq".
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  The judgment was whether that was a risk worth taking. The ISC discussed the threat with the Prime Minister, who recognised the danger that attacking Iraq would provoke what he called
  "the very thing you were trying to avoid".
  However, his judgment was that the threat posed by the potential combination of terrorism and Iraqi weapons of mass destruction could not be ignored. He told us that concern that military action might bring about an increased threat from al-Qaeda must not lead us to allow
  "a nexus to develop between terrorism and WMD in an event".
  It is still too soon to gauge the medium or long-term effect of the war in Iraq on international terrorism. In the shorter term, in Iraq itself we have seen a terrible series of acts of violence. As the Foreign Affairs Committee noted in its report entitled "Foreign Policy Aspects of the War against Terrorism", which was published at the beginning of the year,
  "a dangerous alliance of foreign fighters with terrorist allegiances and elements of the former Iraqi regime has been forming inside Iraq".
  According to the US State Department's revised global terrorism report of 2003, there had been a slight rise in terrorist attacks in 2003 compared with the previous year, and the number of attacks and casualties in the middle east had doubled. Closer to home, the Foreign Affairs Committee concluded that the war in Iraq could indeed have made terrorist attacks against British nationals and British interests more likely in the short term.
  But what is the risk to the UK from al-Qaeda? The al-Qaeda threat is certainly at a higher level now, and we should assume that terrorists intend to carry out an attack in the UK. We have been spared, so far, the horror that was visited upon New York, Bali and Madrid, to name just three. It is not clear why that is so. For example, it is not clear to what extent that is due to effective action by the various agencies. The House will remember the widely publicised arrests following the discovery of half a tonne of ammonium nitrate fertiliser in a west London warehouse in March. No one present believes that the ammonium nitrate was intended for agricultural purposes.
  There is the related question of accessibility. Did the terrorists attack Madrid, rather than London, because Madrid was perceived as a softer target, or because they happened to have the capability on the ground to mount the attack in Madrid? Do the terrorists not have the resources here—yet—to bring a planned attack on the UK to its conclusion? The fact that there has been no attack in the UK to date provides little comfort. The director general of the Security Service told the ISC that
  "the absence of an attack on the UK may lead some to conclude that the threat has been reduced or been confined to parts of the world that have little impact on the UK. This is not so."
  The House will be aware that the Security Service stated publicly that
  "al-Qaeda cells and supporters of affiliated groups are known to be active in the UK",
  and that
  "a terrorist threat to the UK may also come from overseas."

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  We know about the long lead-in time for planning an attack. The National Commission on Terrorist Attacks Upon the United States concluded that the idea of launching the 11 September attacks was first put to Osama bin Laden in 1996 and that an initial list of targets was drawn up as long ago as spring 1999.
  As I said, although we cannot be sure why there has not been an attack on the UK to date, we can certainly be confident that al-Qaeda-linked groups would like to carry out such an attack. It is imperative that our counter-terrorism efforts are comprehensive and robust and that we take all practical steps to ensure that we can deal with an attack. On that latter point, the Civil Contingencies Bill is designed to strengthen the Government's emergency powers and update the framework for civil protection work. Significant additional funds have been made available for counter-terrorism.
  In discussing that issue, there is an understandable tendency to focus on secret intelligence, but much of the information used in counter-terrorism is in the public domain—in the broadcast and printed media. BBC Monitoring is the organisation that scrutinises such open-source information. It is part of the BBC World Service and it tracks more than 3,000 sources in 100 languages covering about 150 countries. BBC Monitoring receives, translates, analyses and conveys the information to counter-terrorist staff. Such opensource information provides a context within which secret intelligence data can be placed. Among the customers of BBC Monitoring are defence intelligence staff, the assessment staff, intelligence agencies and the National Criminal Intelligence Service.
  The ISC found that BBC Monitoring provides a valuable service both to Government Departments and to the agencies, and that it adapted well to the need to report on the growing number of terrorist-related media sources. However, the funding from its stakeholders declined over the last decade, most steeply in 1996, and has been frozen since 2002, despite the extra demands upon it.
  The ISC also learned that the Foreign and Commonwealth Office was reviewing its allocation to BBC Monitoring with a view to making significant cuts. The Committee made representations to the Foreign Secretary and the Prime Minister and I was fortunate to secure an Adjournment debate on the matter earlier this year. Subsequent to our interventions, the Government have agreed to maintain funding for BBC Monitoring at its current level until the end of 2005–06, during which time a strategic review is to be carried out. The ISC welcomes the decision not to cut the funding provided to BBC Monitoring, as we believe that it would be a great mistake to reduce the money available to that valuable resource.
  Alan Howarth: Does my right hon. Friend share some of my concern in reading the Government's response on that point? The Government say that they anticipate that
  "the review will ensure that the overall level of funding should reflect the value of BBC Monitoring to each stakeholder."
  Is it not important that the overall level of funding should reflect the value of BBC Monitoring to the Government as a whole? Is it acceptable for individual
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  stakeholders to make their own judgments about the extent to which they should opt in or out of that commitment?
  Dr. Strang: I am grateful to my right hon. Friend, who expresses the point precisely. We must be alert to that. He is absolutely right that we should view the matter across the board. We can appreciate that there will be arguments among the different bodies that fund the organisation and that Departments are under pressure over spending. However, isolated assessments of the contribution that BBC Monitoring makes may understate what is required. My right hon. Friend will know about the significant co-operation between BBC Monitoring and the Foreign Broadcast Information Service of the US. We get a good deal from that. If we are serious about the need to strengthen our guard against international terrorism—I think that we all are in this House—there is no case for cutting the resources of BBC Monitoring.
  In conclusion, the whole House recognises that the threat to the British people from international terrorism is much higher than it has been in recent years. More resources are being devoted to the intelligence necessary to increase the protection of our people, and I congratulate the Government on that. However, there are certainly no grounds for complacency. We need to be ever more vigilant and do all that we can to reduce the risks.
  3.44 pm
  Mr. James Arbuthnot: Apart from the issue of counter-terrorism, the main work of the Intelligence and Security Committee during the year—and the main intelligence interest for the country—has been on the war in Iraq. We did a separate report on that, which came out in September last year. Inevitably, this year's annual report contains an element of mopping up. Nevertheless, the Committee's work has been quite hard and very varied.
  I want to pay tribute to the Committee's Chairman and Clerk, and to its staff and investigator who have worked extremely hard to help us all. It is a great pleasure to follow the right hon. Member for Edinburgh, East and Musselburgh (Dr. Strang). I do not think that it breaks the official secrets legislation to say that he brings a certain laconic wisdom to the Committee, and to everything that he does. Above all, I pay tribute to the intelligence and security services. As many have said, they do an enormous amount to protect this country and its interests.
  I shall be very brief, as there is no need to repeat what the report says. I shall deal with only three points. The first is the funding of GCHQ, to which my right hon. Friend the Member for Haltemprice and Howden (David Davis), the shadow Home Secretary, referred.
  Paragraph 52 of the report deals with the huge cost increases examined by the Committee's report for 1999–2000. We note that resource accounting for GCHQ has always been a bit of a problem but, for the first year in three years, GCHQ has produced unqualified accounts. Most private companies would consider that to be of little moment, but I think that we

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  should welcome it with open arms. It is very good news, but it is difficult to get the bean counting right and the Committee will continue to keep an eye on the matter.
  The report deals with the eventual vacation of the Oakley site. We express concern that resourcing had not been provided for that. In their response, the Government say that the site will be vacated by 2012, at the latest. There is always a dilemma in such matters: do we have two sites, and therefore an element of planned redundancy, or do we have one site in the interest of efficiency and cost-saving, but lose the element of redundancy that is sometimes needed? The pendulum swings from decade to decade on that dilemma.
  My second point has to do with detainees. I refer the House to page 23 of the report, in which the Prime Minister's rather disturbing although deadpan letter is reported. It states that interviews have
  "with the following exception … been conducted in a manner consistent with the principles laid down in the Geneva Convention."
  The report does not actually say that we are dealing with Guantanamo bay. However, having raised that subject, I think that it is right to draw attention to the fact that the US still does not accept that the Geneva convention applies to the people held there. The effect of that is that they are not entitled to legal representation. The failure to apply the Geneva conventions to those people and to give them access to lawyers is precisely what has given rise to the sort of behaviour that the report describes.
  I welcome the Supreme Court's recent decision that the Guantanomo detainees should be subject to the rule of law. Frankly, that should come as little surprise to anyone with an interest in justice or fairness, but the failure of the US willingly to give those detainees access to lawyers and to the rule of law has fuelled deep resentment across the world about the US—and therefore about Britain's behaviour in allying itself with the US. That has fuelled resentment in the United Kingdom against the US. It is a divisive approach, and it should stop. The letter from the Prime Minister states:
  "The detainee showed no signs of distress and made no complaint of being hooded or otherwise during the interview."
  Well, he was shackled. It is not clear from the letter how the detainee would make signs of distress apparent—
  Mr. Mates: Perhaps he rattled his chains.
  Mr. Arbuthnot: Indeed. As we say in the report, we intend to take evidence on all those matters and there is much for us to consider.
  My final point concerns counter-espionage and the reduction in the proportion of the espionage budget spent on it. That is a particular worry in relation to the espionage against economic targets in this country. Our companies' secrets—our intellectual property, which, in a highly developed country such as ours, is the keystone of our prosperity—are being stolen and we are not doing enough to protect them. When we went to the US, we discovered that it treated intellectual property and commercial secrets as part of the critical national infrastructure. As the right hon. Member for Newport, East (Alan Howarth) said, our intellectual property
  1070
  should be regarded as part of our national infrastructure, and I welcome the interest that the Chief Secretary to the Treasury showed in that point when he appeared before us. If we connect the vulnerability of our computer systems to our economic vulnerability, it is plain that we have much to do to catch up.
  3.52 pm
  Mr. Andrew Tyrie: I pay tribute to the work of all those who seek to protect us and whose work largely goes unsung. The brevity of that remark should not be interpreted as an indication of the strength of my feelings, and I echo the sentiments that have been expressed time and again this afternoon.
  The Intelligence and Security Committee might have been an interesting parliamentary backwater, but the war has tested it to the full. That is because, first, the country was taken to war almost entirely on the basis of intelligence information provided by several institutions that the Committee has the responsibility of overseeing. The second reason the Committee is now centre stage is that the war was undoubtedly the most divisive event in British politics since Suez. I was, and remain, deeply sceptical about the need for military action—certainly at that time. Many people sense that we became involved in the invasion without sufficient clarity about our objectives and real purpose. It is vital that we now do our job to express the electorate's questions and articulate their concerns.
  The third reason why the Committee is now centre stage is that it has become increasingly clear that the Government have no intention of co-operating fully with the efforts of many parliamentarians in finding out what really happened in the run-up to the Iraq war. I hope that those on the Treasury Bench will not challenge that remark. The Committee described the Government's response to its report on weapons of mass destruction as "extremely unsatisfactory". The Foreign Affairs Committee has documented the extensive obstructionism that it has encountered in several reports. I shall not go into those in detail unless challenged. As a result, the minimum level of required democratic scrutiny after a war has not yet been achieved by this Parliament.
  We still do not have adequate information to answer some basic questions which I shall list. Did Saddam Hussein really present a threat when we went to war? Was the Prime Minister being clearly told about that threat at the time? Was the threat imminent enough to require action? We have had some information that helps us to provide answers to those questions, but not enough.
  Much less information is in the public domain about several other crucial questions on assessing the Government's action. What assessment did the Government make before the war about the consequences of the invasion of Iraq for the middle east and about the likely effect of invasion on moderate Muslim opinion in the middle east and elsewhere? What assessment was made before the war of the task of post-war reconstruction in Iraq? What assessment was made of the prospect of holding the country together and moving it to democracy? What assessment was made of the effect of invasion on other rogue states and their likely behaviour? What conclusions did Ministers, especially the Prime

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  Minister, draw from those assessments? Above all, what assessment was made before the war of its likely impact on the western alliance as a whole, and on the strength of the collegiality of interest in the west that is the bedrock of our security?
  The plain fact is that for the most part Parliament has been thwarted in its efforts to find answers to those and similar questions. Much the same obstructionism is evident in Washington. The Executives of the world's two greatest democracies have exhibited an unremitting determination to deny parliamentary or congressional access to information about the decision to go to war. They have been equally careful to ensure that the remit of the independent inquiries they were forced to set up was as narrow as possible. The damage arising from that has been colossal.
  First, the Executive's lack of candour has accelerated the decline of public confidence in politicians. It has extended the electorate's cynicism about domestic politics to the foreign arena. In fact, the Prime Minister's determination to thwart a full examination of the issues has damaged his Government's credibility far more than anything that was likely to have been revealed had there been more candour from the start.
  Secondly, our failure to get to the truth has eroded the public's respect for democratic institutions, and especially for Parliament, which is obviously of concern to us. It should be our role to force candour, but we have not, so far, succeeded.
  Mr. Barron: The hon. Gentleman will know that in our report on Iraq and WMD we did not set out to judge whether the decision to invade Iraq was correct. The purpose of the report was to examine whether the available intelligence that informed the decision to invade Iraq was adequate and properly assessed and whether it was accurately reflected in Government publications. We were not denied access to any information in drawing up the report, and the hon. Gentleman may be misleading the House if he is suggesting that we were denied information on some of the points that he mentioned.
  Mr. Tyrie: When the Committee decides to try to make the kind of assessment that I am suggesting and decides to make public that assessment, the public will feel much more reassured about the extent to which information has been made available to the Committee. Can the right hon. Gentleman tell the House whether the information required to answer the second series of questions to which I alluded was also made available to the Committee?
  Mr. Barron: Whether to invade Iraq was an issue for policymakers. It was also an issue for the House, in a debate and in a vote. For the Committee, the important thing was whether policymakers—one of whom has just entered the Chamber—were given the right information prior to those decisions being taken.
  Mr. Tyrie: I do not want to detract from the work of the Committee in any way, as it has done an outstanding job, as I was about to point out—I notice that the right hon. Gentleman is now smiling and seems much happier than he was a moment ago. What Parliament needs to
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  do is to get to grips with those fundamental policy issues; we need the evidence in our hands to enable us to form judgments. We do not have that evidence. Perhaps the right hon. Gentleman has seen all the evidence. Perhaps he has seen the Foreign Office assessment of the extent to which the war might have destabilised the middle east. Perhaps he has seen an assessment of the likelihood or otherwise of creating a democracy in Iraq. I do not know. Perhaps he can tell me in general terms whether he has seen such assessments.
  Mr. Barron: If the hon. Gentleman reads our report on Iraq, he will see that we saw some assessments of the likely effect. Indeed, one of them received a lot of public comment: people asked what would happen if Iraq were invaded and WMD got into people's hands for use by terrorists throughout the world. So we saw some of the evidence, but clearly not all of it. I do not know whether it exists in the form that he suggests.
  Mr. Tyrie: The right hon. Gentleman has made my point: he says that he has seen some but not all of the evidence.
  Mr. Barron: If it is not there, I cannot see it.
  Mr. Tyrie: The right hon. Gentleman cannot even be sure whether the evidence is there. I should like to move on. I have given him ample opportunity to comment on my remarks.
  The third reason why we should be so concerned about what has gone on is that our failure to get to the truth, and the public's perception that we have failed to do so, have made us less secure as a country. That may be true of America, too. Both President Bush and the Prime Minister asked us to take the Iraqi expedition on trust. Next time there is a security threat, when we have to rely on their judgment, that trust will be much less willingly bestowed. Just as bad, potential opponents in other parts of the world will be able to see that weakness and exploit it. That is why the shortcomings of parliamentary scrutiny have not just weakened our democracy, but are making this country a less safe place.
  The Guantanamo bay and Abu Ghraib scandals, to which my right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot) referred, illustrate how much better off we would be if we had more effective parliamentary scrutiny. I am pleased that the Committee will investigate that and take evidence.
  For over a year, I have pressed the Government to tell me what steps the UK has been taking to discover whether people were being tortured at Guantanamo bay. What triggered my concern was information that an acquaintance of mine gave to me a long time ago. He found out that people were being deported from Guantanamo to Egypt to be tortured more comprehensively there. He asked me to raise that issue, which I did. I was shocked by that information, and I have been trying ever since to bring pressure to bear on the British Government to raise it with the Americans. I have had a long exchange of correspondence with the Foreign Secretary about that.
  Of course, the efforts of one Opposition MP are only a pinprick. None the less, it is possible that if a parliamentary Select Committee or the Intelligence and

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  Security Committee had taken up those issues earlier and pursued them remorselessly, some of the abuses might never have taken place and much less damage would have been done.
  Those abuses have undermined the very values that the west is seeking to export. They have done incalculable damage. Our apparent double standards will resonate for years.
  This is not just a moral issue for the UK; it is, of course, a legal one, as my right hon. Friend the Member for North-East Hampshire said a moment ago. We have a duty of care under international law to uphold the welfare of all prisoners who we may have handed over to the Americans. I am told that we have handed over 341 prisoners to the Americans in Iraq, some of whom may be in Abu Ghraib. I should be grateful to the Foreign Secretary if he said whether that was the case. I have tabled several questions to the Secretary of State for Defence today to ask him about that very question. What happened to those 300 or so detainees and what steps have the Government taken to monitor their welfare? I will write to the Foreign Secretary about that again.
  The experience of the past 18 months shows that our democracy needs much better scrutiny after wars than has taken place on this occasion. We need to try to restore the electorate's trust in politicians and Parliament. That is a big challenge, and I shall mention only a few things that could be done, some of which are alluded to in the report. First, it would help if the Prime Minister would trust Parliament a little more. He should realise by now that his obstructionism over scrutiny on Iraq has cost more in lost credibility than any embarrassment that he has been spared. The Prime Minister and the Foreign Secretary may have thought they had done well in refusing many of the Foreign Affairs Committee's requests for papers and people and by relying instead on Lord Hutton after David Kelly's death. In fact, far from letting the Government off the hook, it has only reinforced public cynicism.
  The same is true of the Government's response to David Kay's evidence to a Washington committee—the creation of the Butler investigation. It may well turn out that the Government would have done much better to use the Intelligence and Security Committee to do that job of investigation rather than hoping that Lord Butler's narrow terms of reference would keep him away from the most sensitive spots. The Prime Minister should have shown much more candour from the start.
  It is our job in Parliament to do more. We need to show that we can be trusted with confidential material. That is where the Committee has done so well in demonstrating that parliamentarians could be trusted over the past decade. We can also learn something from American experience. Much nonsense is talked about how much more effective congressional committees are than our own. The truth is that they are often stymied by even more partisanship than many of ours, and more obstructionism by the Executive. None the less, they have one advantage: they really can see whom they want to see and, if they are persistent enough, they can get hold of a lot more documentation. Things are often
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  negotiated on the basis of protocols, with the Executive setting out the rules of engagement for the use of information and access to it. Perhaps we should consider doing the same under the Standing Orders of Parliament.
  On an issue as fundamental as going to war, there is also a case for much closer collaboration between the Foreign Affairs Committee and the Intelligence and Security Committee, possibly also involving the Liaison Committee. Today is pretty much the 10th anniversary of the ISC. I strongly welcome its creation and I think it has done a great job. My right hon. Friend the Member for East Hampshire (Mr. Mates) said that there must be trust in the intelligence world. That trust has taken a severe knock over the past 18 months. We have a very big repair job to do.
  4.7 pm
  Mr. Elfyn Llwyd: I add my congratulations to the Committee and its members for their endeavours and the hard work that they have evidently done over the past few months. Undoubtedly, this is an important debate, despite its being held on a Thursday. At paragraph 145, the report refers to its own report of September 2003, "Iraqi Weapons of Mass Destruction—Intelligence and Assessments". The Committee then believed that it had seen all the Joint Intelligence Committee assessments relating to Iraq from August 1990 to September 2002. The Committee now has to say, unfortunately, that that statement proved erroneous: in May this year a further eight JIC papers were handed over relating to WMD in Iraq and United Nations inspections. A subsequent check revealed that those papers were not given to the Committee at the time, which, understandably, caused it "considerable concern".
  The report states:
  "We have read the recently provided papers. We are satisfied that knowledge of them would not have led us to change the conclusions, including those that were critical, in our Report. However, we might well have included further material from these papers … We have received an apology and we accept that there was no deliberate attempt to withhold information from us. However, we are concerned that some internal systems and record-keeping within the Cabinet Office Intelligence and Security Secretariat are defective and we will return to this issue."
  The Government response to the Iraqi weapons report was delayed until February 2004. The Committee noted that it was not satisfied with the response, emphasising that there were only four key conclusions, while either rejecting or failing to address fully many of the Committee's conclusions and recommendations. It said:
  "We regard this as extremely unsatisfactory and we recommend that the government explicitly address each of our recommendations and conclusions in future responses. Our dissatisfaction was increased by the government's decision to allow such little parliamentary debate on two such significant reports."
  The report highlighted the limitations of intelligence, saying:
  "Failing to highlight the uncertainties, and gaps associated with the limited amounts of intelligence collected, could mean too firm an assessment was made, which in turn would influence policy-makers disproportionately."
  I am quoting the report extensively because I believe that the Committee has taken a robust approach and is doing a good job. I hope that everything necessary to

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  enable the Committee to draw the proper conclusions is made available to it the first time of asking, and that its members do not have to burrow for information, as Back Benchers often have to. That is a matter of concern to the House generally. Weapons of mass destruction are not a side issue, but a core issue at the very heart of the Government's decision to invade Iraq. That there were shortcomings in the provision of information on that, of all subjects, is a cause of great concern.
  I wholeheartedly endorse the comments of the right hon. Member for East Hampshire (Mr. Mates) about the detainees at Guantanamo bay. The Prime Minister responded on the important matter of the treatment of prisoners, and the Committee, to its credit, has referred to what he said.
  "The Prime Minister has informed us that, with one exception, all interviews conducted or observed by UK intelligence personnel have been conducted in a manner consistent with the principles laid down in the Geneva Convention".
  He added that
  "some detainees questioned by them have complained about their treatment while in detention",
  but
  "the UK intelligence personnel never witnessed any evidence of detainee abuse of the type that the US authorities have acknowledged has occurred".
  Unfortunately, what the Prime Minister said does not square with what the Minister of State at the Ministry of Defence has been saying in response to detailed questioning from my hon. Friend the Member for East Carmarthen and Dinefwr (Adam Price) and others. My hon. Friend has consistently raised the issue in debate, questions, interventions and correspondence. In a written question to the Minister of State, my hon. Friend asked
  "when in September 2003 the practice of hooding detainees in Iraq was stopped."
  The answer was:
  "An amended Standard Operating Instruction was issued on 30 September 2003 detailing that the use of hoods on apprehended persons was to cease. This had been preceded by a verbal instruction several days earlier."—[Official Report, 30 June 2004; Vol. 423, c. 358W.]
  Paragraph 23 of the report details the whole issue, and I am mindful of the fact that the Committee states at paragraph 79 that it will take evidence on it. I welcome the fact that there will be further inquiry.
  On 28 June, in his response to a question from the hon. Member for Hull, North (Mr. McNamara), the Minister of State stated:
  "We are not aware of any incidents in which United Kingdom interrogators are alleged to have used hooding as an interrogation technique."—[Official Report, 28 June 2004; Vol. 423. c. 142W.]
  That is far from satisfactory, bearing in mind the fact that at the same time the Minister was telling my hon. Friend the Member for East Carmarthen and Dinefwr that the technique was being banned. The problem is compounded by the fact that on 10 September 2003, Combined Joint Task Force 7 produced a document entitled "Interrogation and Counter-Resistance Policy"; the UK input to that document was from the deputy commander of the UK military forces. The document is the authority for the use of hooding, sleep deprivation, stress techniques and white noise; it came to light during recent US congressional hearings.
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  I do not expect answers today, but I want to put on the record several questions. Was the Intelligence and Security Committee given a copy of the document, and if not, why not? Was the United Kingdom's role in the preparation of the document limited to the military commander, or was further authority given higher up the chain or in Cabinet? Who authorised the commander to sign up to the document? It is difficult to believe that the Government did not know of the document—one condoning a practice banned ever since a Northern Ireland case against the United Kingdom more than 15 years ago. It was inconsistent to condone the use of the technique until September 2003 while, at the same time, the Minister of State denied that it was used and, to contradict himself, said that it was banned from 30 September, the very month in which the UK military signed up to the document.
  I am raising those serious issues because the Committee will take further evidence, and will undoubtedly scrutinise the position carefully. Was the reference to information from the Secret Intelligence Service at paragraph c on page 23 a reference to the coalition document? If not, why not? I suspect that reference was not made to the document and, with hindsight, I can understand why, but I hope that the Committee will continue its detailed and earnest investigation into the issue to unravel the truth of what happened.
  More generally, with reference to page 23, what redress, if any, is there for detainees who suffered assaults and battery as a result of the illegal interrogation techniques? Is a criminal investigation under way? On the issue of Abu Ghraib, the Prime Minister has clearly stated on several occasions that he did not know of the inhuman practices at the camp until this year. I do not take issue with that, but apparently the United States Government knew about a year before. We have been told that the Prime Minister and the Government did not know anything of the Red Cross report until this year, but if that is the case—I will accept that it is to avoid further argument—what steps are being taken to question the officials who either failed or declined to pass that information on to the Government? The stock answer is that information is received and passed on day in, day out. However, on a matter as important as the conduct at Abu Ghraib, someone should have passed the information on, so the stock answer will not wash.
  In conclusion, I hope that the Committee will continue its important deliberations, and can do so without being hindered by the withholding, whether wilful or not, of important information germane to its inquiries.
  4.17 pm
  Dr. Julian Lewis: Recently, a senior figure in the anti-terrorist world addressed a conference on security issues, and pointed out that the United Kingdom and other target countries face a terrorist threat that aims to cause destruction, not in single streets, as the IRA did, but in entire neighbourhoods and, if possible, entire cities. He predicted that the threat would persist for the next 10, 15 or even 20 years, but on a note of grim optimism he

  1077
  predicted that life would go on and a new sort of normality would be established after hard, remorseless effort by society as a whole and anti-terrorist services in particular. I am sure that his prediction is right, and history bears it out. In the period between the first and second world wars, it was widely believed that society could not stand up to the pressure of aerial bombardment. In fact, society stood up to it throughout the blitz in the United Kingdom and, more surprisingly, throughout the much heavier attacks in the latter days of the Third Reich, when German cities were utterly devastated.
  There is a tendency, because we live in peaceful times, to underestimate what society can cope with in war. No free society can have absolute security against a small group of determined saboteurs—that was one of the Home Secretary's messages in his thoughtful opening remarks. To those remarks one could add that no repressive society or dictatorship could have absolute security against such a threat, either. Again, one casts one's mind back to the occupied countries of Europe and to the French Resistance in particular who, despite enormous totalitarian forces of repression ranged against them, were still able to mount effective sabotage—or terrorist attacks, as the German occupiers would have called them.
  What one can do is try to focus on the known possessors of weapons systems which, if they got into the hands of would-be saboteurs or terrorists, would enable them to wage the sort of campaign that that senior anti-terrorist figure was predicting they would try to wage, to devastate whole neighbourhoods or even whole cities.
  In that connection, the most interesting paragraph of the report for me was paragraph 91 in the section dealing with Libya. It states:
  The detailed intelligence on Libya … collected by the UK and the USA from all sources over a significant period of time, enabled the UK and USA to demonstrate to the Libyan authorities that they knew about their WMD programmes."
  It then adds the curious comment:
  "Consequently, when the inspectors went to Libya the Libyan authorities, while they tried, were not able to hide their programmes and full disclosure was eventually achieved. This was a major intelligence success."
  Yes, it certainly was, but that was the first indication that I had had that there had been an attempt by the Libyan authorities to go on with a policy of concealment, even after they had come forward and said, "We want to get rid of our weapons of mass destruction. Come in and help us do it." I should be very interested to know more of the story behind that interesting comment, and I congratulate the Committee on having teased out that titbit of information.
  It must be said that the terrorist movements with which we are concerned are extremely patient. I think I am right in saying that there was a period of about eight years between the two attacks on the World Trade Centre, the second ultimately being the successful one. It is all too easy for us to go into one of those periods between attacks and begin to become a bit complacent. Indeed, that senior anti-terrorist figure said that his principal concerns were complacency in society, which
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  he described as a very great problem, and the importance of creating greater public understanding of the wide range of dangers and the long-term nature of the overall threat.
  What the Libyan business illustrated in the wider context is that something sinister was going on under the surface. A report on BBC News Online on 23 May retails how North Korea had been involved in sending uranium to Libya. It states that the International Atomic Energy Agency
  "had found evidence that Pyongyang provided Libya with nearly two tons of uranium in early 2001."
  A spokesman for the IAEA, Mark Gwozdecky, told BBC News Online that the investigation
  "'spans three continents and involves entities or individuals in at least eight countries."'
  That was all linked to the plot by A. Q. Khan, the father of the Pakistani bomb, to sell nuclear secrets to Libya, Iran and North Korea.
  Another report on the BBC on 28 May is headed "UN continues Libya nuclear probe" and states that the IAEA has said that
  "questions remain about Libya's nuclear weapons programme, despite the promise last December to scrap it."
  A report from Associated Press back in February commented on a firm in a place called Shah Alam in Malaysia. The firm, ironically enough, is called SCOPE—nothing to do with the new system that was described earlier in the debate for intelligence collation in this country. It is a precision engineering firm that was part of the network and was involved in machining the parts of the centrifuges that the rogue regimes, in particular Libya, planned to use to construct their bombs. Worryingly, at the end of the report the company's spokesman said that if it received an order similar to the Libya shipment, it would have no reason to turn it down. The spokesman commented:
  "Milling and cutting is the same today as it was before".
  It is not good enough for the Government, or even for the Committee, periodically to state that successes have been achieved, that terrorists have been disrupted and that we have been saved by the good efforts of the security and intelligence services. Something more than that is required. If we are to obtain the greater public awareness, concern and realisation of the long-term threat, which senior counter-terrorist figures feel to be necessary, we must have authoritative accounts of what has been going on as soon as the information can be revealed. We should not have to depend upon putting together a jigsaw from individual, isolated press reports, such as I have been quoting. We should have a system whereby the Government publish from time to time, perhaps in the form of an annual report, an account of what can be revealed about those operations that have been frustrated or exposed.
  In the brief period remaining, I want to address some of the remarks about Iraq. When I congratulated my hon. Friend the Member for Chichester (Mr. Tyrie) on his thoughtful speech, he said, "I am sure that you do not agree with half of it." I said, "You are right, but there is one thing that I do agree with in particular, and it is the most important thing—the British people must always be told the truth." If a democratic Government do not tell the British people the truth, even in a good

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  cause or because they think that they have a good reason not to do so, they will destroy the trust on which their support depends.
  I have said this before and I will say it again: I wish that the Government had not fought shy of telling the British people the real reason why war against Saddam was essential. It was not because Saddam was about to attack anybody; it was not because he had attacked anybody; and it was not even because of his humanitarian record of atrocities. Those are the traditional justifications under international law, as it currently stands, for intervention.
  War against Saddam was essential because the events of 9/11 showed that the world now contains groups that would unhesitatingly use WMDs, if they could get them, and thus cannot be deterred. This has lowered the threshold for intervention against rogue regimes that have a track record of trying to obtain WMDs. That probably does not conform with international law, as it was explained to the Government at the time that they took the decision, and they therefore felt that they had to massage the facts.
  International law is not static; it evolves, and Governments must help it to evolve. It would have been better if our Government had helped international law to evolve by saying clearly to the British people that we did not know what Saddam did or did not have, but after 9/11 we could no longer take the chance.
  4.29 pm
  Patrick Mercer: I apologise to the House in advance for perhaps having to leave a little early.
  It is a pleasure to follow my hon. Friend the Member for New Forest, East (Dr. Lewis), many of whose points I will endeavour to discuss, although I do not expect to do so as lucidly as he did.
  About six weeks ago, 1,500 lb of fertiliser was found in west London. I gather from open sources that it would have been most likely to be turned into homemade explosive and used in a number of car bombs, probably around west London, or possibly in north London. The discovery of that potential explosive represents a very considerable success for the security agencies that picked up those of our enemies who were involved. On the back of the discovery there came a series of arrests, mainly of Pakistanis, some domiciled in this country and others from abroad.
  About two weeks ago, I had the enormous privilege of being briefed by the high commissioner and his staff in Islamabad. They hinted that the operation was much more complex than anything that the open sources in this country had been able to tell us. They told me, or rather hinted, that there had been a very successful operation by British agencies in combination with local agencies in Pakistan. They also said that a much worse event, the details of which I was not told, had been planned, which, if it had gone ahead, would have devastated large parts of this country. I can only pay tribute to the agencies that are prepared to carry out such operations with such courage. The high commissioner told me, "If you are talking about prevention versus cure, homeland security starts here in Islamabad, in Kabul or wherever—that is where the real operations are carried out."
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  I want to try to tease out one or two points about the balance between prevention and cure. If an operation can be prevented, so much the better, but the fact remains that the head of the Security Service and the commissioner of the Metropolitan police tell us that an attack on this country is all but inevitable. To use a wartime phrase, the bomber will always get through. Then, it referred to the Luftwaffe, but the analogy is not lost today. I will not use the old saw about always being lucky, but there is no doubt that we have been extraordinarily lucky so far. It needs only one terrorist to get through for the whole complexion of our security structure to be changed.
  The Committee's report says that the Security Service's website includes information about
  "the threat from terrorism and details of protective security measures available".
  Like my hon. Friend the Member for New Forest, East, I wonder why the details on that website are not made far more widely available to the public. Why are we not told as much as we possibly can be told? Why are we not told, for instance, what is the national state of alert?
  The counter-argument, of course, is that to do so would scare the pants off people. However, it has been done in the past. MI5 and the Metropolitan police carried out a very successful public information campaign against the Irish Republican Army in the 1990s. That gave the public detailed indications of what they were to look for and how they could help the security agencies and services to thwart terrorism. Why are the offices of the national security advice centre not more accessible to the public? Why do not the Government choose to follow the example that is being set by the Metropolitan police and British Transport police in relation to the current poster campaign? Why do not the Government choose to enrol every responsible member of the public as another pair of eyes and ears for the wider police family?
  The report states:
  "We recommend that the threat to the United Kingdom's critical national infrastructure and vulnerability to electronic and other attacks should be examined by the JIC and considered by Ministers."
  If we continue to be vulnerable in that way, should we not consider streamlining the intelligence that we have to handle? Doubtless, the Butler report will make many good points about that.
  How much time do our security agencies spend dealing with people who should not be here? Should we have a proper immigration policy, which would save so much of the time of those important men and women? The United States deals with that through a Department of Homeland Security. It has pulled together its Government agencies. In this country, the Home Office, the Cabinet Office, the Department for Transport, the Northern Ireland Office, the Ministry of Defence and a host of others might deal with the sort of problem that I have outlined. They would have to refer to the head of the Security Service, the head of the Secret Intelligence

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  Service, the head of GCHQ, the head of Defence Intelligence Staff and the head of assessment staff. We are told that a security and intelligence co-ordinator is now pulling all that together, backed up by only a small civil contingency secretariat to deal with curing part of the problem.
  Where does the responsibility of one agency start and another one stop? Where does one Department's responsibilities begin and another's end? Is it any wonder that intelligence has been, to put it charitably, over-analysed, and that the wrong conclusions have been drawn? We need one central figure and one central Ministry to deal with the matter. The problem will not get easier and the money that we need to spend on it will increase every year.
  Let me make some small, sub-tactical points. It is interesting that an officer who is posted from one part of the intelligence community to deal with Islamic fundamentalism receives no training in the nuances of the Muslim faith and creed, the problems that surround Islamic fundamentalism, the history behind it and the outlook. He or she is expected to pick up the whole discipline on the job. That is most odd when the humblest private soldier receives extensive training in dealing with the problems that he faces before deploying to, for example, Northern Ireland, Iraq or Bosnia.
  The report provides some detail about the intelligence cycle, which is interesting and reminds me of parts of my basic training years ago. We are told that the collection plan is set centrally for the agencies, but the report does not make clear where the audit trail for the collection plan lies. Each agency is responsible for auditing its success. That cannot be objective; it must be subjective. Surely there is a better system for assessing success v. failure.
  In the report, C mentions collection gaps. He says that the SIS is now "behind the curve". We have heard today that funding for MI5 will be increased considerably. What about the other agencies? The Chancellor said yesterday that it was the Government's "first duty" to defend the people of Britain. He continued:
  "I will make available the resources needed to strengthen security at home and take action to counter the terrorist threat at home and abroad … Those who wish to cut in real terms the budget even for security will need to answer the British people … We will spend what it takes on security to safeguard the British people."
  Those are fine words, but what about the civil defence grant to our local authorities? What about the anomalies in the equipment that fire, police and ambulance services hold? What about the fact that our firemen who back up the immediate response units have received no training in chemical, biological, radiological and nuclear attacks? What about the fact that the civil contingencies reaction force—the only addition to manpower to deal with the curing rather than the prevention part of the problem—have been seen manifestly to fail in the face of the overstretch of the regular forces? And what about the fact that our armed forces are to be cut yet again? Fine words indeed.
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  I shall end by quoting from paragraph 8 of the report, which states:
  "Terrorism is currently the biggest threat to the national security of the UK and its interests and the Agencies are operating in an extremely difficult and hostile environment. The Prime Minister stated in a speech on 5 March 2004:
  'the [security] threat we face is not conventional. It is a challenge of a different nature from anything the world has faced before.'"
  We are blessed with outstanding intelligence agencies, and this report has been enormously helpful, but I do not see a Government who are ready to rise to this challenge, or who are willing to face
  "a challenge of a different nature from anything the world has faced before."
  I see a Government who are mired in complacency.
  4.40 pm
  Joyce Quin: It is a pleasure to follow the two previous speakers, the hon. Members for New Forest, East (Dr. Lewis) and for Newark (Patrick Mercer) because, although they are not members of the Intelligence and Security Committee, they have always taken a keen interest in its work and that of the intelligence agencies.
  I had not intended to speak in this debate, partly because I am a member of the Intelligence and Security Committee and it is good to hear contributions from other Members. Also, given the time limit on Back-Bench speeches, I was conscious of the fact that there might have been too great a demand by other hon. Members to speak. However, I note that that has not been the case, so I shall take this opportunity to add a few comments to those that have been so well made by my fellow members of the Committee. I want to endorse strongly the words spoken by my right hon. Friend the Member for Rother Valley (Mr. Barron) when he introduced the report on behalf of the Committee, and to pay tribute to the work of our Chairman, my right hon. Friend the Member for Dewsbury (Ann Taylor).
  The report rightly highlights a number of areas. It flags up circumstances in which the agencies have experienced success, and it is good that several hon. Members, including the hon. Member for New Forest, East, referred to what has happened in Libya, which the report flags up dramatically as a great success. It was a great success for the intelligence agencies, and for the Government and the Foreign Office, following the negotiations in which they took part, and I am very pleased with the way in which they turned out. As far as the intelligence agencies are concerned, that is a rare of example of our being able to give public credit, and for that reason, it is important to highlight it in this debate.
  The Committee believes that the agencies need to be properly resourced, and we welcome the increase in funds that has been made available to them in recent years. I want to pick up on a point made by the hon. Member for Winchester (Mr. Oaten), which was that it is important for the agencies to use the best of this country's talents by recruiting as widely as possible. Indeed, several of those issues are highlighted in our report. We refer to the need to bring in talented people from a variety of backgrounds, and we encourage the agencies to consider—without compromising security—issues such as the nationality rules, which have been in

  1083
  operation for a long time. Those rules have a certain rationale but, in a multicultural, multi-ethnic Britain, we would not want the agencies to lose out on being able to recruit people who perhaps do not rigorously fulfil the traditional nationality requirements.
  In that sense, we were all pleased when GCHQ, for example, showed some flexibility in its recruitment so as to attract people who could play a useful role in that organisation, even if they did not comply with all the security requirements to the highest level. It will be useful for the other agencies to look at that kind of flexibility in recruitment.
  One area that has not been touched on extensively in this debate is that of international co-operation and the work that our intelligence agencies carry out in cooperation with agencies in various different countries, and I hope that my right hon. Friend the Foreign Secretary will be able to address that point when he responds to this debate.
  It is very clear from our work, and it is well known in the House, that the allies with whom we work closely in intelligence are ones with which we have had very close co-operation for a very long time: the United States, Canada, Australia, New Zealand and so forth. Without doubt, those links are tremendously important in the modern world. But it is also right that the agencies, and the Government, who are ultimately responsible for the work of those agencies, consider extending our range of allies as widely as possible, while not compromising sources or security.
  Certainly, in the European Union, there is a good deal of co-operation, particularly with those countries that have long-established intelligence agencies, with which we have worked over a number of years. Recently, within the European Union, there has been increased interest in intelligence, because of some of the tragic events that have occurred: most recently, in Madrid. I welcome the appointment of the co-ordinator, Gijs de Vries, whom I know from my days in the European Parliament as an energetic and capable person.
  While EU collaboration is very useful, I would not want to see it adopt an unwieldy, bureaucratic form or in any way disrupt the existing partnerships and arrangements. At such a difficult time for security in the world, we do not want disruption; we want the existing networks to work even better and even more smoothly. We should take that very much to heart.
  Alan Howarth: is my right hon. Friend content that the provisions in the proposed European Union constitution covering these matters will be satisfactory to us in terms of our national security?
  Joyce Quin: Indeed, I think that our Government have very satisfactorily negotiated the European constitution and I find quite puzzling some of the criticisms levelled against them in that respect.
  Within the new European Union, we have some important allies. A number of countries that have recently joined the European Union have been particularly helpful in intelligence matters, and have worked closely with this country, even before they became part of the European Union. For that reason, I hope that my right hon. Friend the Foreign Secretary will be able to assure us that relations with those new
  1084
  countries, which have recently joined the European Union, will be beneficial to intelligence as well as to other matters.
  In the situation in which we find ourselves, however, we need to consider and build up alliances sometimes even in unlikely quarters. I hope that the Government will also be able to reassure us on that point. We all remember how much responsibility was put on the Indonesian services at the time of the Bali bombings. They are dealing with a very difficult situation, given the scattered territory of Indonesia, and the existence of some extremist groups there, some of which are prepared to adopt fanatical means and terrorist ways of operating to try to achieve their goals. It makes sense for us to try to build up co-operation with a country such as Indonesia, perhaps using some of our expertise to help to train and develop the intelligence services in such a country. Obviously, Australia is geographically much closer to Indonesia, and has very good links with it. It makes sense, however, given the challenges that that country faces, for a number of other countries, including the UK, to seek to be as helpful as possible.
  Clearly, if international co-ordination and cooperation is important, so is having the best coordination within our domestic system. I agree with what a number of my colleagues have said in terms of the very positive establishment of the joint terrorism analysis centre, the work that it does, and the way in which our agencies have been particularly successful in working together and sharing information to the best possible effect. I also agree with those who said that it was important for Ministers to meet occasionally to discuss these issues on a cross-departmental basis. I became convinced of that during events in Afghanistan, when I observed links between Foreign Office concern about terrorism and Home Office concern about drugs. My right hon. Friend the Member for Newport, East (Alan Howarth) referred not just to terrorism but to the drugs trade, and spoke of the importance of coordination in the tackling of drugs problems in the Caribbean. I think that if Departments—including the Department for International Development, the Home Office and the Foreign Office—worked together more effectively and provided even a modest increase in resources, that could help a great deal in the Caribbean.
  Intelligence has been centre stage ever since 9/11. I believe that the Committee's report and its recommendations recognise the crucial role played by the intelligence agencies. We are counting on the Government to go on responding positively to their needs, thus ensuring that we can all enjoy a safer future.
  4.51 pm
  Mr. Michael Ancram: I apologise on behalf of my right hon. Friend the shadow Home Secretary, who cannot be here for the winding-up speeches. He notified the Foreign Secretary that he would be unable to do so, for specific reasons.
  I congratulate the Intelligence and Security Committee on its work, and on the effort that it has put into the production of this and other reports during the year. It has undoubtedly been a busy year for the intelligence community, and hence for the Committee. The Committee fulfils a vital role in ensuring that there is democratic oversight of our security and intelligence

  1085
  services—a role that is not always recognised as widely as I think it should be. Debates such as this are important in that respect. I also pay tribute to the work undertaken by members of the security and intelligence services—often at great personal risk, as I know, and often inevitably unknown to many people—in protecting us as we go about our daily lives.
  We have had a fine debate. I congratulate the right hon. Member for Rother Valley (Mr. Barron) on being a more than competent substitute for the Committee's Chairman, the right hon. Member for Dewsbury (Ann Taylor). I entirely understand why she could not be here today. The right hon. Gentleman presented not just a good report but an impressive future work load. It is clear that the Committee will not be looking for things to do over the coming months. He made a particularly important point in connecting the risks to our intelligence with gaps in collection, and called for further resources for the security and intelligence services. That was also mentioned by my hon. Friend the Member for Newark (Patrick Mercer).
  The hon. Member for Winchester (Mr. Oaten) made a number of important points, but one of the most important—and I think that both of us Opposition Members agree on it—was his observation that it is the duty of Opposition parties to probe and ask questions, and that they should not be accused of disloyalty for so doing. If we appear unhelpful sometimes, it is because that constitutional role is incumbent on us, and we would be remiss if we did not fulfil it. [Interruption.] The Foreign Secretary will have a long time in which to wind up the debate. I am sure that he will be able to make all the comments he wishes to make from a standing rather than a sedentary position.
  The right hon. Member for Newport, East (Alan Howarth) was critical of the weakening of counterespionage. I think that that is a lesson we have learned since the end of the cold war. I hope that the increased support for the intelligence services that has been announced will go some way towards putting things right.
  The right hon. Member for Newport, East talked about the world being small for terrorists and large for intelligence services—a point that was also made by my right hon. Friend the Member for East Hampshire (Mr. Mates), who discussed the limitations of the intelligence services.
  My hon. Friend the Member for New Forest, East (Dr. Lewis) talked about what the terrorist is seeking to achieve. I know that this subject is something of a sore, but the chilling statement made by a member of the IRA—he said, "You have to be lucky all the time. We only have to be lucky once"—is absolutely true. With due respect to my hon. Friend the Member for Newark, the situation is not quite like the bombers getting through; they got through because there was a very large number of them. In this case, we are talking about specific, targeted exercises which we have to spot and deal with individually. If we fail, we will see a terrorist incident. That is the background to so much of what we are discussing today.
  My right hon. Friend the Member for East Hampshire surprised me when he spoke of someone failing to recognise which party he belonged to. Perhaps
  1086
  he will vouchsafe to me in privacy to which party they thought he did belong; that question has been puzzling me ever since he mentioned the incident. He also talked about the limitations of intelligence, and it is indeed the duty of the Government to ensure that those limitations are minimised as far as possible.
  The right hon. Member for Edinburgh, East and Musselburgh (Dr. Strang) provided an important and valuable analysis of al-Qaeda's decentralisation and the increasing threat posed by it. That was a good reminder that the threat continues. Although we hear of successes in the campaign against international terror, such terrorism is still there and we certainly cannot afford to become complacent.
  My right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot), in one of his usual succinct contributions, talked about the funding of GCHQ and pointed out that this year, it produced unqualified accounts. I welcome that good discipline, which also helps the morale of the service. He also talked about the Prime Minister's letter concerning the detainees, which is printed on page 23 of the report. I have been pursuing this issue through written questions and I am delighted that the Committee is going to follow it up. Important questions remain, and they need to be answered urgently.
  My hon. Friend the Member for Chichester (Mr. Tyrie) underlined the feeling that the various processes are not achieving what we need to achieve if we are to recreate public confidence. We need to feel that we have not just the truth, but the whole truth and nothing but the truth. We need to wait and see what next week's Butler report comes up with, but we must insist that until we have the truth, public confidence will not be restored. We will go on working to get that truth, however long it takes.
  The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) talked about the missing eight Joint Intelligence Committee papers that were later handed to the Intelligence and Security Committee, and which are referred to at recommendation DD. I accept that there was no deliberate attempt to withhold information, and that what happened did not alter the conclusions. However, if the Committee is to feel confident in its dealings with the intelligence services and the JIC in particular, and if the public are to have confidence in the Committee's findings, it is important that this failure to provide all the information be rectified. If that failure was a systematic one, it is incumbent on the Government to ensure that it does not occur again.
  My hon. Friend the Member for New Forest, East raised a very important set of questions about the political scale of terrorist operations. We sometimes think of terrorist operations in terms of what we experience from, and in, Northern Ireland; but as we learned on 11 September 2001, we are now talking about terrorism of a very different scale. He rightly pointed to some of the failures in respect of being ready to deal with such a disaster, should it occur.
  How will society cope? That question was raised by my hon. Friend the Member for Newark, and a balance must always be struck between giving the public sufficient information to allow them to help in the fight against terrorism, and not frightening them. If the public are frightened, to an extent the terrorist has

  1087
  succeeded. I agree with him and my hon. Friend the Member for New Forest, East that we have yet to strike the right balance in that respect. I hope that we continue to consider how much more information we can give in order to recruit the public in the fight against terrorism.
  My hon. Friend the Member for Newark also talked about homeland security, a subject on which he is our spokesman. He rightly pointed out that there is a strong case for having one Minister devoted to that area, with proper back-up. We believe that that would provide a better answer to some of the problems that he identified.
  The right, hon. Member for Gateshead, East and Washington, West (Joyce Quin) pointed out that we had a great success with Libya. As she knows, I had my doubts about the speed with which we were dealing with that country and I had some suspicions about the ship that was arrested last September after the negotiations were in process, which showed that at that date there were still ongoing intentions relating to the construction of nuclear weapons. Equally, I agree that it was an intelligence success—and at a time when the intelligence services are feeling pretty demoralised about some of the things that have happened recently. It was an important success and we should all welcome it and pay tribute to the intelligence community for the work that was done.
  The remainder of my remarks will be directed towards the work of the Secret Intelligence Service and the collection, subsequent analysis and use made of intelligence material. My right hon. Friend the shadow Home Secretary dealt with the other issues fully and I do not wish to repeat what he said.
  Iraq and the search for weapons of mass destruction, coupled with public confidence in intelligence and its use in the lead-up to conflict, remain of crucial importance to the conduct of—and, indeed, confidence in—the United Kingdom's foreign policy. Paragraph 3 of the ISC report notes that military commanders reported that they had been
  "well served by the intelligence community during military action."
  That is an important finding, which I welcome, because it is a testimony to the good tactical intelligence that we possessed. However, significant questions remain over the gathering and analysis of intelligence at a strategic level, particularly over weapons of mass destruction.
  I have to say that doubts about the intelligence on WMD have been exacerbated by the shifting position of the Prime Minister over the past 22 months, which the ISC has, quite rightly, pursued. I need to remind the House of those different positions because we still need to ask what they were based on. On 24 September 2002, the Prime Minister told the House that the SIS
  "concludes that Iraq had chemical and biological weapons, that Saddam has continued to produce them, that he has existing and active military plans for the use of chemical and biological weapons, which"
  as we all know,
  "could be activated within 45 minutes … and that he is actively trying to acquire nuclear weapons capability."—[Official Report, 24 September 2002; Vol. 390, c.3.]
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  On 18 March, speaking in the House, he said:
  "We are asked now seriously to accept that in the last few years … Saddam decided unilaterally to destroy those weapons. I say that such a claim is palpably absurd".—[Official Report, 18 March 2003; Vol. 401, c. 762.]
  Those were the words that he used—"palpably absurd". On 8 July 2003, in front of the Liaison Committee, he said:
  "I don't concede it at all that the intelligence at the time was wrong … I have absolutely no doubt at all that we will find evidence of weapons of mass destruction programmes".
  That was a change in emphasis rather than a change in nuance. Then, before that same Committee this year, he said, earlier this week:
  "I have to accept that we have not found them and that we may not find them."
  I think that we must ask about the basis on which those different statements were made. Either they were misinterpretations of the intelligence or the intelligence was changing. If we are to have confidence in the intelligence, we need to know the answer to that question.
  On "Frost on Sunday" last weekend, Sir Jeremy Greenstock went further when he said:
  "There's no doubt that the stockpiles we feared might be there are not there."
  He went on to say:
  "It's only again with hindsight … that the evidence is just not there. We were wrong on the stockpiles, we were right about the intention."
  I am not questioning the sincerity of any of those particular statements, but I am asking what it was that allowed them to change so dramatically. Those are not differences of nuance, but inconsistencies of fact. Such unexplained changes of belief at the heart of the Government on this most crucial issue of WMD cast doubt on the accuracy of our intelligence—and, more particularly, on how that intelligence was used.
  In paragraph P of its conclusions, the ISC expressed concern that in their response to its report, "Iraqi Weapons of Mass Destruction: Intelligence and Assessments", the Government emphasised only four key conclusions and effectively provided an inadequate response. I hope that the Government will not merely apologise and say that they will not do it again, as they did in their response to the report. I hope that they will respond to the original questions point by point. Until they do, the doubts to which I have referred will continue to exist.
  One of the basic weaknesses of intelligence gathering in general in the post-cold war world, and certainly in operations in the middle east, appears to have been the over-reliance on electronic intelligence, and in some cases on individual and uncorroborated sources, rather than on sustained human intelligence—that is, men on the ground who understand the region and speak the language fluently. That is one area in which weaknesses have been identified.
  We have heard much today about intelligence requirements in the current circumstances, and the need to resource them financially and in terms of manpower. Although increased resources have been available since 9/11, there is no doubt that the shift of focus from

  1089
  international terrorism and al-Qaeda to Iraq caused great strains on that manpower. In particular, does it not appear that the greatest shortfall was in Arabic speakers?
  The recently declassified Congressional report states that there were only 20 linguists at the National Security Agency and GCHQ who were extremely skilled in Arabic. Does the Foreign Secretary agree? At a time when so much of the threat is coming from that part of the world, as many speakers today have said, that seems to be a deficiency.
  Do the Government have plans to reopen the internationally respected Arabic language school at Shemlan near Beirut? It provided exceptional language training to British intelligence officers and diplomats, as well as important background studies, until its closure in the late 1970s. If not, is there some plan to recreate something similar that will provide that resource in the future? I think that that will be necessary.
  Is the Australian Parliamentary Committee right to assert that intelligence reports on Iraq from the US and the UK in the six months before the war increased tenfold compared with the eight months previously? That would indicate a genuine shift of intelligence focus away from al-Qaeda that could have serious implications for the international fight against terrorism. In light of the genuine and current threat from terrorism about which we have heard today, we need real assurances that those deficits will be urgently rectified.
  Given those shortages, is it not time that we looked for support from our allies, as the right hon. Member for Gateshead, East and Washington, West suggested? What are our current relations with French security services? Is it true that, in the past 12 months, the French have offered to collaborate with the SIS on human intelligence and Arabic speakers? If so, what has been our response?
  Is it true that the offer was turned down, with the knowledge and approval of the Prime Minister, and that the Americans are now benefiting from that help by the French? If so, what were the reasons for declining the offer? What effect has that had on the relationship between our intelligence services? I hope that the Foreign Secretary will be able to respond to that.
  It is clear that errors of interpretation may have occurred between the raw intelligence—such as it was—being fed into the analytical processes of the SIS and DIS, and then the JIC. The decisions that were made were not made in a vacuum, free of expectations at a political level.
  Paragraph 68 of the report states that the Committee was content with the process by which Mr. John Scarlett was appointed as chief of the SIS. However, the report does not say whether the Committee was content with the appointment itself, or with its timing. I was sorry that the right hon. Member for Rother Valley was caught by the clock and was not able to finish his explanation of that matter. I do not want to point the finger at any specific person, but it is an important question that we need to consider.
  Press speculation over the past week about the forthcoming Butler report tends to support my view at the time that it was inappropriate to make the
  1090
  announcement in advance of the report. In that context, Dr. David Kay, the former head of the Iraq survey group, appeared on yesterday's "Newsnight" programme. He has been quoted by the Government with great approval on many occasions in the past, but he made the following rather surprising comment about George Tenet:
  "He took the honourable step, as well as the pre-emptive step, of resigning rather than waiting to be replaced. Obviously, in your system you draw a different conclusion"
  and
  "decide to promote the individual".
  Does the Foreign Secretary have any response to Dr Kay's comments?
  In conclusion V, the Committee says that it
  "believes that candidates for the position of JIC Chairman should be drawn from as wide a field as possible."
  The Government say that they agree. I go a little further. The position is a most sensitive one, the independence of the person holding it must be above question, and there can be no inference of politicisation. It is and should be a position of assessment and counselling between those who provide the intelligence and those who must decide how to use it. There will always be pressure on whoever holds that office to lean towards one or the other. That can best be avoided by appointing someone who has come to the effective end of their civil service career and cannot be accused of seeking to secure future preferment. I look to ex-ambassadors and senior civil servants who carried out that role in the past very well.
  Alan Howarth: The right hon. and learned Gentleman has just quoted Dr. Kay. Will he acknowledge that David Kay insisted that analysts were not pressurised by their political masters? In Dr. Kay's analysis of what may or may not have gone wrong, he rules that out as any kind of explanation.
  Mr. Ancram: Dr. Kay has talked about the environment in which the analysts were working. I am not making a political point, but there are times when political expectations can be raised by the statements made by senior politicians that put pressure on those who are making the assessments to try to find intelligence that will be helpful and coincide with those statements. It is that type of pressure that whoever becomes Chairman of the JIC will have to be capable of avoiding. Senior civil servants or ex-diplomats, such as those who have held the post in the past, are able to do that more effectively than those in the course of their careers.
  Mr. Barron: I was interrupted earlier when I was about to say that it was the Committee's belief that the next Chairman of JIC should be appointed from as broad a background as possible, not restricted as the right hon. and learned Gentleman suggests. Indeed, the former Chairman who will take over at SIS was not from the background that the right hon. and learned Gentleman describes.
  Mr. Ancram: The right hon. Gentleman has got my drift. I am not keen on the idea of opening the position to anybody. This is a specific job that has to be done by someone with enormous experience, not least of

  1091
  considering issues objectively, and remaining unswayed by influences from either side, because influences will always come from both sides. The person appointed must also be unaffected by considerations of their future career.
  Mr. Barron: I agree about the width of experience needed. The appointment should not be made on the basis of what job an individual has done or is doing. That should not be a restriction on who is appointed as Chairman of JIC and that is the Committee's point.
  Mr. Ancram: I hope that we would agree on that. The key is public confidence in the person who is appointed. That confidence would be better achieved if the public could see that the appointee did not have connections with one side or the other and had the experience to avoid such connections while holding the job. That should be seriously considered, because the appointment of John Scarlett was the first time that an active member of the intelligence service was put in that position.
  In conclusion, it is vital to our national interest that public confidence in our intelligence services, in the intelligence they produce and in the use made of it by Government is restored as soon as possible. We all know that confidence in all three areas has been damaged. We need confidence in the way that intelligence is gathered and corroborated, confidence in the assessment process and the qualifications entered into it, and confidence in the political judgments that flow from it. We will have to wait and see whether we learn more about that from the Butler report next week. Given its terms of reference, we may or we may not. I shall not speculate on that today.
  I was pleased to hear my right hon. Friend the Member for East Hampshire point out once again that the misuse of intelligence undermines confidence in the security and intelligence agencies. It is important that we restore that confidence by showing that any such misuse will not continue in the future.
  Whatever the outcome of the report may be, there are certain givens that cannot be avoided. In the end, the key to intelligence is the use made of it. I learned the value of good intelligence during my time in Northern Ireland. I learned also that what matters most are the strategic judgments made by Ministers on the basis of that intelligence. In the end, the buck stops with Ministers.
  In this case, the buck stops with the Prime Minister. He made the statements. He took the decisions. He must accept the responsibility. At the end of the day, he must explain the inconsistencies and why he took the decisions he did. He owes it to our intelligence services and to the British public to do so, and perhaps the Foreign Secretary, who privately, I suspect, shares much of our concern, can start that process now.
  5.15 pm
  The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): I join other Members in paying tribute to the work of the Intelligence and Security Committee. We all understand why my right hon. Friend the Member for Dewsbury (Ann Taylor) was unable to take part in the debate and hope that her son's graduation ceremony was successful. I thank my
  1092
  right hon. Friend the Member for Rother Valley (Mr. Barron) for so effectively standing in for her this afternoon.
  At this moment of unconstrained time, may I make a plea, Mr. Deputy Speaker, that when the Chairman or the substitute Chairman of an important parliamentary Committee is making a presentation, physically from the Back Benches but on behalf of Parliament, special consideration be given to whether the standard time limit should apply?
  Today's debate has highlighted again the important role that our intelligence and security agencies play in both informing Government policy and protecting British citizens at home and abroad. They help to keep drugs and international criminals off our streets, to protect Britain from terrorism and espionage and to counter threats to our economy and our financial institutions. As we heard from an Opposition Member, they give vital support to the operations of the British military, often in difficult conditions.
  For different reasons to those of my right hon. Friend the Member for Dewsbury, but none the less imperative ones, my right hon. Friend the Home Secretary cannot be in the Chamber at present—as his shadow cannot—but he has already pointed out that our intelligence services played a crucial part, alongside our diplomatic efforts, in persuading Libya to renounce weapons of mass destruction—one of the rare examples of public success for their mostly, inevitably and necessarily unsung work. They also help to illuminate threats to and opportunities for British interests around the world.
  Like every other Member who has spoken, I pay tribute to the men and women of Britain's intelligence and security services. Despite often intense pressure and the constant need to adapt to the evolving nature of terrorist and other threats, they serve with great distinction and courage—to my certain knowledge—in often difficult and dangerous circumstances.
  I particularly pay tribute to Sir Richard Dearlove, whose term as head of the Secret Intelligence Service comes to an end this month. He leaves a modern and flexible service, which is better able to meet today's security challenges. I have had the pleasure of working with Sir Richard during the three years in which I have held this office and I saw a great deal of his work during part of the period when I served as Home Secretary. I pay a personal tribute to him and thank him for all that he has done. His successor, for whose appointment I take responsibility, is John Scarlett. As the Committee records, he was appointed after a rigorous and proper selection process and he has the ability and experience to build on that legacy.
  As if on cue, my right hon. Friend the Home Secretary has rejoined us, because I now want to pay tribute—as did he—to the outgoing Commissioner of Police of the Metropolis, Sir John Stevens. It was my privilege to appoint Sir John to his position about five years ago and I am sure that it is the view of the House, across all party boundaries, that he has filled that position with very great distinction at a time of considerable challenge to the police service.
  Today's debate has inevitably focused on the issues of the moment raised by the Committee's report, and I shall deal with as many as possible of the detailed points made by hon. Members in a moment. The Committee's

  1093
  work involves looking at the intelligence and security services in the round, including the broader question of the direction of the agencies' work in the future.
  This is now the eighth year in which I have taken part in this annual debate, and these are among the most mature and considered debates that I take part in or listen to in Parliament. As I listened to the debate, I thought back to the great arguments that took place in the 1980s, which many of us remember, about whether it was proper to allow Members of Parliament to scrutinise the work of the intelligence agencies. That was a question of not only whether that was proper, but whether hon. Members could be trusted to do so.
  The argument began in the early 1980s, when under successive Governments the intelligence and security agencies were not averred to at all. They were appointed and run under royal prerogative. It was said that they had a charter, but it had never seen the light of day, and apart from those who had been admitted to the high priesthood—a few senior Ministers and officials—no one was ever allowed near them. Fortunately, that began to change towards the end of the 1980s, with the establishment of the Security Service on a statutory basis. That was reinforced by the Intelligence Services Act 1994, which put GCHQ and the SIS on a statutory basis and established the Intelligence and Security Committee. Far from the world falling in, in my judgment the quality of the agencies' work has increased, alongside and in direct relation to the improvement in the scrutiny of the agencies by Parliament.
  What is often missed in the debate about parliamentary scrutiny is that effective parliamentary scrutiny is not in opposition to the work that Ministers must do but assists Ministers in their own scrutiny of what their Departments do. Leaving aside the agencies, how often have I been deeply grateful for the fact that, in late evening, I have had to answer a written parliamentary question and discovered something about my Department that I did not know before and that I ought to have known? In some cases, I have been asking the same question for some months and that fact had perhaps slipped the minds of those whom I had asked, but an answer was given because of the parliamentary question, and a raft of organisational or policy changes were able to follow off the back of that parliamentary scrutiny. In commending the Committee's work, I wish to say that Parliament was right to keep at it on the scrutiny issue in the 1980s, and it has been a greater success even than many of us anticipated at the time.
  Let me run through some of the issues that have been raised. The right hon. Member for Haltemprice and Howden (David Davis) asked whether intercept evidence should be used in criminal proceedings. My right hon. Friend the Home Secretary set out the position—and I have nothing to add as I entirely agree with him. I shall paraphrase his words, but in no sense do I undermine what he said. Of course, in principle, we would all like all the available evidence to be adduced in court, so that the guilty can be more easily convicted and the innocent more easily acquitted.
  1094
  If that were the only issue, that would be the end of the question, but there are very much wider questions about whether the integrity of the intercept system, its efficiency and the ability to collect intercept evidence for intelligence purposes, which can include criminal intelligence as well as intelligence against terrorists and enemies of the state, would be compromised. In the difficult, multi-variable equation that we are now considering, we have to take account of the circumstances of our legal system. It is an issue of where the balance should be struck. As my right hon. Friend the Home Secretary has said, we await an interim report to the Prime Minister shortly. Of course, however, I can give no direct commitment about the timing or content. As soon as possible thereafter that it is appropriate and safe to do so, the results will be made available to the Commons.
  Mr. Oaten: Given that other mainland European countries have overcome that problem, is the Foreign Secretary under any pressure from other European Union countries to come to a speedy resolution on this matter so that intercept communications can be used in any evidence throughout mainland Europe?
  Mr. Straw: I had no pressure from other European countries when I was Home Secretary and have had none since I have been Foreign Secretary, and my right hon. Friend the Home Secretary says that he has had none either. Each country differs: some barely use intercept at all for any purpose, which is a separate issue and why we are worried about their capability to deal with terrorist threats; other countries use intercept more widely. Many issues require careful consideration before we come to a view. All that lies within the context that if it is possible to arrive at a solution where intercept evidence can be adduced safely without undermining the integrity and capability of everything else being done by way of intercept, that will be fine, but we are certainly not there yet.
  The right hon. Member for Haltemprice and Howden asked about redaction, suggesting that it may have been excessive. I can say only that I know to my certain knowledge that the Committee is assiduous in ensuring that redactions are permitted only where they genuinely meet the needs of national security. Speaking from recollection, I think that the law provides that if a redaction is proposed by the Prime Minister and with which the Committee disagrees, the fact of the disagreement, although obviously not the content of the redaction, can be made known to the House. As I pointed out last year, the only time when I intervened on a proposed redaction was to refuse to allow one, rather than the reverse.
  The right hon. Gentleman also raised GCHQ and its programme. There were criticisms of the programme for building the very successful new building. Those criticisms have been answered in the response to the National Audit Office report, and most of them were dealt with as soon as they became known, which is why the latter part of the programme was successful.
  On the subject of GCHQ, I draw the House's attention to a letter sent by the Attorney-General, Lord Goldsmith, to Lord Morris of Aberavon, in which he sets out the circumstances of the discontinuation of the prosecution of Katharine Gun. In that letter, which has

  1095
  been placed in the Library, my right hon. and noble Friend draws attention to paragraph 72 of the Intelligence and Security Committee report, which states:
  "We agree that the case had to be discontinued for evidential reasons not in any way related to the Attorney General's advice on the lawfulness of invading Iraq."
  Alan Howarth: Does my right hon. Friend agree that the Attorney-General came under some rather unfair criticism over that matter and that those who suggested that the reasons for the discontinuation of the prosecution had to do with the content of his advice on the legitimacy of the war against Iraq ought to withdraw what they said and should, indeed, apologise.
  Mr. Straw: I agree. The criticism made of the Attorney-General was completely unfounded. Anybody who knows him will know that even the thought that his integrity was in question should never have been aired.
  My right hon. Friend the Member for Rother Valley referred to the introduction of what, frankly, happened before, when we responded seriatim to the recommendations made in reports. That was an omission: it should have happened before, and we are sorry that it did not.
  The hon. Member for Winchester (Mr. Oaten) gave us an inadvertent admission of Liberal Democrat confusion, with which we are all so familiar. He talked in the round—we are familiar with that, too, when it comes to Liberal Democrat policy—but went on to talk about recognising the constraints of the real world. I welcome him to the club of the real world, and we look forward to the Liberal Democrats straightening up some of their policies in future to take account of the fact that the world has changed. If they wish to present themselves as a serious alternative Government, they have to acknowledge the responsibilities that go with that. If, however, they wish to carry on in permanent opposition, which is fine by me, they can continue in their present comfort zone, but they should not insinuate that they have any right to pass comment on those who are or those who wish to be in Government.
  I apologise to the right hon. Member for East Hampshire (Mr. Mates) for not being here to hear his speech. He said that trust is at the heart of intelligence gathering. That is absolutely true, and there has to be trust all round. There has to be trust within the agencies—that is why the ring of secrecy is so important—trust in those who monitor them and trust between those within the agencies and those who are responsible for them, especially senior Ministers and the Prime Minister. I believe that we have done everything we can to maintain that trust.
  My right hon. Friend the Member for Edinburgh, East and Musselburgh (Dr. Strang) asked about BBC Monitoring. He will be aware that I informed the Foreign Affairs Committee on 28 June that from 2005–06, the FCO will reduce its funding for BBC Monitoring by £2 million to £5 million per annum, but overall stakeholder funding for BBC Monitoring will remain at its current level, with the difference made up by other stakeholders and the BBC Monitoring reserve. The Cabinet Office has commissioned a strategic review of BBC Monitoring, which will report by the end of this year. Future funding will be determined by the outcome of that review.
  1096
  Several hon. Members raised the treatment of prisoners at Guantanamo bay and at Abu Ghraib. We take very seriously our responsibilities in respect of Guantanamo bay detainees. From January 2002 to March 2004, seven visits were made by British officials to check on the welfare of the British detainees, and another visit is due to take place shortly. Whenever visits take place, we ensure that families are informed of the outcome.
  Mr. Arbuthnot: In view of the fact that the Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Sunderland, South (Mr. Mullin), has acknowledged that the United States does not accept the applicability of the Geneva conventions, while we think that the conventions should apply to those at Guantanamo bay, does the Foreign Secretary agree with the consequence, namely, that we believe that detainees at Guantanamo bay should have legal advice available to them?
  Mr. Straw: Yes. Speaking specifically in respect of our detainees, we have said that the provision of legal advice is a necessary part of any fair trial system—it is almost a sine qua non. The detainees there have not received legal advice, even though one or two of them are in the trial system. That is the background to the recent appeal to the Supreme Court, and it has been one aspect of our disagreements with the United States Government about the fairness of the trial process offered. We have repeatedly said that British detainees should either be tried as soon as possible according to principles that are recognised to be fair, or be returned to the UK. That remains our position and it has been the subject of considerable discussion between ourselves and the United States ever since Guantanamo bay received British detainees.
  The hon. Member for Chichester (Mr. Tyrie) asked about prisoners of war who were handed over by UK forces to the United States. Three hundred and fortyone were so handed over in April 2003. The United States subsequently released all but three: two of the three were handed over to the legal custody of the Iraqi authorities on 30 June, although physically they remain in US custody, held on behalf of the Iraqis; and the other is now detained as a security internee in UK custody. I hope that that satisfactorily answers the hon. Gentleman's question.
  Mr. Tyrie: Does the Foreign Secretary accept that we have an enduring duty of care towards the detainees who are still in custody, so we have a direct interest in the conditions and abuses in Abu Ghraib?
  Mr. Straw: I do not want to go into detail about the nature of our duty of care, but our power to hold detainees, save for security internees held under the letter from Secretary Powell to the Security Council attached to resolution 1546, ceased on 30 June. Of the 341 detainees. 338 were released by the US—so that was the end of that matter—and of the remaining three, as I have explained, one is a security internee under what amounts to an annexe under UN Security Council resolution 1546, and the other two are in the custody of the Iraqi interim Government. Our power ended, because our powers as occupying powers finished on 30 June.

  1097
  The hon. Member for Chichester and the hon. Member for Newark (Patrick Mercer) made comparisons with the United States. Scrutiny of the Executive in this country is, in my judgment, at least as high as scrutiny of the United States Executive. We have a very different system because we are members of Parliament, whereas members of the US Executive are, as everyone knows, constitutionally separate from what amounts to the Parliament. In this country, Ministers responsible for intelligence and security agencies—my right hon. Friends the Home Secretary and the Prime Minister and myself—are interrogated weekly, sometimes daily, on these issues, which is in sharp contrast to the position in the United States, where the Head of State never appears before Congress and rarely, if ever, gives an extended press conference. Others undertake those duties, so accountability is infinitely greater here, and takes place day by day, week by week.
  Mr. Ancram: And on the "Today" programme.
  Mr. Straw: "Today", my right hon. Friend the Home Secretary would agree, is now part of the interrogation of Ministers, because it is rare for us not to appear on the programme. Long may that continue, because it is important that the public should hear us interrogated on the radio as well as in Parliament.
  The Intelligence and Security Committee provides ongoing checks on the responsibilities of senior Ministers and the Prime Minister. The questioning is tough and, to some extent, tougher than it would be in public, and its reports are there for all to see. It has been suggested that we were difficult with the Foreign Affairs Committee, but, as I said at the time, a turf war was going on between it and the Intelligence and Security Committee. As far as we were concerned, we did not withhold material from parliamentarians, but it was plainly inappropriate—and had never been suggested before—that the Foreign Affairs Committee should fulfil the role of the ISC. It was agreed in 1994 that the FAC's role should continue unabridged and unamended following the establishment of the ISC, but it was not agreed then, and neither would I agree it in the light of experience, that the FAC is the appropriate body to hold the agencies to account.
  Finally, on the parallel with the United States, a couple of Opposition Members suggested that there was a case for establishing a Department for homeland security. That case was accepted by the Government of the day in 1782—it is called the Home Office, and has operated satisfactorily ever since. The United States emulated us, but it is not necessary, in this regard, for us to emulate the US.
  Anybody who knows the system of law enforcement in the US knows that in place of three intelligence agencies and 43 police services, which we have in this country, plus the enforcement arm of the Customs and the immigration and nationality directorate, the US has 17,000 law enforcement agencies. It is a rather different situation, and even at a federal level there are many overlapping jurisdictions. One can see it on the streets of New York if one walks between the United Nations and any of the legations during United Nations General Assembly week, as the different layers of federal security personnel are advertised on the back of their jackets.
  1098
  It was necessary to co-ordinate better what those agencies were doing. There is now the equivalent of a Home Secretary. Even so, the three big agencies—the National Security Agency, the FBI and the CIA—almost exactly parallel the work of GCHQ, the Security Service and SIS. There are no plans, and I would strongly resist them if there were, to merge those three into a single agency.
  Mr. Barron: I apologise for going back a little. On detainees, the Government have given us a positive response as regards co-operating fully with our inquiries. In his contribution, the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) raised a number of issues and referred to reports and papers that he believed the Government have on the subject. Will my right hon. Friend confirm that the Committee would be able to see any or all of those papers if it considered that necessary?
  Mr. Straw: My right hon. Friend is exactly right.
  Dr. Lewis: In the unavoidable absence of my hon. Friend the Member for Newark (Patrick Mercer), may I say that the Foreign Secretary has been busily engaged in demolishing an Aunt Sally? It is not the position of the Opposition that there should be a separate Department for homeland security, only that there should be a dedicated Minister for homeland security, unlike the situation that existed when the hapless right hon. Member for Stretford and Urmston (Beverley Hughes) had to combine being Minister with responsibility for homeland security with being Minister with the minor responsibility for immigration.
  Mr. Straw: I do not claim to have followed every nuance of the Opposition's consideration of that policy, but I suspect that it is rather like most considerations of their policy: they start off with a label, then try to fill the box, and the product often changes in between. We have a Home Secretary and a Minister with responsibility for the police services. If we had another Cabinet Minister for homeland security, that could lead to a certain duplication of effort and, far from co-ordination, a great many problems.
  I shall deal with the points made by the right hon. and learned Member for Devizes (Mr. Ancram), who speaks for the Opposition on foreign affairs. First, there was the issue of collaboration with the French security services. Because that is an intelligence matter, I cannot comment on it in any detail, but I can arrange for the right hon. and learned Gentleman to be briefed on Privy Council terms. I did not recognise the story that he told, but we seek collaboration and liaison with all the intelligence and security services with which it is appropriate to do so.
  The right hon. and learned Gentleman spoke about the gathering and analysis of intelligence before the Iraq war. On many of those points, the House will have to await the Butler report. However, I remind the House of two things, which come not from any intelligence report but from what we all know and saw at the time, and which are worth bearing in mind. First, the Iraqi regime had a nuclear weapons programme, a chemical weapons programme and a biological weapons programme, all of

  1099
  which it concealed. With respect to the chemical weapons programme, the regime not only had one, but used it.
  Secondly, on 8 November 2002, all 15 members of the Security Council independently reached the same judgment: that Iraq posed a threat to international peace and security because of its proliferation of weapons of mass destruction, its long-range missile systems and its defiance of the United Nations. Those two sets of facts need to be borne in mind throughout the future consideration of how we dealt with intelligence leading up to the war.
  Mr. Ancram: The question concerns the statements and the intelligence. We all accept—at least I certainly do—that Saddam Hussein had WMDs at some stage, but did he have them on 24 September 2002, when the Prime Minister came to the House and said he had WMDs?
  Mr. Straw: I know what the right hon. and learned Gentleman is asking, and the analysis of that question is the focus of the Butler inquiry, which will be subject to full parliamentary consideration.
  Mr. Tyrie: Will the Foreign Secretary give way?
  Mr. Straw: No; I shall make progress to complete the debate.
  The right hon. and learned Member for Devizes asked about Arabic linguists and whether the Beirut linguist school has been re-established. That school had to be abandoned because it was blown up by one or other of the fighting groups in Beirut at that time, and there are no plans to re-establish it. Linguistic ability is one of the outstanding merits of the Foreign and Commonwealth Office, the SIS and GCHQ, and our great investment in that area is far larger than that made by many comparable countries. I am personally committed to that investment in linguistic ability being sustained, especially in Arabic, and I am happy to write to the right hon. and learned Gentleman about the matter.
  That concludes the response to the debate, and I thank all hon. Members who have attended it. Again, I pay tribute to the agencies, and above all thank all the members of the ISC.
  Mr. Jim Murphy: I beg to ask leave to withdraw the motion.
  Motion, by leave, withdrawn.

  Medhurst Row Crossing
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jim Murphy.]
  5.47 pm
  Sir John Stanley: From the world of intelligence, I turn to the even more crucial issue of rail safety at the Medhurst Row rail level crossing in my constituency, outside Edenbridge. The level crossing is not lightly used, because it crosses a twin-track, cross-country railway line, which is the mainline from Tonbridge to Redhill. The line carries a substantial amount of passenger traffic and is one of the freight routes to the channel tunnel.
  Serious safety concerns have been expressed about the level crossing for a number of years, and my constituent, Mr. Roger Kennedy, wrote to me on 4 September last year:
  "I have been given permission five times in the last seven years to cross in front of oncoming trains. Last year after a meeting at this crossing with your chief safety officer at Ashford, we were all told that it would never happen again, within two weeks my neighbour was given permission to cross and was confronted by an oncoming train. Recently a friend, whilst trying to cross, had to tell the signalman twice that he thought he heard a train before the signalman realised there was a train approaching the crossing. Three months ago our gardener gained permission to cross, then crossed the line, rang back to say the gates were closed, only to find a train going through the crossing. This train must have been on his section of line when he crossed. The incident was caught on camera and Mr. Hamneill was told at Ashford, but we doubt if anything was done, because only three weeks ago the same fate befell our postman, he again was given permission to cross in front of an oncoming train."
  That letter was addressed to Network Rail, and a copy was sent to me.
  I raise the issue today because of a further serious incident on 3 March this year. That involved the eldest son of my constituent, Mr. Roger Kennedy—Mr. Alex Stedall. He, too, was certain that he had been given permission to cross and found himself crossing in front of an oncoming train.
  Before I come to the incident on 3 March, it might be helpful to the House and to the Minister if I explained the crossing procedure. Before initiating the debate, I went to the crossing and went through the full crossing procedure personally. Unlike a normal level crossing, the Medhurst Row crossing is a so-called private crossing, of which there are about 5,400 in total. It can be used by any member of the public on foot, because it is a public right of way, but those who wish to use their vehicles can do so only if they are authorised to cross at that particular crossing.
  The crossing is not like a conventional rail crossing where the gates are normally closed across the railway line and open to the traffic, shut against the traffic when a train goes past, then reopened to the traffic and closed again across the line. In the case of the Medhurst Row crossing—and, I suspect, many other private crossings—the position is reversed. In normal circumstances, the gates are open at all times to trains going up and down the line, and closed across the road. When a train goes past, the gates remain in the closed position across the road. If someone wants to take their car across, they turn the gates not across the railway line, but back across the road at right angles to the line.

  1101
  That means, in effect, that a train driver will never see the gates closed across his path, even though the gateway may be open to road traffic. That is a significant and dangerous feature of this particular type of crossing.
  I shall describe the crossing procedure for somebody who wants to make the crossing by car. They go to the telephone beside the closed gate, pick up the telephone to contact the member of staff in the Ashford signal box, and ask for permission to cross. If permission is granted, they open the gate that is nearest to them, folding it back away from the railway line, cross on foot over the active railway line, go to the far gate, and open it. They cross back over the railway line a second time, on foot. They get into their car. They make a third crossing, in their car, over the active railway line. They get out of their car. They make a fourth crossing back on foot over the railway line, close what is now the far gate, and make a fifth crossing back over the active railway line to close what is now the near gate. They go to the telephone, ring the Ashford signal box, as required, and report that they have made the crossing and closed both gates.
  The procedure involves no fewer than five crossings of an active railway line—four on foot and one by car. For those who are used to it, it takes a minimum of two and a half minutes. I imagine that it would take considerably longer for someone who was not familiar with it. It was a challenging experience to make five crossings of an active, twin-track railway line when I did it in broad daylight on a summer day. I would not wish to have to perform that procedure at night or in foggy or misty conditions.
  My constituents who live in the specific area that we are considering have no alternative route for reaching the main road system. The only way is to go down the private road and use the Medhurst Row railway crossing. There is no other option when they go to work, take the children to school and so on.
  Let us consider the incident that took place on 3 March. This morning in the Palace, with the assistance of Network Rail and the rail safety inspectorate in the Health and Safety Executive, I was able to look at the closed circuit television evidence of what happened. I was also able to listen to the available transcript of the telephone conversation between Mr. Alex Stedall and the Ashford signal box.
  At approximately 7.50 am on 3 March, Mr. Alex Stedall, the eldest son of my constituent Mr. Roger Kennedy, drove to the Medhurst Row crossing on his way to work. He lifted the phone and asked whether it was safe to cross. He was given permission to cross and, in the normal way, was told by the Ashford signal box to call back when he had crossed to confirm that he had shut both gates. He opened the near gate, got on the line, mercifully looked and saw the Edenbridge to Tonbridge school train bearing down on him. He got off the line, shut the gate and, a few seconds later, saw the train go past. Clearly, a fatal accident had been averted—just.
  The risk of fatality is not merely to those who use the crossing. The Minister well knows the sadly documented fact that when a train hits a vehicle, it can
  1102
  be derailed, with the risk of loss of life or injury to those on the train as well as those on the crossing. For the Kennedy family, there was the potential for an appalling tragedy at that moment on 3 March, because Mr. Kennedy's two younger sons were on the Edenbridge to Tonbridge school train when their elder brother came close to being hit and almost certainly killed by it on the Medhurst Row crossing.
  The incident has been the subject of considerable investigation and I have been involved in presenting additional evidence to Network Rail and the Health and Safety Executive. After seeing the CCTV evidence and listening to the tape recordings, I find some worrying aspects to the adequacy of the crucial safety monitoring equipment.
  It being Six o'clock, the motion for the Adjournment of the House lapsed, without Question put.
  Motion made, and Question proposed, That this House do now adjourn.—[Jim Fitzpatrick.]
  Sir John Stanley: First, the tape recording is incomplete; there is at least one crucial sentence missing. Secondly, the closed-circuit television evidence is unsatisfactory because the cameras are activated only by vehicle movements, not by pedestrian movements. There is therefore no CCTV evidence of Mr. Stedall walking to the telephone. There is only evidence of him when he comes close to moving his vehicle. So there is a lack of completeness there, too.
  The third area of concern is that, on the data that I have seen, there appears to be a material degree of time mis-match between the CCTV material and the timings on the tape-recorded material. This could be a consequence of computer software, but the Minister will understand that if it is not possible to rely on identical timings on the CCTV and the tape recording, it is very difficult to be certain about the time relationship between a particular telephone conversation and the passage of a particular train. Some serious questions have been raised in my mind as to the adequacy of this monitoring equipment, and I think that that will be a matter of concern for the Minister. I hope that it will also be a matter of concern for the Health and Safety Executive.
  I turn now to the main parties that have been involved in the investigation so far. My constituent, Mr. Alex Stedall, is in no doubt whatever that he sought permission to cross, using the telephone in the normal way, that he was given that permission, and that when he got on to the line, he faced an oncoming train. I have put all the evidence that my constituents have put to me to the chief executive of Network Rail, Mr. John Armitt, who wrote to me on 27 May as follows:
  "Our conclusions, again shared with HMRI, are that the evidence leads us to believe that no technical or operating failure on behalf of Network Rail occurred."
  I have also pursued this issue with the director of rail safety at the Health and Safety Executive, Mr. Allan Sefton, who wrote to me in May to say:
  "I am advised that there is no reason to doubt the thoroughness of Network Rail's investigation."

  1103
  I subsequently received a letter on 25 June, contrasting with those two views, from the deputy director general of the Health and Safety Executive, Mr. Justin McCracken, in which he states:
  "Network Rail's report does contain a recording of a user of the crossing (who is believed to be Mr Kennedy's son) asking for permission to cross the line and permission being granted."
  That would indeed suggest that there was a serious failure; whether it was of a human nature or of equipment I have no means of knowing. However, that is a significant comment by Mr. McCracken.
  Having viewed the CCTV evidence this morning, I believe that it is incontrovertible—this was not denied by the Network Rail people who were there, or the HSE people who were there—that it clearly showed Mr. Stedall opening the gate, going on to the line, going back behind the gate, shutting it, and the train going past a few seconds later. Again, that would seem to me to be clear evidence that he was given permission to cross in front of an oncoming train.
  It is not surprising that Mr. Roger Kennedy has been concerned as to whether there has been an element of cover-up by Network Rail. He has made that allegation, and he has contacted the British Transport police. I have put his allegations to the chief constable of the British Transport police, Mr. Ian Johnston, who said to me in his letter of 28 June:
  "I have asked Acting Detective Chief Superintendent Mark Smith to address the points raised in your correspondence. I have also asked him to review the case to ascertain whether the allegation of a 'cover up' should be the matter of investigation by BTP."
  Whatever the outcome of the current investigations that are still continuing, by Network Rail, the Health and Safety Executive and British Transport police, into the incident on 3 March, I am in no doubt that the present situation at the Medhurst Row rail crossing presents an unacceptable degree of risk, both to those crossing and to passengers on the trains involved, should there be a collision with a vehicle. This is a crossing that has no automatic gates, and no automatic warning lights when a train is approaching. Those using the crossing are totally dependent for their safety on there not being human error at the Ashford signal box, and there not being equipment failure. In life, human errors occur, and equipment failures occur. If either of those should happen, those using the crossing have only one protection: what those in the armed forces are inclined to call the mark one eyeball. That is the only protection available, and it probably saved the life of Mr. Alex Stedall on 3 March.
  The mark one eyeball has its limitations: it is not much use at night, it is not much use in fog, and it is not much use in mist. My conclusion from all the material that I have seen so far is that, as it stands, the Medhurst Row railway crossing is a fatal accident waiting to happen, possibly involving multiple fatalities. I hope that when the Minister replies, he will tell me what he will do to try to prevent such a tragedy occurring.
  6.8 pm
  The Minister of State, Department for Transport (Dr. Kim Howells): I congratulate the right hon. Member for Tonbridge and Malling (Sir John Stanley) on securing
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  this debate. He has raised an issue that is clearly of great concern to him and to his constituents, and which should properly be the concern of anyone who wants to see safety enhanced on and around the railways. He described for us with great clarity reports of a serious incident, which have concerned him a great deal. Were I in his place, I would do exactly the same. It has given me the opportunity to try to reassure him that we are determined to ensure that the country's rail network is operated safely, whether at the Medhurst Row crossing in Edenbridge, or in any other part of the country.
  There are more than 8,000 level crossings operated by Network Rail. Had the right hon. Gentleman not initiated the debate, I should not have known that. It is an incredible number of level crossings. Just 1,500 are public vehicular crossings, and 5,400 are private vehicular crossings. The remainder are public footpaths.
  Public crossings are found where a public right of way crosses the railway, for instance a public road or footpath. The rail operator has a legal responsibility to ensure safe operation, and Network Rail risk assessors look at all level crossings and try to provide appropriate protection, as we would expect them to. Private crossings are provided by Network Rail for authorised users only—typically, occupiers of adjacent land like the right hon. Gentleman's constituents—who need to cross the line to gain access to their property. Network Rail provides briefings for authorised users on the procedures to be followed, and users are responsible for ensuring that crossings are used safely—in particular by following the procedures advised by Network Rail, and obeying the instructions displayed in crossing signs at each location. The right hon. Gentleman helpfully described in some detail what that entails at the Medhurst Row crossing.
  Network Rail published a level crossings strategy in 2003, designed to reduce risks associated with level crossings through—among other things—effective operation and maintenance, a programme of risk assessment leading to risk reduction, and communication with users and external stakeholders to promote safe usage. As the right hon. Gentleman said, the Health and Safety Executive investigates serious incidents on both public and private level crossings, and keeps the safety standards under review. It can require action to improve protective arrangements at level crossings, depending on changes in the level or frequency of risk. It works closely with Network Rail, the Rail Safety and Standards Board and the British Transport police to increase road users' awareness of the risk of misuse at level crossings. I am very glad that the right hon. Gentleman had an opportunity to meet Network Rail and HSE representatives to discuss that problem.
  The Medhurst Row crossing is a private crossing restricted to authorised users, namely the occupants of four houses and a farm who need to use it to gain access to their properties. As the right hon. Gentleman said, users in vehicles must telephone the signaller at Ashford to confirm that it is safe to cross. I understand that Railtrack, as it was then—it is now Network Rail—wrote to all users in July 2000 to remind them of the procedures, and that Network Rail sent a further reminder in 2003.

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  Let me deal specifically with Mr. Kennedy's complaints. These are serious allegations. I want to reassure the right hon. Gentleman that all the complaints made to the HSE have been thoroughly investigated by it or by Railtrack. I understand that Mr. Kennedy first raised the matter with the HSE in November 2000, complaining that the crossing was unsafe and that he and his family had been given permission to cross in front of oncoming trains. That is about as serious an allegation concerning a crossing as it is possible to make.
  There were two earlier incidents, in 1994 and 1998. Mr. Kennedy had been given permission to cross when trains had been on that section of line. Both incidents were dealt with internally by Railtrack at the time. In the case of the latter incident, disciplinary action was taken against the signaller.
  The HSE investigated Mr. Kennedy's allegations, along with Railtrack representatives, and met him on the site in January 2001. It asked Railtrack to carry out improvements to the crossing, to re-brief signallers on the correct procedures—a very important move—and to carry out spot-checks, all of which were done. The HSE wrote to Mr. Kennedy about that at that time.
  Mr. Kennedy subsequently wrote to the HSE on eight further occasions between January and June 2001, making allegations of three further incidents of permission being given to cross in front of trains. In one case, on 27 January 2001, Railtrack found that the signaller had made a mistake, and it took disciplinary action. In the other cases, investigations failed to provide evidence to substantiate the allegations, and Mr. Kennedy was informed accordingly. Nevertheless, the HSE again reviewed the working of the crossing with Railtrack on 1 June 2001. Mr. Kennedy was invited to this meeting, but did not attend. Written correspondence to Mr. Kennedy seeking his version of events was returned by Royal Mail as "being refused". Further improvements were recommended, including the installation of CCTV, which was put in place in 2002.
  The right hon. Gentleman said that Mr. Kennedy's son alleged that he was given permission to cross and was confronted by a train. Network Rail held an internal investigation and the report was passed to the HSE. It shows that Network Rail considered various forms of independent evidence available to it to establish what happened. As the right hon. Gentleman told us, that included tape recordings, CCTV and train monitoring systems, as well as speaking to the staff concerned. Network Rail concluded, on the evidence available, that permission to cross the line was given after two trains that had been approaching had passed. The HSE has reviewed Network Rail's report, and I understand that it has no reason to doubt its conclusions. It has informed the right hon. Gentleman and Mr. Kennedy accordingly.
  I am very glad to hear that the right hon. Gentleman met representatives of the HSE and Network Rail today to review the evidence relating to the latest incident. He has told us of doubts concerning some of the detail of the recordings that he has seen and heard. I undertake
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  to contact Network Rail and the HSE, and to seek from them specific answers to the questions that he has raised as a result of this morning's meeting.
  Sir John Stanley: I am grateful to the Minister for giving that undertaking. I am well aware that Network Rail has taken the view that Mr. Kennedy's son, Mr. Alex Stedall, made the telephone call after the train had passed. There was another train, which had gone past. I myself have seen this morning the closed circuit television videotape. It shows incontrovertible evidence, which was not denied by the Network Rail and HSE representatives present. It shows Mr. Stedall—who was identified by his father and by himself, so there is no doubt about identification—opening the gate, going on to the line, looking, going quickly back and closing the gate, and the train then going past. There is no question whatever but that Mr. Stedall saw the train approaching him. The videotape evidence shows that he went back and closed the gate, and that the train then went past.
  Dr. Howells: I thank the right hon. Gentleman for that intervention. I shall certainly communicate his description of what he saw on the CCTV footage, and I will ask for answers that I hope will be useful to him.
  Of course, one has always to try to place trust in the experts, and there is no doubt that the rail inspectorate has great experience in such matters. We have one of the very finest safety records in the world. Indeed, I was fortunate enough recently to visit Japan, where level crossings pose the biggest problem in terms of railways incidents. Level crossings pose difficult problems—and I am not talking about only private ones, or ones where special permissions have to be sought and granted, but public level crossings when people do idiotic things.
  I want to know exactly what happened at this incident and I will certainly try to find out for the right hon. Gentleman. I want to reassure him that the necessary measures are being taken across the country. It is important that all our colleagues understand that because most of us have level crossings in our constituencies and we need to be aware of the fact that the HSE and Network Rail are concerned to ensure that we have safe level crossings.
  I understand that further improvements to this particular level crossing using existing technology are unlikely to be cost-effective in relation to the level of risk in usage. I hate to be so utilitarian in saying that, as I am not insensitive to the risk in the light of what the right hon. Gentleman has told us about what happened to Mr. Kennedy's son.
  I take the point, which the right hon. Gentleman has made vividly, that we are not talking about only one or two people on the level crossing who might be injured: if a vehicle is on the crossing, it could endanger the train itself. That is an important point, and we saw a terrible accident recently on the Worcester line, which resulted in deaths. That accident was the consequence

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  of the misuse of a level crossing. There are thousands of level crossings and one wonders how much it would cost to ensure that every single one of them was protected by much safer mechanical devices and procedures than we have at the moment. We have to look further into that matter.
  I understand that the cost of installing miniature warning lights at this particular crossing has been estimated at £800,000. The right hon. Gentleman raises his eyebrows, as I did when I read that. I will certainly try to test that figure and see if it is true, but there are an awful lot of crossings up and down the country just like that one. If the cost of installing that sort of equipment at each of those crossings runs at about £800,000, one wonders how any Government or any rail company—it is a privatised railway these days—could afford to do such a thing. As I said, I will certainly test the figure for him.
  Automatic barriers would be even more costly and I fear would probably be regarded by the auditors of this place as being wholly inappropriate, given the relatively small number of households served by the particular level crossing. However, Network Rail and the HSE are aware of the new developments of standalone warning-light systems driven by existing track circuiting, which could be cost-effective. We will take
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  a look at that one. Trials are planned and, if successful, it may prove to be a better solution to the problem of level crossings.
  I do not want to give the right hon. Gentleman too bleak a picture in responding to the problem. There are certainly some interesting technological developments nowadays. I will examine them and I hope that we may be able to apply such solutions to such crossings. On the other hand, I do not want to give the right hon. Gentleman any false hope about what will be done at this crossing, as I am not even sure that it is appropriate or whether the technology will prove to be successful on British railways.
  I am very grateful to the right hon. Gentleman for raising this issue. I want to reassure him that the HSE and Network Rail are committed to ensuring the safe operation of all level crossings, especially the one about which the right hon. Gentleman has expressed considerable concern. I will ask the HSE and Network Rail for their response to the issues that the right hon. Gentleman has raised so that I can satisfy myself that the crossing does not constitute, as he put it, an accident waiting to happen.
  Question put and agreed to.
  Adjourned accordingly at twenty-five minutes past Six o'clock.

Preamble
[SIR NICHOLAS WINTERTON in the Chair]

Asylum Applications
[Relevant documents: Second Report from the Home Affairs Committee, Session 2003–04, HC 218, and the Government's response thereto, Cm 6166.]
Motion made, and Question proposed, That the sitting be now adjourned.—[Derek Twigg.]
2.30 pm
Mr. John Denham: I welcome the opportunity to introduce the debate on our report, which was published in January. I thank fellow members of the Committee, who have worked very hard, since before my time as Chairman, to produce the report. It is a substantial and useful report, as is reflected in comments from outside the House. The Refugee Council, for example, welcomed it as
"a substantial, evidence-based report"
that
"should be welcomed by all those genuinely interested in developing a credible asylum system."
I emphasise the fact that there was consensus and the report was unanimous. Obviously, there were differences on some points of content, which are reflected in the record of the votes, but the final report was unanimously agreed. The Committee included two former Home Office Ministers—the redoubtable right hon. Member for Maidstone and The Weald (Miss Widdecombe) and me—and several other strong-minded members, so the fact that we produced a unanimous report is significant.
I will not quote the report at great length, but at paragraph 73 of our conclusions we stated that
"there is more in common between the over all strategy of the main political parties than is apparent at first sight. In particular, they are advocating a reduction in in-country applications for asylum, balanced by a significant increase in the number of refugees accepted through UNHCR. There is broad agreement on the need for more effective processing of claims, a reduction in illegal working and effective action on removals. A greater public understanding of these constructive common elements in the main parties' approach, as well as of the undoubted differences of principle on some issues, would help to make asylum a less divisive issue in the wider community."
I want to underline that fact. The issue is of great public concern. It is important that the public debate among the political parties concentrates on genuine differences and does not seek to exaggerate differences in areas in which they do not exist, because if the debate gets out of hand, it will not be any of the mainstream parties that benefit, but the extremist organisations that are trying to exploit public concert,. That observation by the Committee is very important. and I will continue my remarks in that tone.
A broad overview of the report is that the state of the asylum system is much better than it was a few years ago. In Committee we had a debate. which I will not go into, about the historical record, the responsibility and
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the efficacy of different policies that have been adopted over the past 10 or 12 years—but the main point is that the system is better today than it was only a couple of years ago. We also recognise that whatever debate there may be about domestic policy, Governments of all political parties have essentially faced a problem generated by international circumstances and conditions, rather than by things that have happened at home. All Governments have inevitably struggled with some of the consequences of those international developments.
I will highlight the key improvements. First, the number of applications has been substantially reduced. Secondly, the time taken to process applications has been reduced, particularly for first applications. Thirdly, there has been an improvement in the record on removals. That said, there are still problems and challenges, which I will come to in a moment.
It is worth looking briefly at the nature of the problem. Much of the public debate between the various organisations has shown differing shades of opinion and has tended to be polarised. One side says that pretty much everyone who seeks asylum comes from a part of the world or a country suffering internal conflict or conflict with its neighbours, and that those who come here are therefore overwhelmingly genuine refugees seeking safe haven. The other side says that pretty much everybody is a bogus claimant, coming here merely to enjoy the economic benefits of living here, our benefits system, our housing or whatever else is on offer.
The Committee examined the evidence and the various claims and analyses, and came to a balanced view of the situation. We recognised that evidence could be pleaded on both sides of the argument. The Committee's conclusion, set out in the report, was right as far as I could see from the evidence. First, it concluded that most of those who come to this country or to other western European countries seeking asylum come from countries where there is a level of internal conflict or conflict with neighbouring countries. Equally, the evidence, including evidence in cases that go all the way through the appeals system to the High Court and beyond, suggests that about half of the applications made in recent years were from people with a well founded fear of persecution under the Geneva convention, and that half of them were not. The latter applicants have sought refuge here without having a strong case under the Geneva convention.
That conclusion is not as surprising or contradictory as it might seem. Most people who leave their home country, wherever it is, are unlikely to do so without reason. A level of conflict or instability that may lead to economic insecurity and poor personal prospects may well be the trigger for people to move, even though they may not have a well founded case under the Geneva convention. At the same time, others at the other end of the spectrum, who may have a well founded case, are moved to leave their country because they can make a new start in a different country, with better prospects for their families.
As we say in the report, people leave their own country to seek asylum here or in Europe for a spread of motivations and reasons. However, our judgment that, at least in the recent past, about 50 per cent. of claims are well founded and 50 per cent. are not is probably as close as we can get. I said that people have different

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motivations in order to underline something that we all recognise. Those mixed motivations and different reasons make the system complex for Governments to administer. The nature of the decisions that have to be taken is complex, too.
I now turn to the areas highlighted in the report to which the Government need to pay greater attention. First, it is true that the number of asylum applications has fallen rapidly over the last year or so. That appears to have continued since the publication of our report. However, the quality of the initial decision making remains poor, and too many decisions for comfort are overturned later in the appeals procedure. There will, of course, be a temptation to take what some might call a peace dividend out of the reduction in the number of asylum applications and the reduced expenditure that could follow.
However, I stress to my hon. Friend the Minister that any freed-up resources should be invested in strengthening the initial decision-making process, in improving the process and in training staff, so as to achieve a higher success and accuracy rate. That will pay dividends down the line, not least because people will have greater confidence in the system. It will also take the heat out of a contentious issue, which has been debated in the House since the publication of our report—the attempt to simplify the appeals system, set against the need to ensure that asylum seekers' rights are not jeopardised. If people had greater confidence in the initial decision, there would be less concern about the appeals procedure. That will be a tricky issue, with the comprehensive spending review coming up, and the reduction in Home Office staff and so on, but investing in the initial decision-making process is crucial.
Secondly, the Government need to recognise the need for more effective action on returning failed asylum seekers; indeed, changes to the procedures are necessary. We recognise in the report that considerable progress has been made in stepping up the number of removals, but we cannot yet say that we are completely on top of current decisions, let alone that we are tackling the backlog of failed asylum seekers.
I draw hon. Members' attention to the proposals in our report for a radical change in how these matters are handled; in particular we suggested piloting a requirement for asylum seekers to attend a specified place to receive the decision on their asylum application. At present, they get the decision—yes or no—by letter, and say, "What will happen now?" They usually have little idea. If asylum seekers had to attend a centre to get their decision, and if the decision was positive, matters such as a job, national insurance number, housing and so on could be lined up for them. If the decision was no, in addition to counselling and support, arrangements could be made there and then to plan their leaving the country and, if necessary, their detention.
The third point about the overall system that the report highlights is that there would be less of a pull factor for economic migrants, and possibly greater effectiveness in removals, if there were less ability to obtain illegal work. The report stresses the importance of taking action against those who employ illegal labour and suggests the use of the Proceeds of Crime Act 2002 against employers who knowingly employ illegal
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labour, because at present the penalties are far too low. I am glad that the Government responded positively to that idea.
I want briefly to discuss returning failed asylum seekers. There is still a need for more independence in the production of the country assessments made by the Home Office about whether the human rights situation in a given country is good enough to return asylum seekers. There have been improvements, but we still think the assessments should be more independent of the Home Office. Asylum seekers are still being told that it is safe to return home when not only they but civil organisations and non-governmental organisations challenge that assessment.
The Minister may be aware of recent correspondence between the Bishop of Winchester and the Home Secretary about the situation in the Congo. On one hand, the Home Office says that it is safe for people to return home; on the other, the Church of England, with its extensive network of Church contacts in that country, says that it is not. More independence in human rights assessments would bring greater confidence in the system and fewer delays in removing people.
The report also highlighted the fact that those who even the Government recognise cannot be returned at present are in limbo In the later stages of the legislation, the Minister introduced new measures to ensure that such people would be gainfully occupied, and when he replies to the debate he may be able to say more about what he expects the impact of those measures to be.
During the Committee's work we drew attention to the problems caused by section 55 of the Nationality, Immigration and Asylum Act 2002. The Government changed the rules to give people slightly longer to claim after entering the country, but an independent review of how section 55 operates would be valuable. When people's cases are assessed they are supported by the National Asylum Support Service, and I suggested that any savings in the system should be ploughed back into improving the asylum application process. The Committee said that the NASS system was not yet working as it should, and that there was a case for greater investment in the asylum support system. That should be a call on some of the resources freed up by the fall in the number of asylum applications.
I have mentioned the substantive areas for improvement that the Committee recommended should be addressed, and I want to end on three or four significant wider points about how the asylum system is developing. First, border controls are being moved into Europe, Sangatte has closed, and action is being taken against airlines and others who bring people into the country, so the only people who can get here to make an asylum application are those who have substantial financial resources; if their network of family and friends cannot pay the people trafficker, they cannot get in.
However, it is not obvious that this country best meets its international obligations by granting refugee status to those who manage to get through all those hoops to get here. We suggested in the report that, as the number of in-country asylum applications falls—inevitably, I think—there should be a significant expansion in the number of refugees accepted into the

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country through co-operation with the United Nations High Commissioner for Refugees. The Government have already started that on a small scale.
We should like the Home Office to be involved with other Departments in conflict prevention. Most asylum seekers come from countries where there is conflict. The Ministry of Defence, the Department for International Development and the Foreign Office all look into conflict prevention, but the Home Office, too, should be able to argue that certain areas are a priority because they will produce a large number of asylum seekers.
We said in the report that we should like changes to the convention, but we ruled out the idea that this country should ever contemplate withdrawing from it. As we recognise that any change to the convention must be a matter of international consensus, none of us should hold our breath at the prospect of immediate change. However, we recognise that the convention does not really reflect the needs of a modern, mobile world.
For example, the vast majority or those currently in Darfur would probably be able to make a successful application for asylum in this country, because they had suffered genocide or persecution in Sudan. Only the lack of money and flights prevents them from getting here. However, the best way of dealing with what is happening in Sudan would not be to move the entire population to western Europe. We need a set of international obligations that give the rich nations of the world more responsibility for tackling the problems more effectively.
I have already spoken for longer than I intended to, but I hope that I have covered the main points. We stated in the conclusion of our report:
"the overriding priority is to maintain recent progress in improving the applications system, to reduce the backlog further and to increase both the fairness and the speed of the system. Efficiency should be combined with humanity".
We also said:
"whether we are dealing with genuine asylum seekers or economic migrants we should never lose sight of the fact that we are dealing with human beings, not numbers, and they should be treated accordingly".
Mr. Deputy Speaker: I thank the chairman of the Committee, the right hon. Member for Southampton, Itchen (Mr. Denham), for introducing the report. I now call another Select Committee Chairman, the hon. Member for Banbury (Tony Baldry).
2.47 pm
Tony Baldry: The right hon. Member for Southampton, Itchen (Mr. Denham), and the Home Affairs Committee have done the House a considerable service in producing the report. The Chairman is to be congratulated on securing a unanimous report, not least given the participation of my right hon. Friend the Member for Maidstone and The Weald (Miss Widdecombe). I can imagine that chairing such a Committee could on occasion be quite challenging.
Two events in which I have an interest and which prompt me to think about the issues in question are coinciding today: the International Development Committee, which I chair, has today published a report on migration and development, and simultaneously the
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Court of Appeal is hearing Cherwell district council's application against the overruling by the Deputy Prime Minister of his planning inspector's decision on the accommodation centre at Bicester. I should like to say something about all those matters.
I suggest that perhaps the House should increasingly be considering not asylum policy but migration policy. One difficulty that has arisen is that the impression can be gained from the media that every migrant is an asylum seeker. In fact we have many migrants, some of whom are refugees and some of whom claim refugee status that they are not entitled to. We need a migration policy.
The International Development Committee identified several myths about migration. Migrants are not a "problem", but people trying to improve their lives, who must be treated accordingly. There is a myth that a tidal wave of migrants is about to crash upon our shores. That is wrong. Migration is economically and politically important, but it remains the exception rather than the rule. International migration has increased in the past 40 years, but there is still a tiny amount—less than 3 per cent. of the world's population live outside the country of their birth—and most migration is between developing countries. A large proportion of international migrants move between poor countries, and the number of migrants who stay in their own country far exceeds that of international migrants. I shall detain the Chamber with only one fact: there are 175 million international migrants in the entire world. India alone has 2 million internal migrants, and China has 120 million. One must put some of these issues into perspective.
As the Chairman of the Home Affairs Committee said, it is not always the poorest most desperate people who migrate, because very often they cannot afford to. Often it is those with access to resources who migrate, so one cannot simply assume that policies to help migrants, particularly international migrants, will also help the poorest people. We must also be conscious of the fact that although migration can lead to a brain drain, flows of remittances and the return of migrants with new skills can offset the loss, and may even lead to a brain gain.
It is perfectly possible—we believe that it must be possible—for there to be a triple win on migration policy: for migrants, for migrant-sending countries, and for migrant-receiving countries. We need to think about how we can improve remittances and how we tackle trafficking and smuggling. All those issues are in the report, and I hope that the House will consider them. Indeed, I hope that the House will have an opportunity in due course to debate the report in full.
I shall not detain colleagues any longer, except to say that we should stop regarding migration as a problem, as the tabloid newspapers often present it, and see it as an opportunity both for us and for sending countries. We need a migration policy, not simply an asylum policy. We have sometimes got ourselves into a muddle as a result of administrative cock-ups and the way in which they were dealt with. The Romanian saga was one such example. The media got the impression that we were going to be overwhelmed by people from EU accession states seeking work in the EU—an impression that the Government did not help to dampen down. That has not happened, as the figures announced

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yesterday demonstrate. Indeed, quite a lot of people came from Poland, looked around, saw the cost of housing and went back to Warsaw.
The construction industry will tell anyone who visits construction sites in London that it is desperately short of skilled people, and if we go to any general hospital in the UK and ask around, we find that many of the people working there have been trained overseas. If they were not there, there would be a serious gap in the provision of health care and other vital services. We were not helped by the way in which the Romanian affair was handled.
I suggest to the Minister that accommodation centres represent another administrative cock-up. I have no quarrel with any of the conclusions drawn by the Home Affairs Committee: the report was unanimous. However, I draw the attention of the Chamber to one point. In its summary, the Committee calls for a more flexible approach to the siting of accommodation centres, but it is also fair to say that in relation to its conclusions in paragraphs 138 to 141, the Committee did not take oral evidence from anyone other than the Minister. If it had done so, the Refugee Council and pretty well every organisation concerned with the welfare of refugees would have confirmed their continuing concern about the fact that the Government's existing proposals are for sites that are too large and in the wrong place.
We all understand how this particular policy came about. Night after night, it seemed, there was television footage of young men trying to get on to trains coming through the channel tunnel from Sangatte. A genuine impression was given of a situation getting out of control. Ministers clearly believed that they needed to be seen to be doing something in response, so they advanced the proposal for accommodation centres.
Those of us fortunate enough to have been Ministers know that those Ministers will have had to write to the Treasury, which will have written back saying, "Well, it sounds like an interesting idea, but we're not totally convinced. If it's going to go ahead, it can only be on land on the existing Government estate." Therefore, with a limited budget, Home Office Ministers felt that they could have only a limited number of accommodation centres, so they would have to be for a large number of people—750 in each. Every organisation concerned with the welfare of refugees persistently tells Ministers that that approach is wrong and will not work.
Following the abandonment of attempts to use the Newton site in Nottingham yesterday, we are three years down the line—the process started in 2001—and the Government have been able to identify only one site, the decision on which is subject to judicial review in the Court of Appeal. Even if that site is successful, to have been able to identify only one site on the Government estate in three years suggests that the prospect of identifying more sites of this size, and getting them through the planning process, is unlikely.
Ministers must recognise that in the cases of Newton and Bicester there were full public inquiries. One of the great things about public inquiries is that people have to come and put their arguments rationally; they cannot be
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irrational, emotive, racist or irresponsible. An inspector hears planning arguments on planning grounds and makes a planning judgment. Having heard the evidence at Newton and Bicester, the planning inspectors said that the developments should not go ahead. In the case of Bicester, the Deputy Prime Minister chose to ignore completely the advice of the planning inspector, and that is the matter of the case before the Court of Appeal. The Government have not identified any site in their estate that meets with the agreement of the planning inspector.
Since 2001, the number of asylum seekers has dropped considerably, almost back to 1997 levels. Perhaps the summer months would be a good time quietly to rethink the whole approach. I commend to the Minister the following recommendation in the Home Affairs Committee report:
"Given the delays in opening accommodation centres, and the fall in asylum applications, the Government in its response to this report should clarify how many accommodation centres it intends to establish, with what capacity, on what timetable and at what cost."
The Committee also recommended that there should be a flexible approach to the siting of such centres. I suggest to the Minister that while considering the Department's response to the Select Committee's report over the summer months, Ministers should re-engage in discussion with groups such as the Refugee Council and the Immigration Advisory Service, as well as with MPs.
The history of involving MPs is disappointing. I received a telephone call one day from Lord Rooker, whom I much admire and like, to tell me that an announcement was going to be made the following day about the accommodation centre in Bicester. There was no subsequent discussion or engagement by the Minister's predecessor, the right hon. Member for Stretford and Urmston (Beverley Hughes), who saw it as a test of will that she should drive the policy through unchanged. Well, circumstances do change, so perhaps this is the time to have a rethink and to re-engage with groups concerned with the welfare of refugees and with MPs.
We must try to produce a policy that meets the needs for accommodation centres across the country, as recommended by the Select Committee, but does not involve huge accommodation centres stuck out in the middle of the countryside. I am against the idea of 750 people being stuck for up to six months on the outskirts of Bicester. What is more, the centres will be run by Group 4. The report from Mr. Philip Shaw on what happened with Group 4 at Yarl's Wood is still outstanding on the Minister's desk, and I find it strange that the Home Office, before it has had the opportunity of considering that report, appears to have awarded the contract for the running of the Bicester centre to "Global Solutions"— or whatever name Group 4 has decided to rebrand itself with to prevent us from remembering that it used to be Group 4.
I ask that during the recess Ministers take the opportunity for a period of quiet reflection on accommodation centres. The Newton decision yesterday means that their current policies are pretty much in tatters. If they were to engage with groups that are concerned with the welfare of refugees, they could develop policies for accommodation centres that would

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command wide support in the community and the country. Their current policy is totally friendless; it cannot find support anywhere.
3.1 pm
Mrs. Janet Dean: Asylum and illegal immigration are emotive and contentious subjects, and also more complex than many people imagine. One of the Home Affairs Committee's conclusions sums up that complexity. It says:
"The categories of 'economic migrant' and 'genuine refugee' often overlap. We note the research evidence that conflict, not poverty, is the defining characteristic of asylum seekers' source countries, though not all those who come from such countries are genuine asylum seekers. Equally, people genuinely seeking asylum may also be seeking to better their own and their families' lives. Likewise people who do not personally have a well-founded case for asylum may be coming from countries suffering conflict as well as from countries which are not."
The importance of the subject was reflected in the recent decisions by the Home Affairs Committee to conduct three full inquiries into various aspects of asylum and illegal entry: border controls, removals and asylum applications.
One of the reasons why there has teen so much public opposition to asylum and illegal immigration is that the system appeared to be out of control. The scenes shown on our televisions of young men trying to jump on to trains in France, and the Sangatte refugee camp, certainly gave that impression, and undermined the confidence of the general public. The fact that other countries in Europe had similar problems, and that most refugees in the world escape to their neighbouring countries, which are themselves some of the poorest, seemed to go unrecognised.
I am pleased that there has been co-operation between our Government and that of France in tightening the borders in France. When we conducted the inquiry into border controls, members of the Select Committee visited the Sangatte camp and were appalled by the conditions there. I am thankful to say that it has now closed. We also saw areas of Calais and areas around the Eurotunnel where those seeking to enter the UK could easily gain access to lorries and trains. Indeed, such activity had a severe impact on rail freight for a considerable time. The installation of security fencing has secured those potential points of entry into Britain.
There are several reasons why people want to come to the UK rather than to other European countries. Some of those are negative, such as the perception that there are delays in the process, which allow people to get lost in the system. Others reflect the positive aspects of the country. In the report we comment that:
"Asylum seekers' perceptions of the advantages of the UK may simply reflect this country's longstanding reputation for justice and fairness."
Another factor is the strength of the UK economy, meaning that there is the opportunity for work, both legal and illegal.
If we are to have a system that is respected by the public, we must ensure that the process is efficient and effective. I am pleased that the actions taken by the Government to increase security and to reduce the attraction of coming to the UK have cut the number of asylum applications so dramatically over the past year or so. Everyone should welcome the 60 per cent.
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reduction in applications between October 2002 and March 2004 reported by the Government in their response to the report. The increased number of removals, and the speeding up of decisions on asylum applications, so that 80 per cent. are now taken within two months, are also important improvements to the system, for which the Government and their staff should be commended.
In its report, the Committee recognised the need to address the problems at both ends by reducing unfounded applications, and by swiftly and humanely removing failed asylum seekers. However, it must be recognised that as we make it harder for people to arrive in this country illegally, genuine refugees, too, will find it more difficult to seek asylum here. Most of those who enter the UK to seek asylum do so through people traffickers. They tend to be young men, who have been able to raise such funds from families and communities to pay their passage. The Committee concluded that they were not necessarily representative of the refugee population that could claim asylum in the UK.
Our report said that the Government had a moral obligation to provide legitimate routes by which refugees can gain access to this country, to assist refugees closer to their country of origin, and to tackle the routes of enforced migration. In that respect, I welcome the fact that the UK has agreed to accept up to 500 refugees a year through the Government's Gateway resettlement programme. I am also glad that the UK has been an active partner in negotiations regarding the development of a common European asylum system, and that we have played a major role in shaping Eurodac and the Dublin II regulations, which will facilitate the identification and return of asylum seekers who are the responsibility of other member states.
The report emphasised the need to improve the quality of initial decision making to ensure that we have a fair, fast and effective asylum system. As my right hon. Friend the Member for Southampton, Itchen (Mr. Denham) said, we referred to the need to front-load the system, putting in the right resources at an early stage. We suggested that there should be access to good quality legal advice and interpretation services, to avoid the necessity of reconsidering decisions through the appeal process. Although I am disappointed that the Government do not accept that in most cases, the attendance of legal advisers at the substantive interview would provide value for money, I am pleased that there is a commitment to ensure that publicly funded legal advice available to asylum applicants is accredited and of a high standard.
The quality of the decision making can be improved by the language analysis scheme, and the Committee supported the extension and development of that service. We also recommended that the Home Office should recruit more caseworkers and interpreters with a specialist knowledge of the claimed countries of origin of asylum seekers. I welcome the Government's review of the initial training of asylum caseworkers, as well as the proposal to have refresher training for experienced caseworkers.
One of the reasons for the fall in the number of people claiming asylum last year was the implementation of section 55 of the Nationality, Immigration and Asylum Act 2002, and we were concerned by reports of the distress caused to individuals who could not claim

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benefits because of that section. We welcome the modification made by the Home Secretary to extend to 72 hours the period within which arrivals to the UK would be expected to make a claim for asylum to qualify for benefit. Although it is true that families are exempt from section 55, and there is a reconsideration process, I am disappointed that the Government have rejected the Committee's recommendation that there should be an independent review of the working of section 55. However, I welcome the decision to display posters at all ports of entry advising those who intend to claim asylum that they must do so on arrival.
The Committee hoped that if a review of the operation of section 55 were instigated, welfare support for failed asylum seekers could also be considered. There is currently a problem for those who have been refused asylum: they are destitute and unable to leave the country, through no fault of their own. As I understand it, section 4 support may be available, but that might necessitate someone moving away from friends to access that support, and individuals who may be eligible may not be aware of the help available. I hope that the Government will be able to publicise the availability of section 4 support better. It might also be advantageous to give those who cannot be returned home a temporary right to work to support themselves.
I hope that the debate will be helpful in illustrating the complexities of the issues, and the difficulties in establishing a system that will command the respect of all who need to seek asylum, as well as of the public; some people meet asylum seekers, but others only hear about them through the media. We must remember that we are talking not about statistics but about individuals who, for whatever reason, have travelled many hundreds of miles away from their homes and families.
3.10 pm
Bob Russell: In his introduction, the right hon. Member for Southampton, Itchen (Mr. Denham) rightly drew attention to paragraph 73. I commend him for that, and for the manner of his presentation. I also concur with much that has been said by my colleague on the Committee, the hon. Member for Burton (Mrs. Dean), and by the hon. Member for Banbury (Tony Baldry). I particularly congratulate the hon. Member for Banbury on his reasoned contribution; I am sure that his view will be echoed on his party's Front Bench. It is a pity that the good sense reflected in the unanimity of the Committee—which will, I am sure, be repeated here—is not always found in other Chambers, and certainly not in our media.
I would like to draw attention to paragraph 76 of our conclusions:
"Britain's reputation for fairness and tolerance should not be exploited by those with no genuine claim for asylum, and even more so by the criminals running the international gangs, nor should it be sullied by ill-informed or exaggerated debate. We hope that our report will contribute to a rational debate about the asylum issue."
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That is probably a forlorn hope. Nevertheless, it is important to state it. Every politician, elected or unelected, has a duty not to inflame the situation but to try to present reasoned arguments as to what is the truth and what is fiction. In paragraph 59, we say:
"Illegal working car have a particularly pernicious effect on community relations and an unfair impact on the legally employed workforce. It is important that the Government should be seen to be vigorously tackling the problem."
The Chairman rightly drew attention to some illegal acts by employers. We need to follow that down the employment chain. The possibility will not have escaped hon. Members' attention that the relatively cheap food—salad, in particular—in our supermarkets could have been harvested by illegal immigrants employed by gangmasters, who are engaged by farmers who have to keep the prices down because of the stranglehold of the major supermarkets. It could be that our supermarket bosses are indirectly associated with some of the illegal employment practices.
When the Government tackle the issue, I hope that they will follow it all the way through and find out who else is involved in the chain. The right hon. Member for Maidstone and The Weald (Miss Widdecombe) highlighted the fact that there are very few prosecutions for employment of illegal workers under section 8 of the Asylum and Immigration Act 1996, and she was right to do so. We must not assume that Morecambe bay was a one-off incident. I am thankful to say that its consequences were unique, but I suspect that it was not an isolated instance of illegal employment.
Those who read the Daily Mail or the Daily Express— which, sadly, give comfort to racists, bigots and the ill informed—could well believe that the country is awash with scroungers and people living off state benefits. That might describe some of the indigenous population, but dozens of asylum seekers have come to my advice bureau over the years, and I have yet to see one who has been anything other than a "get up and go" person. There is no future for them at home because of a range of issues, and asylum is the only way for them to get out of the world in which they live.
Without exception, such people want to contribute to the United Kingdom, not to live off it. The evidence—I hope that the Minister will confirm this statement, as we do not regularly hear it from Government Ministers—is that people who settle in this country and get work are net contributors to the public purse, not a drain on it. Ministers need to say that time and again, in the hope that the Daily Express and the Daily Mail may one day report it.
I return to paragraph 6 of the report's conclusions and recommendations. One of the reasons why people come to the United Kingdom to seek asylum is that:
"The UK may well be seen also as having a greater commitment to fairness and due process and respect for treaty obligations."
That theme continues in paragraph 7, where the Committee—it was unanimous—states:
"We do not believe that Britain can be described as a soft touch for asylum seekers."
We took evidence from people who had been asylum seekers, had made their case and been accepted. They came and gave evidence, and they contrasted the fairness, justice and humanity that they witnessed on arrival in this country with what happened in some of

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the other countries that they had come through. Not once did they say that Britain was a soft touch. The next morning, the Daily Express said something like, "Asylum seekers admit Britain is a soft touch".
In a previous existence I was a branch secretary of the National Union of Journalists, and there was a time when there was a code of conduct. I do not know whether that still exists, but if it does, it is about time that the NUJ took up the issue with the section of the national media that is failing this country, distorting the truth and misleading the general public, with the consequence that political parties can use that to justify their attacks on those who have chosen to settle in this country because circumstances so dictated.
I represent—I shall get the plug in here—Britain's oldest recorded town, and for 2,000 years we have absorbed people into our town, starting with the Romans but going all the way through the Saxons, the Normans, the Danes and people from the Low Countries, until recent times whet brave men from Poland came and fought alongside the British in the second world war. That continued through the 1950s, '60s and '70s.
This country needs and has benefited from the people who come here, such as the Ugandan Asians or the people from the West Indies who came here in the '50s and '60s for transfer to the national health service. That message is too seldom mentioned. The report brings us up to date and into the 21st century. It explains why this country has, and has had for centuries, a proud record of welcoming ashore those who have fled their home country because there is no future for them, for a variety of reasons. This country has been the richer for that.
Far from being a drain, the people who came here as asylum seekers and have made Britain their home have been net benefactors to the economy—I return to that point, because nowadays everything seems to be money driven. I implore the Minister and his colleagues to mention it, and it would be nice if the Prime Minister would do so once or twice as well. I hope that the Government will take the Committee's recommendations very seriously. I stress again that they were unanimous recommendations. carefully thought through. Witnesses from various pints of view gave evidence, and we distilled that. For a Committee to come up with unanimous recommendations on such a vital and controversial subject as asylum is the equivalent of Greece winning Euro 2004.
Mr. Deputy Speaker: Before I call the next speaker, I have one point to make. Morecambe bay has been mentioned in the debate, and it is appropriate to advise the House that criminal charges have been made, so the case of the cockle pickers' tragedy is sub judice. I ask Members to exercise caution in their remarks if they refer to that matter. The circumstances can be taken into account, but the cases must not be mentioned.
3.20 pm
Mr. Martin Salter: I apologise if my speech is somewhat fuzzy; I am trying new glasses, and switching back and forth is not easy, as we see every Wednesday at Prime Minister's Question Time. The Prime Minister is a year older me, and probably suffering in the same way.
Like Bernard Manning when he makes inappropriate comments, people who begin a contribution about race or asylum often have to lay out their credentials first. Some of what I have to say may be controversial, and I want to put on record that I have spent 25 years working with Searchlight, the magazine funded by the Board of Deputies of British Jews, in fighting the rise of the far right and organised fascism and the racial attacks and abuse that go with them. I have also been a member of Reading Council for Racial Equality, and I understand from an audience that I was recently granted with my hon. Friend the Minister that roughly 31 MPs are responsible for 40 per cent. of correspondence with the Home Office on immigration and asylum casework. My researcher was pleased to hear today that she is responsible for much of that correspondence. She is probably towards the top of the list—not that she will be getting a pay rise.
I want to put on record as well my congratulations to my right hon. Friend the Member for Southampton, Itchen (Mr. Denham) and his colleagues on the Home Affairs Committee. I have spent many hours reading the report, and it is a significant contribution to the debate on asylum and immigration in this country. It is a debate that in part, thanks to the tabloid press, prejudice and suspicion, threatens to poison race relations in this country.
My constituency of Reading is one of the most ethnically mixed and proudly multicultural towns that one could ever come across. The far right has never gained a foothold on the streets of Reading, and I will do everything in my power to ensure that it never does; it has never been able to exploit some people's well founded fears and other people's prejudices for political gain. However, we have seen it advance, including in the European elections, and we know that this issue is exploited for political ends.
My starting point is, properly, the Home Affairs Committee report and, in particular, some of its observations. It states:
"We note evidence that conflict, not poverty, is the defining characteristic of asylum seekers' source countries, though not all those who come from such countries are genuine asylum seekers. We consider that, very roughly, about half of claimants can justifiably be regarded as economic migrants rather than refugees".
To take slight and gentle issue with the hon. Member for Banbury (Tony Baldry), he must have been very lucky in his advice surgery if every single asylum seeker who came before him was genuine.
All hon. Members who have an extensive case load will have seen people who have tried to abuse the system. I am talking not necessarily about people whose family have saved up to smuggle them from one side of the world to another, but about deliberate overstayers. I remember seeing last year in my advice surgery a lady from India who had overstayed a tourist visa by several months and was advised by a solicitor, unbelievably, to apply for asylum—from one of the most modern democracies, indeed the largest democracy, in the world. It was a blatant abuse of the system, simply intended to spin out the length of time she could stay in this country.
I also remember, with some pride, the amount of effort that it took Foreign Office Ministers, my staff and me to get Elizabeth Siah-Vandi into this country to

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rejoin her mother. Elizabeth was 11 years old when the fighting broke out in Sierra Leone. She witnessed the horrific spectacle of her own uncle, who was her guardian at the time, being beheaded in front of her. It took us three years to trace her through the United Nations High Commissioner for Refugees and through three African countries, before finally reuniting her with her mum in Reading. It is a tribute to Sierra Leone's education system that Elizabeth was quickly able to attend and compete with others of her age in her class at her local school in my constituency.
Those are two asylum stories: one genuine, the other legally aided, corrupt abuse of the system. That tells us one thing—that we have a problem. As the hon. Gentleman said in his contribution, the problem transcends party politics. I deplore the politicisation of the issue, because it only plays into the hands of those who wish asylum seekers and people of different races, nationalities and religions no good whatever.
I was particularly interested in the Committee's observations on removals. It has been put to me that the system is not unlike a bath, with the two taps full on and the plug out. [Interruption.] From the twitching on the Front Bench, I think that I may be stealing a line from the Minister. The challenge for the Government is how we balance a firm and fair system with one that commands public confidence. Any Government will command public confidence only if there is a credible removal system. It is absolutely absurd that we still do not have a proper embarkation process. On several occasions the Committee made reference to the fact that the Government cannot find out who is in the country at any point in time.
Such research leads me to draw the conclusion that a way of checking identity, perhaps with identity cards, is essential. Having such a system would help us not only to manage our immigration and embarkation systems, but to restore public confidence that our borders are safe and secure, and that the asylum system cannot be abused either by those who seek to profit from human misery or by those who wish the people of this country no good whatever, and who are prepared to take up arms, or use explosions or other acts of terror, for political purposes.
In my community, the reaction to the asylum issue of the settled immigrant communities, of British-born blacks and Asians, is interesting and instructive. By way of preparation for this debate, I spoke to a number of people in my constituency of black and Asian origin. Those people, who are as British as I am, resent the fact that the debate on race and community relationships in this country has become skewed. Someone whose skin is brown or who wears a turban might now, somehow, not be regarded as British any more, but as just another of those asylum seekers whom people read about day after day in the tabloid press. I need say no more.
There was mention of the efforts of my right hon. Friend the Member for Stretford and Urmston (Beverley Hughes) as the previous holder of my hon. Friend the Minister's post. I should like to put on record my appreciation of the efforts that she made while at the Home Office to deal with the backlog and the abuse of the system. She was an excellent Minister and I hope
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that she will be back in the Government very soon indeed. Significant progress was made under her stewardship in getting to grips with the chaos of the asylum system, for which Governments of different political persuasions have been responsible. New asylum claims halved under her stewardship, reducing to 3,500, compared with more than 8,500 a month in October. We saw new claims being decided within two months, and appeals being completed within six months, so people with unfounded claims can no longer use delays to play the system.
We also saw border controls being moved to France, thus stopping 9,000 people from gaining entry last year; the closure of Sangatte; the securing of the channel tunnel; the installation of new technology at ports to screen for stowaways; and the introduction of fingerprint checks to stop asylum shopping. Thousands of new caseworkers, have been employed, the asylum backlog has been reduced to less than half that of 1997, and initial claims ire now dealt with in 2 months, compared with the 20 months they took in 1997.
I say all that not to politicise the debate, but because I believe that my right hon. Friend was treated badly by the media and by some Opposition Members. She has a proud record of getting to grips with one of the most difficult issues in Government, and she deserves recognition for that
It is worth considering how the numbers add up, particularly in relation to new asylum claims, which are mentioned in the report. The figures show that until 1988 we were rattling along with 3,000 to 4,000 claims a year, which was much the same rate as other European countries, but that between 1988 and 1990 the number increased sixfold to 26,200. By 1998, the number had doubled to 46,000. Those increases occurred under the previous Conservative Administration, which sought to grapple with the problem by introducing measures that have since been built on. The fact that asylum claims doubled again under the Labour Administration—they were at 84,000 in October 2002, although they are now back down at the 1997 level—shows that this issue does not bear examination in the party political context.
We should not play party politics with this issue, on which no party can feel particularly proud of its record in government. As the report says, the people who smuggle human beings into this country are organised criminals. They are quickly on top of every change in legislation, whether it is introduced by a Conservative or a Labour Government. They look for new ways around such changes, because the system enables people with no morals or scruples to become multimillionaires overnight.
I did not manage to dig out the exact press cutting, but I remember looking at a criminal rich list—one of those absurd rich lists in The Sunday Times—on which the guy to whom I refer, a trafficker, was seventh, I believe. I will not attempt to name him, even with parliamentary privilege, in case it is somebody else. I found it interesting that someone would actually list the trafficking of human beings as his primary source of income, by which he made billions and billions of pounds worldwide. That is the problem that Governments have been dealing with.
We must ask ourselves certain questions. What is asylum for? Who does it help? How much does it cost? Is it sustainable? The Select Committee report touched on some of those issues, but we should concentrate on those specific questions, rather than have a sterile debate about which political party has done more to say no to a higher proportion of people.
What is asylum for? The definition of a refugee is someone who has a well founded fear of persecution on the grounds of race, religion, nationality, membership of a social group, or political opinion. That is an incredibly broad definition; I do not know whether a member of the Ku Klux Klan who felt persecuted in an intolerant America would qualify under it, or where members of specific religious groups would fit into it, in the context of a non-secular state or constitution, but I do know that a definition framed in 1951 has little relevance to Britain, Europe and the world today in the 21st century.
A lot has been said about genuine asylum seekers versus economic migrants. People talk about a well founded fear of persecution, but my reading about dictators and dictatorial regimes has led me to conclude that Hitler, Stalin and other dictators did not spare the over-50s. Looking at the gender and age profile of those seeking asylum, however, we find that 82 per cent. are young males between 18 and 34, 15 per cent. are between 35 and 49, and only 3 per cent. are over 50. Very few are women, and very few have disabilities.
When we ask what asylum is for, we also learn how much it costs, and my right hon. Friend the Member for Southampton, Itchen referred to that. It costs between £10,000 and £20,000 to smuggle people across the world, but the wages of the average Chinese agricultural worker mean that it would take them several lifetimes to pay that level of bribe.
So, although we must always have an asylum policy, the prime beneficiaries seem to be young males who, while undoubtedly fleeing poverty and conflict, have the ability to benefit economically from the opportunities available in Europe. The people smugglers are certainly making millions, if not billions, from trafficking in human misery, with absolutely no regard for human life. Many lawyers are also doing well out of an industry from which, as I read in The Guardian the other day, the Legal Services Commission is having to recoup £8 million of public money in the form of legal aid fees that had been wrongly claimed.
The overall costs of asylum are difficult to quantify, but if we piece together some of the answers to the parliamentary questions, it becomes clear that we are certainly talking about a figure in excess of £1.2 billion, with legal aid bills pushing £200 million. That is an awful lot of resources. Is the situation sustainable? As my right hon. Friend said, if the population of Sudan or Iraq arrived on the shores of a European country, our treaty obligations would mean that we had to process every single claim. Of course, that is not going to happen, but the policy is not sustainable.
It is all very well being critical, but where does that analysis lead us? It leads us to say that our treaty obligations are in need of review, if not radical surgery. The Home Affairs Committee stepped away from the temptation to recommend withdrawing from our treaty obligations, but I refer members of the Committee, and
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the House as a whole, to the evidence of Mr. Martin Howe, QC. He argued, quite coherently, that the right to asylum should be qualified by
"what it is practical for us to achieve",
thus putting some limits on the obligations of receiving countries. The report summarises some of his points, noting that he argued for the UK to reconsider
"its acceptance of treaty obligations"
and that the
"1951 Geneva Convention should no longer be directly interpreted and applied by domestic courts. Instead, entitlement to asylum should be judged against criteria enacted in domestic law…The UK should withdraw from the European Convention on Human Rights and not re-enter unless the convention is revised to take better account of the need to tackle terrorism…As an alternative, the UK could withdraw from the Convention and then re-adhere to it after a short period attaching 'reservations' under Article 57 in respect of anti-terrorist measures."
Mr. MartinHowe is not the only person who has argued that our treaties look tired and that our obligations are possibly unrealistic. In his keynote speech on immigration on 27 April, the Prime Minister said:
"But since the early 1990s, the nature and volume of asylum claims to the UK has changed radically.
It became increasingly apparent that our asylum system was being widely abused. The UN Convention on Refugees, first introduced in 1951, at a time when the cold war and lack of cheap air travel made long-range migration far more difficult than it has become today, has started to show its age."
The Prime Minister argues that there is a case for change. The previous Minister of State at the Home Office in her evidence to the Home Affairs Committee argued that too. We know that there is a commitment to a convention—plus process, which hopes to update these tired treaties.
Mr. Denham: Just to correct any misapprehension, the Committee certainly would welcome a change in the convention. The Committee believes that the restriction of the convention to state persecution rather than non-state persecution would be the right thing to do, although we recognise that that is not what our own courts have decided and nor is it in the European convention. However, we did not fight shy of saying we should withdraw; we took a positive decision to say that we should not unilaterally withdraw from the convention.
I can speak only for myself, but I think that members of the Committee took the view that it would be unacceptable for the fourth or, according to the figures, fifth richest country in the world simply to turn its back on an international convention rather than to try to change it through the international system. I would not like the impression to be given that the Committee thought that we should leave, but decided not to say so. The decision to say that we should stay and argue for change rather than leave was a positive decision by the Committee.
Mr. Salter: Just as I probably stole the line from the Minister, my right hon. Friend has stolen my conclusion, but it will bear repeating. Hon. Members will have to hear it twice now, but that is always the beauty of interventions.
The argument, which the Committee and I share, is also shared by Mr. Ruud Lubbers, the United Nations High Commissioner for Refugees. He recently argued, as I will argue in my concluding comments, that, far from throwing money at a system that will inevitably be the subject of abuse, there should be greater emphasis on tackling the conditions from which people are fleeing. In a speech on 9 April 2003, he said:
"Unfortunately, governments often fail to recognize the important role that UNHCR can play in helping them to address refugee issues. As a former Prime Minister, I know that taxpayers want rational, cost-effective programs. So I really wonder how governments can justify spending millions on reinforcing borders, on all kinds of deterrence measures, on custody and detention centers, and on so many other costly domestic approaches, while refusing to invest in tackling the problem at source, where solutions should begin. It seems quite irrational. UNHCR is working with refugees and the internally displaced in their regions of origin. Governments should see it in their interests to fund us, strengthen us and use us."
Those are sentiments with which many of us would concur.
I concur with much of what has been said in this sober debate, which has been in marked contrast to the kind of treatment that the issue gets in the media. I am pleased that the Government and the Committee have not closed the door to reviewing our outdated treaty obligations and, in particular, their somewhat perverse interpretation by our judges, who have probably never seen an asylum seeker outside the court context.
If these reviews do not deliver, we should consider withdrawing from both the 1951 convention and the European convention on human rights in order to force the pace of change. Britain has been proud to argue for and to take a leading role in matters of humanitarian assistance. I do not believe that the current asylum system is sustainable. It is hopelessly exploited, not so much by the asylum seekers as by people who seek to profit from them.
Britain has signed up to the UN target of 0.7 per cent. of gross national income for development aid, but we are still a long way from meeting it. Much progress has been made, but Britain is still at only 0.32 per cent., compared with 0.8 per cent. for Norway and 0.77 per cent. for Sweden. For Britain to take a lead in addressing some of the appalling conditions and conflicts from which many refugees are forced to flee, we must hit our UN targets sooner rather than later. Money wasted lining the pockets of gangmasters, suspect lawyers, people traffickers and dodgy landlords could be better spent helping to improve the life chances of our fellow human beings in other parts of the world who are less fortunate than we are.
3.45 pm
Mrs. Claire Curtis-Thomas (Crosby) (Lab): I offer my sincere apologies to my hon. Friend the Minister and to the hon. Member for Woking (Mr. Malins), but I cannot stay for their concluding remarks, for pressing private reasons.
Asylum, as my hon. Friends have said, is a hugely emotive issue. If we are to reduce the emotive nature of the arguments that we hear, surely we should improve the mechanisms that we use to process asylum seekers
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when they come to this country. I participated in the inquiry with some hesitation, because, at face value, it seemed enormously complex, particularly for a Member of Parliament who represents a constituency that, by and large, is almost completely white. I have received three inquiries about asylum in seven years; hence my reticence today. So many hon. Members in this Chamber clearly have considerable first-hand experience of asylum seekers and I clearly do not. However, my role on the Committee was to consider process-related issues and to see what could be done to Government processes in order to improve the outcomes for all concerned, because there has been substantial criticism of how successive Governments have executed their role of processing applications.
As my hon. Friends will know, of the 36 recommendations made, 21 were accepted, 12 were rejected and three needed clarification. That is quite something. I have looked at many Select Committee reports whose recommendations were almost all rejected by the Government. I am pleased that, on this occasion, many concessions have been made to the Committee's recommendations.
My remarks will centre on the issues of conflict. I will repeat some of the comments made by my colleagues, but it is right to do so, because the comments are substantial and we feel strongly that our recommendations address a problem that the Government are not tackling constructively.
First, the Committee recommended that the Government should make a commitment to restoring the concession to work after six months once the application processes have been streamlined. The Government rejected that recommendation on the basis that asylum processes to deal with applications are being speeded up. That is undoubtedly true, and the Government are to be congratulated on it, but it does not make the recommendation any less valid. We still have people left in this country for an inordinate amount of time who are not working. That is deeply demoralising and does not acknowledge the fact that the reason why those individuals are here lay well outside their control.
Last Tuesday, I went down to HMS Haslar to visit the detainees in the detention centre there. The centre has been the subject of discussion in the press, and I wanted to see for myself whether there was any substantive truth in the reporting. It turned out that, as usual, the reporting was wildly inaccurate, which supports the comments made by the hon. Member for Colchester (Bob Russell). I found detainees who were there for many months, not expecting to be repatriated, but seeking to be repatriated to their country as quickly as possible and knowing that they would have a long wait. If people cannot be repatriated, they should be allowed to work, especially if they are being detained in prison-like conditions, as those individuals are. They should be offered the opportunity to work in the prison. Detainees at Haslar are not prisoners but detainees; the rules about the minimum wage therefore apply to them, and for that reason they are not permitted to undertake work of any kind. I sincerely hope that that problem might be overcome and that they might be allowed to do something constructive to help them to fill their days in such a difficult period in their lives, especially when, for many of them, those days will go on and on.
The Committee recommended that embarkation controls should be reinstated at UK borders to enable credible estimates to be made of the number of failed asylum seekers who remain in this country. It is estimated that reinstating embarkation controls would cost in excess of £26 million a year, but that is not a huge sum of money when one considers the dispute about who is here. The Government should seriously consider the proposal. as the issue was raised not just by one or two individuals, but was a consistent message about how to control the process and know that we have control over it.
I agree with what the Chairman of the Select Committee said about the refugee convention definition. However, we asked for negotiations to be reopened on the EU draft for the qualifications directive, which proposes harmonisation on the broader, rather than the narrower, interpretation of asylum. I hope that the Minister will say how those negotiations are progressing. The Committee visited Germany and Sweden and we are acutely aware that countries throughout Europe have similar problems to our own. A harmonised directive on the issue would therefore be helpful for all concerned.
The Committee believes that the Home Office should commission an independent review of the decision-making process of the immigration and nationality directorate and publish the results, and that the process should be subject to constant assessment and review. I understand why the Government would not want an independent review of the process, but surely, given the failure rate that is inherent in the existing system, an independent review would be helpful and would restore confidence. People take a dim view of those who are both judge and jury; the directorate takes decisions about applications and reviews those decisions. That does not smack of the fairness that the citizens of this country expect of such a process.
On the matter of the late claim in respect of the refusal of support, I, and, I presume many of her members of the Committee, received today an extensive plea from Shelter about the working of section 55 of the Nationality, Immigration and Asylum Act 2002. Hon. Members have not mentioned that report, but Shelter referred to numerous cases in which there are serious problems associated with section 55. We have asked for a review, but the Government do not believe that such a review is necessary or desirable. however, I ask the Minister to reconsider. If there is no significant evidence to support those concerns, we have nothing to lose from a review. In fact, we have plenty to say that will confirm that section 55 can bring people to the point of destitution, which is totally unacceptable in this country.
Finally, I should like to touch on the temporary right to remain in the UK for some failed asylum seekers. The Committee recommends appropriate use of the power to grant strictly temporary rights to remain in the UK to those genuinely unable to return to their countries. The Government have, of course, granted leave for those meeting criteria under the humanitarian protection and discretionary leave policies, and to those whose circumstances engage our obligations under the ECHR and other considerations. However, the Government have indicated that they will not grant even limited leave to failed asylum seekers who cannot leave due to factors
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beyond their control, such as people making unfounded claims due to obstacles to removal. I sincerely hope that the Minister will also consider extending limited leave to failed asylum seekers who cannot leave this country through no fault of their own. We must consider that limited group of people, but that does not mean establishing a floodgate through which many will enter. It would apply to a limited number of people. I ask the Minister to consider supporting that request.
3.57 pm
Mr. Alistair Carmichael: I add my name to the list of right hon. and hon. Members who have welcomed the report, the strenuous efforts that have been made and the very thoughtful debate that we have had today. It has possibly been one of the best debates of this sort that I have attended during the three years that I have been a Member. That reflects well not just on the House but on the Committee.
The right hon. Member for Southampton, Itchen (Mr. Denham) introduced the debate and made two important points. First, he said that this was an evidence-based report and, secondly, that it was unanimous. Those two descriptions are important. Being an evidence-based report, it can be used to nail a number of myths, particularly those to be found in the tabloid press, to which a number of right hon. and hon. Members referred. I understand that unanimity is not easily obtained, but it is certainly worth striving for. As the right hon. Gentleman said, where there is discord among those of us in mainstream parties on an issue such as this, people on the political periphery will benefit—the British National party and its ilk in particular.
We must also recognise the role of the media—a point that was perhaps not made as strongly as it might have been, apart from in the contribution of my hon. Friend the Member for Colchester (Bob Russell). I do not know whether any other hon. Members present endured the British National party's broadcast during the recent European elections. Time and again it returned to press headlines: the Daily Express says this, the Daily Mail says that. There was talk of swamping and of a deluge of asylum seekers. We should understand that the BNP will use that type of press comment in an attempt to achieve legitimacy and respectability for its views.
Mr. Salter: The hon. Gentleman should not be too surprised about the Daily Mail headline. It is probably worth putting on record that this was the newspaper that in 1934 carried the famous headline, "Hurrah for the Blackshirts"—not that I bear a grudge for a long time. It is funny how leopards do not change their spots.
Mr. Carmichael: I cannot honestly say that I was surprised by the Daily Mail, but its attitude should concern us all. The other remarkable and commendable feature of the report and of the Committee's approach, as pointed out by several hon. Members, is its recognition of the fact that asylum seekers are not a race apart. It is dangerous to classify people in that way. They are individuals. That struck me quite forcefully last year when several students from Anniesland college, all of whom were asylum seekers, visited my constituency. They met the senior classes at Anderson high school in Lerwick. People were not quite sure what

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they were coming to and what was coming to them. It was apparent after a short time together that these people were seen not only as asylum seekers, but as individuals with names and personalities that were good, bad or indifferent.
It is a pity that the hon. Member for Crosby (Mrs. Curtis-Thomas) is not here. I was astonished to hear of the small number of asylum seekers in her constituency. More asylum seekers have come to my surgeries in Orkney and Shetland than to hers. Every year, dozens, if not hundreds, of people come to the isles seeking asylum. Some are from places as far away as Birmingham, Manchester, Sussex and Suffolk. We have concerns about the effect that they might have on our local economy and culture, but we welcome them none the less.
In all seriousness, a couple of cases, one of which remains to be processed, are prominent in my constituency at the moment. I am intensely proud of the way in which the local community in Shetland has got behind my constituent Hazel Minn, a Burmese asylum seeker who is currently resident in the northern part of Shetland. Some 6,000 people have signed a petition in support of her case. That means that a significant proportion of a local community of some 22,000 have got behind an individual whom they have identified as being part of their community. Glimmers of hope like that are tremendously helpful at a time when the asylum issue is threatening to poison race relations and wider politics in this country, as the hon. Member for Reading, West (Mr. Salter) indicated.
The right hon. Member for Southampton, Itchen said that there were three factors at play: the number of applications, the time taken to process them and the removal of those whose applications are not successful. The Government have absolutely no control over the number of applicants, which any number of factors can affect. Indeed, the report on migrants throughout the world, which was published today by the Select Committee on International Development, of which the hon. Member for Banbury (Tony Baldry) is Chairman, was a useful reminder of the fact that the problem is not a UK problem or even an EU problem, but a worldwide problem.
The other two factors—the time taken to process applications and the removal process for those whose applications are not successful—are within the Government's control. Now that we have seen a dip in the number of applications to be processed, I hope that the quality of decision making at first instance will improve. That must be the opportunity that the decrease in numbers presents to us. The number of applications that are refused at first instance but successful on appeal must concern us all, because it is a matter of life and death for many people. If we get it wrong and send them back, their lives will be in danger.
I suggest that if we are able to restore some confidence in the system as a whole, we will succeed in drawing a lot of the poison that is currently a feature of the asylum debate in the UK.
I recently took the opportunity to visit the Dungavel immigration removal centre in Scotland and, at my prompting, the Select Committee on Scottish Affairs
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recently followed my example. I should like to give my personal impressions of that centre. The Dungavel centre is not the hell on earth that is often painted in the press and by a number of politicians north of the border. However, it is a lock-down institution—the razor wire around the walls and the number of locks on the doors make that clear. I was immensely impressed by the quality of the staff who are employed there and the dedication that they exhibited towards the day-to-day work in which they are engaged.
The institution, for all its softening at the edges, still looks and feels like a prison and I remain concerned that we are keeping children there. I know that one has to balance the need to detain the parents and the benefits of keeping the children with the parents against separating the family, and that there is no easy solution to that problem. The Commissioner for Children and Young People in Scotland is taking a close look at the situation and I hope that the Government will work closely with her.
The continued detention of children in a place like that is something that we will not be able to tolerate for much longer. It is of particular concern because many people in Dungavel, even though they are kept as well segregated as they can be, are awaiting deportation after having served sentences for drug offences or, sometimes, serious assault. One does not know what those people are capable of and we should work towards ending a situation in which they are kept in such close proximity to children.
I want to say a brief word about the confusion of asylum seekers with economic migrants. That is something which impinges on my constituency because we need extra workers in several skills-based sectors, which cannot currently be met from our own resources. We would welcome extra migrant workers. There is a particular need for extra workers in the fish-processing sector, but that need is being thwarted by the somewhat byzantine rules. I am told by one local employer that they can employ people under the skills-based sector scheme to process white fish or pelagic fish, but not shellfish. I do not understand why that should be; perhaps the Minister could find out for me. That sort of distinction seems unnecessary, hinders business, and seems to be of no benefit to the people who would seek to take on those jobs.
The Minister for Citizenship and Immigration (Mr. Desmond Browne): There is an explanation.
Mr. Carmichael: I am not expecting an immediate response.
Mr. Browne: Unless the hon. Gentleman is on tenterhooks about the issue, I shall write to him about it.
Mr. Deputy Speaker: The House is grateful.
Mr. Carmichael: If I was surprised at the Daily Mail, I am also surprised that the Minister does not know the answer to that question off the top of his head. I shall await his answer with interest.
I do not understand the Government's resistance to the eminently sensible proposal that there should be an independent review of section 55 of the Nationality,

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Immigration and Asylum Act 2002, when so many organisations have expressed concern about its operation. Shelter has been mentioned and Amnesty is another. If the Government are as confident of their position as they claim to be, what do they have to lose by having a further independent review? I do not see what the difficulty is.
The hon. Member for Burton (Mrs. Dean) referred to the concern about the quality of legal advice given to people entering the asylum process. There is an increasing amount of evidence that people are being advised to make asylum applications when that is not appropriate. One such case is referred to in the press today. I speak as a former solicitor, and if even half of what I read is true, I am exceptionally concerned. It is time that the appropriate professional bodies—the Law Society of Scotland and the Law Society south of the border—took control of the situation. If there is abuse, it has to be tackled and rooted out, because it does no good to the individuals making the applications and brings the whole system into disrepute. Most importantly from the point of view of bodies that exist to preserve our professional reputation, it brings the profession into disrepute.
Mr. Salter: Perhaps the hon. Gentleman can advise me. As I understand it, some immigration advisers are not necessarily qualified solicitors. I have also had first-hand knowledge of people being able to get fraudulent case histories and ready-made stories to pursue cases. I believe that that is referred to in the body of evidence of the report. What good would it do to engage the Law Society and Bar Council when another cohort of people is handing out advice, some of which is good and some of which is questionable?
Mr. Carmichael: I would expect that for those engaged in immigration advice who are not lawyers—and there are some even more extravagant claims than those to which I have referred—the Office of the Immigration Services Commissioner would be the appropriate regulator. However, the frequency with which such anecdotal cases are produced is such that the legal profession should take the problem seriously and consider named individuals closely and seriously. As a one-time legal practitioner, I hope that the professional bodies will take seriously their duties to their own profession, if nobody else.
This may sound like a routine plea from the Liberal Democrats, but I believe that there must be some consideration of the EU dimension. That plea is often heard from my party, and when it is I often find it necessary to wash my hands or find urgent business elsewhere. I do not share the unbridled enthusiasm that some of my colleagues have for all matters European, but asylum is one area in which the co-ordination of action would make sense. No one European country should take a disproportionate number of asylum seekers. If individuals were claiming asylum in the first country that they reached and one country was taking disproportionate numbers, successful refugees could be redistributed to other parts of the EU. That aspect of asylum policy requires further examination. In passing, I wonder whether a common asylum policy would have the same effect on the number of applications as the common fisheries policy has had on the number of fish in the North sea.
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Mr. Humfrey Malins: I begin by paying genuine and sincere tribute to the right hon. Member for Southampton, Itchen (Mr. Denham) and his Committee, not only for the excellent content of their report, but for the courteous and reasoned way in which he presented it to the House this afternoon. The House of Commons works best when members of different political parties discuss issues together in a Select Committee and produce excellent reports—this being no exception. I agree with the right hon. Gentleman that in many ways we have more in common with each other on many issues than the outside world would have people believe.
I also pay tribute to the hon. Members for Burton (Mrs. Dean), for Dover (Mr. Prosser) and for Colchester (Bob Russell), with whom I spent happy days on the Select Committee when I had the privilege to serve. I remember their constructive contributions. With at least two of them I spent many happy days, and with at least one I spent many happy nights on a Home Affairs Committee trip to Europe to examine the issue of border controls as part of our first report. I will not say who that was, but I am glad to see those hon. Members in their places.
The report stresses that the asylum system—hon. Members have rightly said that there is an overlap between asylum and immigration in many people's minds—must be efficient and humane. Not a single hon. Member here this afternoon would doubt the proposition that the subject of asylum must be handled and talked about in a sensitive and reasoned way.
I remember our report on border controls about three years ago, which referred in its opening paragraph to the dreadful tragedy of the 58 Chinese who suffered an appalling death in the back of a lorry at Dover. The hon. Member for Dover has spoken about asylum matters with his customary skill, care and dedication over some years, and he will remember the beginning of that report and that dreadful tragedy. In a sense, it matters not whether those young Chinese people were genuine asylum seekers or economic migrants. The truth is that 58 young lives were needlessly lost, and that is a tragedy. That incident brought into sharp focus the issue of asylum and the need to talk about it in a moderate way.
Our report pointed out, as does the latest report, that more people are on the move. At the time of our report, we were told that there were the better part of 30 million people on the move in the world. They are moved on by conflicts, famine and war. One factor that encourages the growth of asylum applications or movement to other countries is the complete change in circumstances, in the world since 1951. The hon. Member for Reading, West (Mr. Salter) spoke about the 1951 convention and the changing times. The world was different before 1951, but what has changed it all? I suggest that two things have changed the world in many ways. First, the jet engine has meant that journeys that once took eight months, then eight weeks and then eight days, now take eight hours—and who knows, perhaps one day they will take eight minutes. Getting from A to B is so easy. Secondly, the television has beamed around the world stories about what life is like in developed countries.
We live in a changing world with many more people on the move. A great many of them are genuine refugees under the convention and a great many more are doing

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an honourable thing, even if they are not refugees—seeking a better life for themselves. They want to contribute wherever they go. It is a complex problem. When hon. Members say that we need to talk about it moderately and sensibly among ourselves, they are absolutely right.
This Chamber is not combative, unlike the House, which is. I sometimes note a different atmosphere here. It is more like a Select Committee, in which we are discussing a matter among ourselves. I want to make a few constructive remarks about asylum generally and some matters mentioned in the report in particular. Yes, asylum applications have increased fairly dramatically in recent years. However, on this occasion, if not on others, let me acknowledge that Governments of all political persuasions—I choose my words carefully—are capable of developing good policies and not such good ones. I hope that I made that point sufficiently gently not to have scuppered my chances of any more promotions within my party. Not every party has got it right over the years—[Interruption.] I may live to regret my last comment.
There was a fairly dramatic increase in asylum numbers from 29,000 in 1996 to 84,000 in 2002. Is that a problem? It is certainly a fact. There has been a drop since then, which has been welcomed in many quarters. Some credit must be due to the Government for the fall in asylum applications in recent months. Applications for indefinite leave to remain have increased so dramatically in recent years that we need to look at the European convention on human rights, and people's rights under human rights legislation. Did other hon. Members refer to that? I think that they did.
In many ways, people have been permitted properly under the law to stay in this country, and have done so pursuant to the Human Rights Act 1998. Indefinite leave to remain was granted in 20,000 cases in 2002, compared with, say, 3,000 some 10 years or so before. We need to consider such matters. The report is in part critical of the Government and in part complimentary. I say that neutrally. I am the first to acknowledge the Government's success in the past six to nine months in certain respects and am pleased to congratulate them. I also join the hon. Member for Reading, West in paying tribute to the previous Minister, the right hon. Member for Stretford and Urmston (Beverley Hughes) for her work on asylum.
Let me briefly highlight one or two areas. The report focuses on initial decisions. Those are very important. Please get it right at the beginning, because money is saved in the long term and the system is not extended for so long that people suffer the anxieties that arise when things take too long. I am a bit worried that, even now, initial decisions are being made by men and women who might not have had enough training to get it right. We are talking about a quasi-judicial role. The decision about an application is sometimes a life-or-death decision. I might not be putting it very well when I say that it is almost a judicial function, but it is a very important role and I am concerned that the starting salary of an initial decision maker is in the region of £17,000 a year. That is quite low. The training given to an initial decision maker is somewhere in the order of 27 days. Perhaps more should be given. Perhaps more
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front-loading—I think that the Committee used that phrase—into the beginning of the process would result in dividends further down the line.
We should consider not only the quality of initial decisions—we know that appeals against initial decisions are successful more often than perhaps they should be—but the speed of them. I do not know why it takes a long time to get an asylum decision. I wish that it could be quicker. All I do know—this is the only parallel that I can draw with my personal life, as I sit-part time as a district judge and a recorder in the Crown court—is that if a lady or gentleman is charged, for instance, with assault occasioning actual bodily harm, it is almost inevitable in the criminal system that the trial will take place with in a month, and that the appeal will be heard within another six weeks. Perhaps I am being too simplistic, but for much of the time the criminal justice system has great speed and it would be good if we could have more of it in asylum cases. I appreciate that this and previous Governments have had problems, but the quality and speed of initial decision making needs to be looked at.
The same goes for appeals. Many appeals can take months to get from the initial decision maker to the adjudicator. That is a pity. Sometimes the conduct of the appeal is in the hands of the Home Office. I know many adjudicators personally, so I know that at some hearings before adjudicators the Home Office is not represented. The result, of course, is that the poor adjudicator often has to give the benefit of the doubt to the Home Office—in effect, he has to conduct the case against the applicant on behalf of the Home Office. Those are handling matters, not matters of great principle. However, if they are dealt with efficiently, that can result in an improved system.
The same goes for removals. In their response to the report, the Government use the words
"It is well trodden ground that…we have not been good at processing claims quickly or removing people."
Let me not be critical today, but let me say that removing failed asylum seekers is difficult. I acknowledge that. However, if the public are to have confidence in the system, those who are granted asylum should be made welcome as refugees and fully integrated, but those who are refused asylum all the way up the appeals system should be removed.
Over the years—I say that neutrally—the percentage of failed asylum seekers to have been removed has not been sufficiently high to secure the confidence of the general public. The Government have made an improvement in the last few months, but I have no answers—at least not today, although I might have some later—to the problems that the Government face on removal. Some countries find it difficult to take such people back. There are some countries, such as Zimbabwe, to which we do not return failed asylum seekers, because we are not happy about the situation there. I understand that it is administratively difficult to return people to China. As a matter of routine, we did not sent failed asylum seekers back to Iraq.
There are practical and handling difficulties, and I am the first to accept that there are no easy answers, save that it would be no bad thing if we continued to discuss the issues among ourselves and tried as best we can to reach more acceptable or better conclusions.
The Select Committee report points out that if we do not remove a high proportion of failed asylum seekers, we will move into an amnesty situation. We have had many amnesties over the years, but I am not sure that they generally inspire confidence in the general public.
I shall say a few words about induction centres. We have had a number of asylum Bills in the past three years, so I rather forget which ones I have dealt with and when. However, I am pretty sure that the 2002 Bill—it was about two and a half years ago—dealt with induction and accommodation centres. The Government say in their response that a network of induction centres will be up and running during 2004, and I believe that the Committee applauds that. Will the Minister tell us more?
We had a tremendously long debate about accommodation centres during the passage of the 2002 Bill. I pay tribute to my hon. Friend the Member for Banbury (Tony Baldry) for his diligent work on the issue, not only generally but on behalf of his constituents. The Immigration Advisory Service, the Refugee Council and many others said a couple of years ago that accommodation centres ought to be sited in urban areas and that they should accommodate 200 or 300 people rather than 750. In short, we were worried that the accommodation centres proposed by the Government were too big and in the wrong places. Our worries remain. I believe that not one accommodation centre is yet up and running. It must surely worry the Minister that that is the result so far of a flagship policy announced two or two and half years ago. Is there time over the summer months for the Minister to consider, as my hon. Friend suggested, the prospect of a slight change of tack—the possibility of smaller centres, in urban areas?
Mr. Carmichael: Is it still Conservative policy to use an offshore island as an accommodation centre for processing asylum seeker claims? The hon. Gentleman will know that I may have a constituency interest in that.
Mr. Malins: I am afraid that I have lost a bet with myself. My bet, which I worked out this morning, was that within a minute of getting on my feet I should be asked by someone today about the so-called fantasy island. I shall answer the hon. Gentleman in my own way: we are not here today to engage in an argument about party policy. In my party, at any rate—and I think that there is a semblance of understanding of this in the Home Affairs Committee's deliberations—we are considering quite carefully the merits of offshore processing of asylum applications. The so-called fantasy island was a bit of a dream of the press. We said, and we are still trying to make progress with the idea, that we have a lot of sympathy with the prospect of deciding asylum applications offshore rather than within our shores, in areas near to the asylum applicant's original country.
Mr. Browne: Will the hon. Gentleman give way?
Mr. Malins: I will, but I hope that the Minister will bear in mind that I began in a conciliatory way. Before I give way, I point out that I have not spent the afternoon trying to slam the Government for their policy in any way—yet.
Mr. Browne: I am obliged. Why is the hon. Gentleman so worried? I want merely to seek a clarification. His right hon. Friend the Member for Haltemprice and Howden (David Davis), the shadow Home Secretary, is quoted in the newspapers today as saying that it is still the intention of the Opposition to unveil an explanation of how they intend asylum applications to be processed offshore. That is different, even if subtly so, from the hon. Gentleman's expression of sympathy with the idea. Are we to rely on his hon. Friend's reported remarks in today's newspaper or on his own more conciliatory tones?
Mr. Malins: My best answer is to say that the Minister must rely entirely on my right hon. Friend on policy matters. He will understand that I began the afternoon in a very conciliatory and kind way. I hope to continue in that vein a moment or two longer.
I repeat that one of the matters that I am currently charged with is investigating further how offshore processing could be efficiently carried out, and where it might happen; we are extremely attracted to that approach and as committed as we can be, in opposition and without a Government's resources behind us, to putting it into practice when the next Conservative Government are elected. I do not say anything like "and may that be soon", because that is not my style. I say, "when the time comes".
I have been distracted. I shall return to the report that the right hon. Member for Southampton, Itchen presented to the Committee, and the paragraph about illegal working, to which several hon. Members have referred. It deals with a rather vicious situation, because most of the victims of illegal working are those who do the work, not their employers. As often as not, the employees are treated badly, paid badly and operate in unsafe, unhealthy conditions—a very sad state of affairs. I hope that the Minister will be able to put more resources into finding more illegal employers—under, I think, the 1996 legislation—and into more prosecutions of such persons than have hitherto taken place.
Bob Russell: Would the hon. Gentleman accept my earlier point about the need to follow through such investigations? We should not necessarily prosecute the immediate employer, but follow the chain, perhaps even right up to our major supermarkets, which are responsible for the suppression in agriculture, certainly in salad production.
Mr. Malins: I hesitate to agree entirely with the hon. Gentleman, whose judgment I broadly respect on every issue that we have ever discussed on the Committee together. However, his point is genuine and fairly sensible—that at the bottom of the ladder, so to speak, is the small-time person committing a criminal offence and below that person is the worker, who may be suffering deeply. It is not a bad idea to see whether there is any responsibility—if not legal, moral—among those a little further up the ladder who might be making profits. The hon. Gentleman's point is not at all bad and I accept it.
My last fundamental point is about money. Our asylum system is expensive and there is a lot to be said for diverting resources and investing them in areas of the world from which asylum seekers come. The Committee

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seemed to agree with that and the hon. Member for Reading, West made the same point. We should invest in their economies, if we can, or in the areas nearby, and try to create conditions in which people do not want to leave those countries for economic or other reasons. When I read in a parliamentary answer from a year or two ago that it cost £1,600 a week and £80,000 a year to keep somebody at Oakington detention centre, I wondered whether that money could be better spent anywhere else, or in a different way. We all agree with that point, so I assure the Minister that I am not being critical, but reinforcing the Committee's report, which says that investment in troubled areas is wise investment indeed.
I have tried to speak with moderation to reinforce much of what was said in the all-party report and to confirm my belief that Select Committees probably represent the best workings of the House of Commons. They bring together people who are interested in getting a good result and a good policy. Select Committees are non-confrontational and are most excellent, so I congratulate the right hon. Member for Southampton, Itchen very much indeed.
I am left, as we all are, with the thought that the more we study such issues, the more we become aware that there are no easy answers. I was struck by Lord Rooker's remark when he said, I think a year or two ago, what we all know to be the truth: that, really, there is now no lawful way to claim asylum. People must either pay to enter this country illegally, so are perhaps the wrong people, or enter under one visa and then claim asylum. I do not know the answer to that, but I do know that if good MPs in Select Committee continue sensible discussions, such as those that we are having and those that gave rise to the report, we have a better chance of making progress towards the goal that we all seek.
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The Minister for Citizenship and Immigration (Mr. Desmond Browne): As a Minister of three months' vintage, I am grateful to the Home Affairs Committee under the sterling leadership first of my hon. Friend the Member for Sunderland, South (Mr. Mullin), who is now Under-Secretary of State for Foreign and Commonwealth Affairs, and latterly of my right hon. Friend the Member for Southampton, Itchen (Mr. Denham)£for producing such an insightful report. I would have been hard pressed over the past few months to find a better summary of the complex issues of asylum and asylum processes. I must confess that I read the report only in the past two weeks, in anticipation of this debate, and I deeply regretted not having read it in the first week after my ministerial appointment. During that time, however, I was kept well occupied by my very able officials who provided me with substantial briefings. Indeed, there are no quiet times or slow news days in this area of public policy, and I have been busy ever since. Nevertheless, I am grateful to the Committee for its report, and to the House for timetabling the debate, which caused me to read the report. It has greatly added to my understanding of the complex issue for which I have responsibility.
While I am on the subject of reports, I take this opportunity to welcome the wide-ranging report by the cross-party International Development Committee, and
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especially its finding that migrants benefit the United Kingdom. That is clearly the Government's view. The evidence in the report also shows that they benefit the countries from which they come. The report was published only today, but I shall read it in full.
Those who enter by legal routes contribute economically and culturally to the United Kingdom, and they most certainly should not be seen as a problem. I include refugees among those who enter by legal routes, because the acquisition of refugee status means, of course, that people are here legally. Refugee status gives people a retrospective stamp of approval. They may have been asylum seekers at one stage, but once they get refugee status, they are here legally.
Like other hon. Members, I want to take a few minutes to comment on the great disservice that is done to debate on this issue by the lack of any moderate discussion of it. In saying that, I am, however, mindful of this afternoon's discussion, which has clearly been moderate, moderated and informed. Indeed, I might have to resist the temptation to use all the remaining time to answer the detailed and important questions that hon. Members have raised, having been informed by the report. Indeed, they may want me to do that.
However, as I was listening to right hon. and hon. Members' observations about what some organs of the media and other politicians had said about this issue, I made a short note of three episodes from my own limited experience of it. Taken together, they provide a degree of balance, and they will be a constant reminder to me—indeed, I am sure that I will have similar experiences in the future—of how important facts, not myths, are in this connection.
The first example involves the hon. Member for Woking (Mr. Malins); indeed, he involved himself in it. At the most recent Home Office questions, he asked me about the evidence that an immigration officer called Mr. Owen had given during a criminal prosecution in Swansea a short time before. Some hon. Members may remember the case, which later collapsed, amid concerns about the presence of witnesses.
The immigration officer, who had been seconded to the National Criminal Intelligence Service from the immigration service, had been put forward to the court as an expert on people trafficking. His evidence was reported the following day in certain newspapers as proof that the Government were covering up the true number of asylum seekers in this country. The headline said that there were eight times more asylum seekers than the Government said there were. In fact, the man's evidence was that in Manchester, during his experience as an immigration officer, the Chinese community disputed the census number of people in their community in that city, reckoning that the census underestimated the number of Chinese people in the community by a factor of about six.
One might ask what that matter had to do with asylum seekers, and that was a question that I asked myself when I read the story underneath the headline. That man's evidence has also been prayed in aid on the same theme by the Leader of the Opposition at Prime Minister's questions, but subsequently, at Home Office questions, I was asked a question by the hon. Member for Woking. The question was informed by the reporting of Mr. Owen's evidence, which suggested that

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there was a significant underestimate of the number of people who were in this country illegally, and that we had lost control of the situation. Because of my legal background, I obtained the man's evidence and read it. He had said those things, but the problem was that he was talking about 1991. I criticise the hon. Member for Woking only gently, because like others, he is probably prepared to rely on the press, but he must be careful what press he relies on.
Mr. Malins: Yes, when I asked the Minister that question at Question Time, it was based on a report in The Daily Telegraph, and the Minister replied to me that the gentleman was giving evidence about his experiences in 1994, not 1991. That is what Hansard says, not 1991, which is what the Minister just said—but that is a minor point. However, I came out of Home Office questions and have spent the last fortnight trying to find out exactly what was said, and I still do not know. I decided in my own mind that if the Minister was right about what Mr. Owen said, I would offer him an abject apology for my misunderstanding of a newspaper report, but that if it was as I had been led to believe, I would put that to him. It may be necessary for me to apologise for quoting something inaccurately to the Minister; he does not know me well yet, but when he does, he will know that I shall be the first to do that, and that it would, if necessary, be an unreserved apology.
Mr. Browne: I am grateful to the non. Gentleman for his generosity and I shall ensure that he receives the verbatim record of what the man said in that part of his evidence. He is right that I said 1994 in response to his question, because that is when I understood that Mr. Owen had stopped working on the front line of the immigration service and had moved to the National Criminal Intelligence Service. At that stage I did not have access to the detail of his evidence, but I knew that he had given evidence based on his own experience, which stopped in 1994.
However, by referring to the source of his question, the hon. Gentleman also raises a i interesting point, given my own research and observations on this story. I shall not trouble hon. Members much further with the matter, but I collected all the reporting of that evidence, and although all of it in different newspapers ran under different bylines, it was almost verbatim. In fact, in the more lurid tabloids, the reporting was almost verbatim, as it was in The Daily Telegraph, but it was presented to the public under different bylines. There may have been five or six court reporters from various newspapers, but I suspect not. I suspect that a stringer gave that information, either through the Press Association or in some other way, to a number of newspapers, and stories were written with only one word different here or there.
That is exactly the sort of thing that can inflame the situation and cause serious difficulties. If people who may be suspicious about certain tabloid newspapers can go to quality newspapers and find exactly the same facts reported in exactly the same way but under a different byline, they will treat that as corroboration, and because of the way in which our newspapers are compiled these days, that is not always the case.
The hon. Member for Banbury (Tony Baldry) has already referred to my second experience, which was the way in which my publication of the EU accession states
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figures on migration yesterday has been received. In my view—I am grateful to the hon. Gentleman for proving that this is correct—that evidence proves conclusively that there will not be the flood of migrants from the EU accession states with which we were threatened. One newspaper threatened a flood equivalent to the size of the population of Latvia.
We are not going to be flooded. Despite the hysterical whipping up that such reports were designed to engender, that has not happened. However, far from admitting that that was the case, one such newspaper identified part of the figures this morning, and under the headline "14,000 come out of the woodwork", it suggested to its readers that somehow people who had been working in this country and had subsequently registered under the workers registration scheme were to be equated, one would assume, with woodlice or some other form of beast. However, it ignored totally the reality of those figures and the conclusions to which their evidence leads.
I want to share one final anecdote with the Chamber. As part of the process of learning this job, just to show hon. Members that I am not naive and do not have blinkers on, I went to the asylum seekers unit in Croydon to experience as far as I could the process of making a claim for asylum. It was easy to participate in part of that process, but there was a part of it that I could not do; I could not actually be interviewed. Arrangements were made for me to sit in on the interview of an asylum seeker.
As I sat in on that interview, I was struck by how manifestly honest the asylum applicant was being. He narrated a story that in no circumstances would ever have secured refugee status under the 1951 convention. He said quite simply—it was an appealing story in its own way—that he had been living with his parents, who had died in a car crash, and he wanted to come to London to live with his brother, who was settled here. One can understand that; it is an entirely human need, but it would never qualify anyone for refugee status under the 1951 convention. Having listened to that, and having confidently expected that he would have been tutored to tell an entirely different story—if not by his brother, by an agent or someone else—I was impressed.
As he left the room with the caseworker who was dealing with the case, I was left with the interpreter. I said to the interpreter. "Well, at least he was an honest man." He said, "No, he wasn't." I asked why, and he said, "Because he's an Egyptian." I said, "How do you know?" and he replied, "Because he has the strongest Egyptian accent I've ever heard in my life. Just as I know you're a Scot, he's an Egyptian." Tangentially to that story, the report raises the issue of language analysis. We will have to develop our skills in that area and share them with the skills being developed by our partners around the world, with whom we work closely on such issues.
There is a lot to be gained from language analysis, just as there is a lot to be gained when making decisions about the credibility of claims by improving our ability to identify the age of applicants and to distinguish minors from those over the age of majority. It is known, of course, that we will treat minors in a particular way, particularly unaccompanied minors. I accept that it is helpful to have a discussion informed by the Select Committee's work on language analysis, and we are

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continuing to work on that. The evidence of that interpreter would probably not be led by us or produced before any judicial authority because an interpreter, although he is a skilled person, is a not a language analysis expert, and expertise of the nature that we are being encouraged to use does not come cheaply. I share those few short and quite moderate stories to show the nature and complexity of the area of public policy for which I now have responsibility.
This debate gives me an opportunity to express my unstinting admiration for my predecessor, my right hon. Friend the Member for Stretford and Urmston (Beverley Hughes). I bow to no one in my admiration for her as a Minister. We have heard in contributions from across the House recognition of the significant improvement in the processing of asylum claims and the security of our borders, much if not all of which is down to her work as a Minister.
It is my deep regret that I came to this job in the way that I did. It is characteristic of the woman that she should have resigned. I did not think that she needed to. I thought it was perfectly understandable that she had forgotten about the information that she had been given, which turned out to be misleading, given the pressure on her and her work load, which I now have some experience of. She did not need to resign. But she did, and it is characteristic of her that she should have done. She is an intensely honest and honourable person. My further regret is that at the point at which she resigned and when she was under most pressure, so few of those who have since told me that she was a good Minister and an honourable individual spoke up for her. They remained silent while some of their colleagues were doing the maximum damage to her. I deeply regret that that has happened.
Some of those successes have been recorded in the report. It would do no harm and it would be helpful to some of the other remarks that I have to make in response to this debate if I just record some of them. Asylum applications in the UK are now down to their lowest monthly level since 1997, a cut in intake of over 60 per cent. from its peak in 2002. Whether that will turn out to be a dip or the beginning of a trend, time will tell. But no one who understands this area of public policy would be silly enough to say that that reduced level will be sustained. It is subject to many other factors, some of which, as the hon. Member for Orkney and Shetland (Mr. Carmichael) said, are outwith the control of any Government.
It should be noted that that is the biggest percentage reduction in asylum intake in the EU. Contrary to those who suggest that our success is based on the smoke and mirrors of fiddled figures, these statistics have been verified by an independent inspection by the National Audit Office as being genuine. The backlog of cases waiting to be decided is at its lowest level since the early 1990s. The last figures that we published put it at less than 18,100, compared with 60,000 in 1996. I happen to know that the current figures are even lower.
Hon. Members stressed the importance of quick decisions. Decision-making processes are quicker than ever: 80 per cent. of asylum claims are now decided in less than two months, compared with an average of 20 months under the previous Administration. I say that
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for illustrative purposes only. Cases that go through our fast-track procedure are dealt with even more quickly. As has been recognised, we have increased the number of removals to record levels, as well as putting in place measures to encourage failed asylum seekers to leave the country voluntarily and to support them in doing so.
These successes have come through the application of the strategy outlined in the 2002 White Paper "Secure Borders, Safe Haven", which I am pleased the Select Committee endorsed. As well as taking robust action to prevent abuse of this asylum system, we are committed to an international approach to helping genuine refugees worldwide. As has been recorded in the debate, we have, for example, recently welcomed refugees in need of our protection who were brought direct to the UK from west Africa. We are also supporting better integration of those who are granted refugee status or another form of protection, including through the new citizenship ceremonies that we have introduced.
I will now seek to answer as quickly as possible some of the points made by hon. Members. It is not my intention to fill the available time, but a number of important points were raised, not the least of which concerns the quality of decision making. I have spent almost all my professional life dealing with processes—judicial and quasi-judicial processes—involving decision making. I therefore know that if one has an unmeritorious case, the best thing that one can do is to delay. In almost any judicial circumstances, delay is the friend of the party who has the case with least merit, because, as Mr. Micawber said, something will turn up. Things turn up because circumstances change. Any lawyer worth his salt knows that delay is the friend of those whose case is without merit.
Consequently, I am, and I was when I came to this job, unimpressed with the argument that the high overturn rate on appeal reflects the quality of initial decisions. I have spent significant time over the past three months considering a correlation between the overturn rate on appeal and the layered appeal processes that exist in asylum cases, including the quasi-appeal processes that are quite often brought to bear at the very end of the process and mostly in the 12 hours before removal. That is when people make further asylum claims or human rights claims.
I have considered all that with some care and have come to the view that the reason why many cases—I do not say all—are successful at subsequent appellate stages or later stages and have not been successful at initial appeal stages has more to do with the time gap between the initial decision and the eventual resolution of the case than anything else. Significant things happen to change people's circumstances in that time. In many cases that I have read—I have read hundreds in the past three months—the circumstances that applied to the eventual decision were quite far removed from those that applied to the initial decision.
That is a function of a number of factors that come into play. The hon. Member for Woking identified one: we have made the European convention on human rights justiciable in this country. The hon. Member for Orkney and Shetland has a quizzical expression on his face and his brows are furrowed as if he does not understand that point, but I will explain it to him simply. A single man who comes to this country and applies for asylum may well within a comparatively short time, and

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almost certainly within a longer period if he manages to stay here, have a claim under article 8 in relation to his family life.
That is only one example; there are any number of others. Some have to do with the changed circumstances of the country of origin, and some have to do with changes relating to the Government of the country of origin. Some have to do with all sorts of other factors that are outwith the control of most of the individuals involved in the case, and certainly of the asylum seeker himself.
What is known to asylum seekers and those who advise them is that by far the best friend that someone has in the asylum process is time. If the process can be elongated, the chances are that even the most unworthy claim will come out the other side with some argument. I am not saying that that happens in all cases, but we should be wary of equating the outturn of appeals with the quality of initial decisions and of saying that there is a direct correlation. There is some correlation, but it is not straightforward.
The Government take the quality of initial decision making very seriously. I agree with my right hon. Friend the Member for Southampton, Itchen, and the phraseology that he used, which was repeated by others: we should front-load resources so hat we get quality decisions at the outset. That is what we are doing. We have a comprehensive action plan to raise standards further, we are looking at training, and we are working with the United Nations High Commissioner for Refugees. I recently met representatives from that organisation, and it is about to embark on a pilot with us to find out how it can significantly assist us.
Treasury solicitors already provide some external assessment of decisions, and there will be ongoing external assessment by the UNHCR. That will respond to the Select Committee recommendations to some degree, but it will not take us as far as the Committee wants us to go. We are satisfied—I qualify that by saying that we are satisfied in general terms—that caseworkers finish their initial training with the skills required to make sound initial decisions in asylum claims, and that we are putting in place the level of support and continued training needed to help them through that process.
It is not entirely clear to me what the hon. Member for Woking suggests. I do not think that he suggests that we should recruit people with a better quality of professionalism to do that work; I think that he suggests that if we pay people only £17,000 to do that job, we are not likely to get the sort of people who can make decisions that will stand up to the appeal process. I do not agree. I accept that such decisions are important, and that they are administrative decisions of a quasi-judicial nature, but I believe that we can, with the caseworkers and decision-making process that we currently use, get a level of support, certainty and professionalism with which we can improve on the improvements that we have already made. However, we are open to a degree of independent assessment of that.
Mr. Malins: I have never heard the answer to this question. Does the Minister have any idea—I am sure that he does, considering his expertise in this area—what percentage of initial decision makers are graduates?
Mr. Browne: I do not know, but I spend an increasing amount of my time at the front line of this business,
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which means going to Croydon and speaking to and working with the people who make initial decisions—I urge right hon. and hon. Members to do the same, as it is an important thing to do—and I am impressed by their expertise. I came to this job with an interest in certain areas of the world, and I have had some of the most informed and best discussions about the politics of such areas with caseworkers in Croydon who specialise in cases involving those areas.
That leads me to the Select Committee's recommendation that asylum caseworkers should specialise more on applications from particular countries. The obvious purpose of that recommendation is that people should build the expertise to make the sort of difficult judgments that need to be made in asylum cases. There is already a good amount of country specialisation, but the requirement to decide 75 per cent. of all new applications within two months of the date of application that we have properly introduced, and the huge range of nationalities of those applying—albeit that there is a top 10 list of countries from which most applicants come—mean that caseworkers have to consider a range of cases.
I should also point out that with over-specialisation there is a danger that people will become case-hardened to particular circumstances, or that they will become so used to hearing about those circumstances that they do not treat cases on an individual basis. We must be careful not to create that sort of unintended consequence.
I come to the issue of enforcement and removal. As I said, although we have, in the past year, managed to return record numbers of asylum seekers to their country of origin or to third-party countries where their asylum claims ought better to be processed, we are not complacent about this issue. There is still a significant amount of work to do, but we are determined to remove those who have no right to be in the United Kingdom, particularly failed asylum seekers. Provisional figures show that, excluding dependants, we removed 21 per cent. more asylum seekers in 2003 than we did the year before.
Bob Russell: The Minister will agree that Russia can he described as a safe country. Will he accept that Chechnya, which is officially and technically part of Russia, is not necessarily safe, and that Chechens returned to Russia, to Moscow or St. Petersburg, may not necessarily find their way back to Chechnya? In such circumstances would the Minister accept that returning Chechens, especially young males, to Russia other than directly to Chechnya puts their lives at risk? The British Government should think very carefully about what route, if any, should be given to young Chechen males who perhaps are so much in fear of their lives that they should be allowed to remain here.
Mr. Browne: I suspect that what lies behind the hon. Gentleman's question is a specific case, or cases. If he wants me to respond to the circumstances of a particular case I should prefer to have an opportunity to identify that case and to check whether the factual basis of his question is borne out by the circumstances as we have recorded them. I shall deal with his question in a general way, but not in relation to a specific country.
A couple of years ago, the Home Secretary stated that there were no longer any no-go countries in respect of returns. There is an inherent logic in that approach, because our current processes allow people to claim asylum on the basis of the convention, and then they will be considered for discretionary leave to remain or humanitarian protection. With respect to members of the Committee, who are intelligent, well informed and able, there is an illogicality in having a further process of protection after people have gone through that process, and an even deeper illogicality to say that that person cannot then be returned to their country of origin, because those are just the sorts of arguments that should be considered in an earlier part of the process.
I was not a Minister at the time, but I accept the Home Secretary's logical approach. He said that we would no longer deal with the issue on the basis that there are countries to which we will not return people, but we will consider individuals on a case-by-case basis. The hon. Gentleman will understand my reluctance to be drawn into discussions about nationalities or countries, but I agree with him that whether an individual should be returned should be considered on the merits of that individual's case. It is crucial to consider the route by which a person is returned, because it would be counter-productive to have ambitions in terms of a safe return but to attempt to return people by a route that would expose them to unnecessary dangers.
Mr. Denham: I do not think that the Minister is right to say that it is illogical to have a further stage of protection, because the issue that is being determined is different. The first question is whether someone has a right to be a refugee. The question whether someone who has no right to be a refugee none the less cannot be safely returned involves the application of a different test under a different law. The reality is that there is a set of people who, I fully accept, clearly have no right to be here as refugees, but whom we cannot practically return. The question raised by the hon. Member for Colchester (Bob Russell) and by this report is: how do we most appropriately deal with those people who cannot be returned to their country? It is not illogical to say that we must deal properly with that part of the system, just as we deal properly with the initial application.
Mr. Browne: I have no difficulty in agreeing with every word that my right hon. Friend said. I do not shirk from my responsibility to apply our policies in a humanitarian way that serves our overall policy objective of considering the process holistically. We should consider asylum applications as being applications processing. If status is granted, quick movement to integration and settlement in our community should follow. Alternatively, if the judicial and appeal processes conclude that someone has no right to be in this country, there should, if possible, be quick removal. We will enhance the prospects for achieving that by doing the sorts of things—recommended by the Select Committee—although not all of them.
One recommendation was to speed up the process, and we have moved significantly towards that; 80 per cent. of asylum applications are dealt with at the initial
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stage within two months. Proposals before Parliament at the moment would allow us to shorten the appeal process significantly. That would mean that the element of unnecessary time injected into many cases can be removed—I accept that it is sometimes injected because of the inefficiency of Government processing. We should be able to deal with people at the point at which we seek to remove them in a context near to the circumstances in which they presented themselves. That would reduce some of the blockages to removal created by changed circumstances and further appeals.
We are faced with the challenge of designing a system of support and contact management. The Select Committee report made interesting observations about the handing over of decisions. I read them carefully and will take them into account. We must maintain contact with people so that we know where they are and do not have to use expensive enforcement resources to find them and get them to the point of removal.
Equally, citizens must be internationally documented so that they can travel to where we want to return them. That would interdict the almost 100 per cent. practice of claimants destroying, losing or hiding their documents, or in some cases not having them. It would also interdict agents from encouraging them to do so. Legislation before Parliament would help us to deal with that problem, but we will deal with it in practical ways as well. We are becoming far better, particularly at ports of entry, at identifying where people have come from. For example, if we know which terminal building they arrived at, we can identify flights that they might have come on.
With the help of carriers we will ensure that, where appropriate, copies are made of travel documents before people travel. That will greatly help in the process of returning people with their travel documents. We also need co-operation from other countries and Governments to re-document their citizens. We have great difficulty re-documenting citizens of some countries. That may be because of slow administration, as the hon. Member for Woking identified, or other factors such as a country's view on accepting citizens returned against their will or other diplomatic and political issues. We need to address those issues, and to improve our ability to re-document those citizens.
However, there will always be failed asylum seekers in the UK whom we are unable, or unlikely to be able to return to their country of origin. We therefore, as the report identified, need a policy that supports those people appropriately. The Government's view is that the support appropriate for those people is available under section 4 of the Immigration and Asylum Act 1999. The report identified a lack of knowledge about section 4—that point was responded to by the Home Office—and we are now making it clearer to individuals. Indeed, in letters that I send to representatives I am making it clear that section 4 exists and we are making clear to some individuals the opportunities that section 4 provides.
As with all this area of policy, the situation is not static, but dynamic. Hon. Members are right to identify that our responses to the challenges of a substantial increase in the number of asylum seekers generate policies that may not be entirely appropriate when those numbers are considerably reduced and maintained at a reduced level. If these reduced numbers persist, that

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may give us the opportunity to examine carefully how we apply those policies, and to consider some of the issues that are raised by the report.
Several hon. Members raised the important issue of illegal working—
Tony Baldry: Do I take that last sentence or two to be a policy line on accommodation centres—that changing circumstances may mean a change of view—or did I misunderstand that?
Mr. Browne: No, I was talking specifically about the issue raised by my right hon. Friend the Member for Southampton, Itchen—the need for us to be able to work in a coherent way and for then to be a process that my right hon. Friend the Secretary of State often refers to as being firm, fair and fast, By fast, we also mean efficient. That is at the heart of what we need to do. If we are able to do that with reduced numbers, the challenges that will face us at either end of that process may be different, and we may be able to respond and apply our policies in different ways. However. the policies remain the same, and that would include the policies in relation to accommodation centres. I am sorry to disappoint the hon. Gentleman, but he will understand why, on the day that the dispute in relation to the accommodation centre in his constituency is before the court, I do not want to discuss that in detail. I hear what he has to say but, as presently advised, our policy on accommodation centres remains unchanged.
We are disappointed that the Office of the Deputy Prime Minister decided not to grant planning permission for an accommodation centre at RAF Newton, but we have now accepted that decision. I have been true to my word that we would respect the planning process in relation to accommodation centres, and I am sure that the hon. Gentleman will be able to use that fact to convince his constituents that some of the more extravagant suggestions about a grand conspiracy by the Government in relation to that issue could not be true. We will respect the decision of the court on the accommodation centre in his constituency. However, he knows what the Government's position is—we debated it in this Chamber not long ago.
I shall now return to the issue of illegal working. Illegal working is an important aspect of asylum policy. There are calls in the report for us to improve the operation of section 8 of the Asylum and Immigration Act 1996, and I believe that we have done that since the report was published by amending the list of documents that employers can accept as proof that job applicants are entitled to work in the United Kingdom to include documents whose security we are more able to guarantee.
As hon. Members will know, part of the problem was that it was difficult to prosecute an employer under section 8 because so many documents that were acceptable as evidence that a pen on had the right to work in the UK were forged. Since the report was
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published, we have removed documents that are easily forged from the list, and our courts will now be able to accept a defence only if the secure documents are produced. In addition, we have significantly increased our enforcement activities on illegal working. Although that has not yet been reflected in an increase in successful prosecutions of employers, significantly more are in the pipeline. I am sure that hon. Members will be reassured by that.
As I would argue that success on appeal is not necessarily a correlated reflection of the value of initial decisions, hon. Members should not see the numbers of successful section 8 prosecutions as a reflection of police or immigration service activity. Collection of information is often crucial in enforcement, and the objective of an investigation may not be an employer whose premises house the illegal workers, but perhaps a bigger fish—an illegal gangmaster or agent for example. It is appropriate that we are having this debate on the day that the Gangmasters (Licensing) Bill receives Royal Assent, and we will work to ensure that that legislation works as intended.
Bob Russell: In the spirit of what the Minister has just said, will he urge his ministerial colleagues in the Department for Environment, Food and Rural Affairs to call on the four major supermarket firms to produce an audit trail for the produce on their shelves, covering whence it has come and the route it has taken?
Mr. Browne: That is an interesting suggestion, and if I recollect correctly, there was some discussion about the issue in a relevant Environment, Food and Rural Affairs Committee report. What I can tell the hon. Gentleman is that, in implementing the Gangmasters (Licensing) Bill and the processes relating to it, the Government intend to consult supermarkets widely and involve them. I do not think that the Government have the power to require the supermarkets to do what he suggested, but I suspect that there will be such dialogue between supermarkets and my colleagues in DEFRA in the context of that new legislation.
I have taken all the available time, but I have not answered all the questions. That is a reflection of the importance and complexity of the issues that have been raised rather than an inability to get through them all. My hon. Friend the Member for Crosby (Mrs. Curtis-Thomas) asked a specific question about the current state of the negotiations on the EU qualifications directive. The negotiations have finished, and the directive has been agreed and adopted. My hon. Friend will be pleased to hear that.
I will write to hon. Members on the other issues that I have not been able to reach during this summing up. My final point is to say that I am grateful to all hon. Members for the way in which they have approached the debate and for their obvious support for the thrust of the Government's policies. I look forward to that spirit—
It being half-past Five o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.

Preamble
The House met at eleven of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Coventry.

Wild Birds: Importation
Baroness Miller of Chilthorne Domerasked Her Majesty's Government:
What discussions they are having with other European Union member states and with the European Commission on the future of imports of wild birds.
(Lord Whitty)My Lords, there have been no specific discussions with EU member states or the Commission on the question of imports of wild birds, although we meet on a regular basis to discuss the implementation of the Convention on International Trade in Endangered Species—or CITES—which protects about 1,700 species of bird.
Baroness Miller of Chilthorne DomerMy Lords, I am disappointed in the Minister's reply. I should have thought that this unnecessary and destructive trade was something that the EU would want to bring to an end. Does the Minister think that the current position amounts to a kind of bird racism? The EU has a strong policy in its birds and habitats directive, while this country has strict regulations on the licensing and capture of wild birds—and, indeed, the killing of them, as was shown by the incident of the three robins last month. However, a trade is allowed to continue that is literally raping the rain forest of its species.
Lord WhittyMy Lords, as regards the endangered species, there are of course very strict rules under CITES on the importation, transportation and the capture of and dealing in birds in the native country. There is no such provision in relation to non-CITES species; they are of course legally capturable in those countries and trade in them is legal. Subject to general animal welfare regulations, there is no reason why the trade should be stopped.
Baroness ByfordMy Lords, does the Minister accept that the trade that is dealt with under the Convention on International Trade in Endangered Species is crucial? Of the 99 seizures of animals and birds that took place in 2003, how many were birds?
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Does the Minister accept, too, that of the 411 seizures last year, with not one prosecution taking place, this Government are dragging their heels? That is an absolute disgrace.
Lord WhittyNo, my Lords, I do not accept that. The figures for seizures are not kept separately for animals and birds, so I cannot give the figures to which the noble Baroness refers. However, I would be reasonably confident that birds would be in a minority in those figures.
Clearly, Customs enforces a large number of seizures—2,000 animals and birds were seized last year. There is a very strong enforcement at the point of entry. The prosecution that has been successful in recent years has also ended with an exemplary sentence, with one person being sentenced to five and a half years' imprisonment. So it is not fair to say that the enforcement authorities are not doing their job.
Baroness Gardner of ParkesMy Lords, how do the two things fit together—the question of endangered species, such as the tortoise, and the right of people to bring in a pet, if they have lived abroad somewhere? It is possible that someone might even have had a wild bird in the country of origin for years and might want to come to this country and bring it. Are permits available, or is there an absolute ban in all such cases, even if they would comply with the Passports for Pets scheme?
Lord WhittyMy Lords, within Europe there would of course be free movement, subject to the border regulations on pets and the pets passport system. Beyond Europe, there is no entitlement to bring a bird into this country unless it is allowable in terms of trade and, if it is an endangered species, one is observing the regulations under CITES. There is no absolute ban, but pets do not qualify any differently from any other point of trade, in that respect.
Baroness WalmsleyMy Lords, in relation to the number of seizures referred to by the Minister, could he hazard a guess as to what percentage of the total illegal trade that may represent? Is there any evidence that that is just the tip of the iceberg?
Lord WhittyMy Lords, by the nature of things, I cannot give figures on undetected illegal trade. The indications are that there is some illegal trade going on, but through the airports it is unlikely to be very substantial as there are tight Customs controls and birds and animals are reasonably detectable. I cannot really give any indication of total size, but there is some illegal trade, and Customs and other authorities are doing their best to stamp it out.
Baroness ByfordMy Lords, might I press the Minister further? There have been 411 cases and only one prosecution. My question did not suggest that the enforcement agencies were not doing their job; my question was about why the Government were not having more prosecutions.
Lord WhittyMy Lords, as the noble Baroness knows, the question of prosecution for all smuggling offences is a matter in the first instance for Customs and Excise in most cases. Customs and Excise judges that its best efforts are focused on detection, seizure and, if necessary, destruction. Only in the most blatant and provable cases does it engage in prosecution. When it has done so, in this area—unlike in other areas in which I might have more sympathy with the noble Baroness—the sentence was exemplary.
Lord Livsey of TalgarthMy Lords, will the Minister acknowledge that the introduction of the Wild Bird Conservation Act in the United States has converted the USA from a major importer of wild birds to a non-importer? There are no more wild birds being imported into the USA. Would the Minister consider introducing legislation in the United Kingdom to that effect? Clearly, present legislation is inadequate.
Lord WhittyMy Lords, as the noble Lord knows, any move on importation would have to be an EU decision, not a UK decision. Indeed, half of the non-poultry birds imported into the UK come directly from European sources rather than from elsewhere. The single market would continue even if we were to ban non-EU trade. The situation is therefore not the same as that in the United States.
Baroness Miller of Chilthorne DomerMy Lords, given that reply, will the Minister initiate discussions with the EU since the European Union and Japan are now the two major markets for wild birds captured from the rain forests?
Lord WhittyMy Lords, one must make a judgment on priorities and the judgment we have made is to stop the destruction of endangered species. The prime concern is focusing on those listed under CITES— both birds and other species—to try to tighten and enforce all trade and welfare controls relating to CITES birds. We may come to the wider issue, but the endangered species must surely be the priority.
Baroness WalmsleyMy Lords, will the Minister accept that when these birds are seized by our Customs the damage has already been done and that it is far too late? What are the Government doing to talk to the countries from whose rain forests the birds are coming?
Lord WhittyMy Lords, to a large extent I agree with that but it does not destroy the need for effective action at the point of entry. So far as CITES species are concerned, there are obligations on the country of origin and on those who are trading in such species as well as on Europe or any receiving countries. The same is not true of non-CITES animals and birds.

Northern Ireland Office: Use of Consultants
11. 14 a.m.
Lord Smith of Cliftonasked Her Majesty's Government:
Why the cost of external consultants to the Northern Ireland Office has risen from £10 million to £18.6 million between 1998–99 and 2002–03; and whether this represents value for money.
(Baroness Amos)My Lords, the figures quoted in the Question were presented in a recent Northern Ireland Audit Office report. That report acknowledged that consultants bring short-term expertise when it would be poor value for money to recruit and retain staff for discrete pieces of work. The increases referred to occurred as a result of devolution and the associated increase in work requirements, together with the introduction of new initiatives, such as resource accounting.
Lord Smith of CliftonMy Lords, I thank the Lord President for her reply, as far as it goes. This rise is of at least 80 per cent in a five-year period. I say "at least" because the report notes that there has been severe underreporting in certain areas, so it is not a comprehensive report. Does the noble Baroness agree with me that it is a damning report, in so far as the NIAO offers strong criticism of poor procurement, sloppy procedures, failure to follow DFP guidelines and little evaluation of results? As a benchmark, what was the corresponding figure for the use of consultants by government in England and Wales over the same five-year period, 1998–99 to 2002–03?
Baroness AmosMy Lords, the report identifies areas that need improvement and action has now been taken to address those areas. With respect to a comparison with England and Wales, there are no official data to hand but survey evidence suggests that expenditure on consultancy by the public sector in England has risen significantly. A survey done in April 2004 by the Management Consultancies Association highlighted how expenditure by public sector bodies had almost doubled in the year to 2003 to a figure of £1.3 billion.
Lord GlentoranMy Lords, I have with me a collection of documents that I picked up off my desk just now. They all arrived in the past month or so. They are all consultations of one sort or another. Is this a satisfactory and efficient way of carrying on the democratic process? What are the print runs of such documents and what percentage of them are read or, in particular, responded to by anyone?
Baroness AmosMy Lords, there have been many discussions in this House about the importance of consulting on policy questions and I think we all agree about that. I shall have to write to the noble Lord on the specific question of print runs.
Lord DubsMy Lords, does my noble friend agree that at least part of the reason for the increase in

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consultants' fees in the period was the restructuring of Northern Ireland government departments from six to 10 because of devolution? It was essentially a one-off expenditure so that one would expect consultants not to have to be used further for those purposes.
Baroness AmosMy Lords, my noble friend is quite right. Some of the increase is related to restructuring. It is also related to the move to resource accounting and to devolution. It is important that we recognise that it would be poor value for money for departments to recruit and retain highly specialised staff whose contribution is not necessarily needed on a permanent or on-going basis. I cannot say that it is one-off expenditure but we need to make sure that we are giving value for money.
Lord Shutt of GreetlandMy Lords, does the Minister agree with me that this is a very incomplete report on the use of consultants? If one tries to piece together some of the evidence one cannot actually get to the actual expenditure on consultants. In 2001–02, it was certainly in excess of £34 million, which is more than £20 per man, woman and child in Northern Ireland, but the worst element of all in this is that in 88 out of 100 cases studied in this report there has been no proper evaluation about whether there was any benefit in these consultants being hired.
Baroness AmosMy Lords, as I said in relation to an earlier question, the report identifies deficiencies, and those have now been addressed.
Lord LairdMy Lords, does the figure include the cost of image consultants? If so, what was the conclusion on those image consultants employed through the activities of the North/South Ministerial Council's recent discussions with loyalist and republican paramilitary groups? How do we assess value for money for image consultants for paramilitary groups?
Baroness AmosMy Lords, I have no idea whether the report includes the cost of image consultants, but I will find out and write to the noble Lord.
Lord EltonMy Lords, what were the deficiencies that the Minister says have been remedied?
Baroness AmosMy Lords, there were concerns about inconsistencies in the definition of "consultant" and about some of the monitoring mechanisms put in place. Guidance has been tightened and sent to departments.
Baroness Carnegy of LourMy Lords, are the Northern Ireland consultants engaged by competitive tender? That is a very good way to make sure that one gets value for money.
Baroness AmosMy Lords, depending on their size, contracts are put out to competitive tender. If I can give the noble Baroness any further information on that, I shall write to her.

Northern Cyprus: Direct Flights to UK
11. 21 a.m.
Baroness Knight of Collingtreeasked Her Majesty's Government:
Whether there are any legal or technical reasons why direct flights are currently not permitted between Ercan airport in Northern Cyprus and United Kingdom airports.
(Baroness Symons of Vernham Dean)My Lords, the British Government fully support the agreed EU policy of ending the isolation of Turkish Cypriots. Direct flights to Northern Cyprus could play a useful role in bringing that about. We are currently examining the feasibility of such flights.
Baroness Knight of CollingtreeMy Lords, I am grateful to the Minister for that reply. The very encouraging statement from the European Commission—it came out only last night—mentions, among other things, opening Turkish-Cypriot ports. Does that mean that the airport in Northern Cyprus can be used by those who seek to sell their produce abroad or visit the country? If so, can she give the House any idea when the ports, including the airports, might be opened?
Baroness Symons of Vernham DeanMy Lords, as the noble Baroness said, the proposals came out last night. The Commission made it clear that the proposals have been concerned with establishing a regime to permit trade between Northern Cyprus and the EU, and did not go into the issue that was really the subject of the Question—that is, the direct air links. They did not go into the direct maritime links either. We are examining what the Commission said. As the noble Baroness knows, my right honourable friends the Prime Minister and the Foreign Secretary have said that they want to do what is possible to enable trade, and to end the isolation in a broader sense and a transport sense as well. The proposals certainly look encouraging.
Lord Hannay of ChiswickMy Lords, the Minister agrees that the objective of bringing the north of Cyprus closer to the European Union is a worthy one; she has already said that. Does she agree that the Greek Cypriots ought to realise, if they took a calm look at the matter, that is in their interests too that the prosperity gap between them and the Turkish Cypriots should be narrowed? They are likely to benefit economically from an increase in economic activity in the north.
Baroness Symons of Vernham DeanMy Lords, there is a great deal of common sense in what the noble Lord says. We welcome the fact that the Government of the Republic of Cyprus have stated their commitment to work to end the isolation of the Turkish Cypriots. I very much hope that they will continue to demonstrate their support for that goal,

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not merely by their general statements but by their willingness to engage in real facilitation on those points.
Lord Lea of CrondallMy Lords, is my noble friend aware that those of us who attended the meetings earlier this week with the new Prime Minister of Northern Cyprus were very impressed by his statesmanlike approach? He pointed out that it may be more difficult for airports, which are under the International Civil Aviation Organisation's jurisdiction, than seaports to do something as quickly as the European Commission has suggested. As the noble Lord, Lord Hannay, said, it will be very important to encourage the Government of Cyprus to realise that the moral high ground is increasingly occupied by Northern Cyprus, and that the threat of the Republic of Cyprus to use its veto in the European Union is not the way to go.
Baroness Symons of Vernham DeanMy Lords, as I said, I hope that what the Government of the Republic of Cyprus in Nicosia have said--that they want to end the isolation of the Northern Cypriots—can be taken at face value. They must now look at practical ways whereby that might be possible. The noble Baroness's Question about direct flights is very important, and I feel that we have somewhat moved away from it in supplementary questions. We must also recognise that the issue is highly contentious, as I am sure that she does, but enormously critical. By examining those issues, as we are doing at the moment, and recognising all the problems around legalities and air traffic control, we are trying, as the Prime Minister has said, to look at ways in which the flights can begin as soon as possible. The Prime Minister has said that.
Lord Howell of GuildfordMy Lords, I am sure that all the issues will be examined and reviewed ad nauseam, but the policy of the European Union seems to be to have direct flights to Ercan. It is also the policy of the Government, who say that flights should happen as soon as possible, and of the noble Baroness herself. Ercan airport has been transformed and upgraded, travellers want to travel and tourists want to tour, and the airlines want to run the flights, so why do we not simply get on and allow them?
Baroness Symons of Vernham DeanMy Lords, we cannot do that because it is an enormously complicated and difficult question, as I have explained. The noble Lord may not like it, but we have to get things right legally. The open-skies policy of the European Union does not extend to the air links between sovereign states within the EU, so direct air links are a matter for bilateral agreements. Such agreements have to be properly licensed. That is what is being looked at. I could not be more positive than I have been to the noble Baroness, short of saying that we will begin flights tomorrow. I indicated that my right honourable friends want them to happen, that the Government would like
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to find a way through the problems, and that officials and lawyers are looking at the issue very actively. I hope that that will satisfy the noble Baroness.
Lord BerkeleyMy Lords, that response from my noble friend was very helpful. She said that the flights would have to be licensed bilaterally. Who has to license them? Who is stopping them?
Baroness Symons of Vernham DeanMy Lords, I did not say that. The flights do not get licensed bilaterally, but are agreed by bilateral agreements. Those agreements have to be licensed internationally by the Chicago Convention. I am jolly glad that I asked about that before I came into the Chamber.

Internet Fraud
11.28 a.m.
Lord Lucasasked Her Majesty's Government:
Why the police do not investigate attempted fraud over the Internet.
Lord Bassam of BrightonMy Lords, the decision on whether to investigate an attempted fraud rests solely with the police, who will take into account available resources, national and local policing priorities, the likely eventual outcome, and the competing priorities of fraud and other criminal cases already under investigation. The Home Office works with the police and industry to tackle fraud and other online crime through a number of other initiatives.
Lord LucasMy Lords, I hope that I am not alone in finding that an extremely woolly and unsatisfactory Answer. Is the noble Lord aware of what it feels like to be told that, effectively, part of the place where one works and lives is off limits to the police—that one can see a crime being committed but the police do not express the slightest interest in investigating it, locally, nationally or through the department? What does he think that that does for one's impression of the Internet as a place to do business, and of the police as people who should keep law and order in this country? Such simple things could be done by the police to make matters better, if only they would get off their bottoms and do them.
Lord Bassam of BrightonMy Lords, I am quite clear that the police will devote resources to the investigation of fraud perpetrated over the Internet where a case is considered sufficiently serious. Where there is clear evidence of serious and computer-enabled criminality, nationally and internationally, the National High Tech Unit within the National Crime Squad is more than prepared to deal with such cases. This Government have put large resources into ensuring effective and successful policing of the Internet.

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I understand that the noble Lord has had an unfortunate experience and I greatly sympathise with that. No one likes being the victim of an attempted crime.
Lord St John of BletsoMy Lords, is the Minister aware that only 100 detectives in the United Kingdom are qualified to investigate computer crimes, most of whom are focusing on the Botnet armies as well as on paedophile cases. Considering the recent statistics that 50 per cent of home computers are subject to fishing attacks, and that 70 per cent of e-mail is spam, most of which is sent through hacked computers, do the Government plan to allocate greater resources to tackle this ever-growing problem?
Lord Bassam of BrightonMy Lords, I am aware of the statistics that the noble Lord has drawn to the attention of the House. We work closely with the industry to ensure that the problems to which he referred are tackled. The Government take these issues most seriously and for that reason we have begun to put in extra resources. Indeed, in the next year, we are providing extra funding for the City force so that it can expand its capability. It is estimated that some 600 officers are dedicated to tackling fraud and a large part of that work will involve them in dealing with crimes which operate through the Internet.
Lord SheldonMy Lords, as the use of the Internet is due to increase greatly in the years ahead, it is most important that trust be maintained. In the United States, the FBI sponsors the Internet Fraud Complaint Center. Will not users need to have that kind of confidence in the Internet if usage and interest are to be maintained?
Lord Bassam of BrightonMy Lords, obviously, it is up to each jurisdiction to decide how best to organise its resources to counter Internet crimes. The noble Lord is right that we must have trust in the Internet. For that reason, we have invested more money in tackling Internet crimes and fraud, and the Government are committed to ensuring that we do so effectively. As I explained, we have the National High Tech Crime Unit, which concentrates a great deal of its resource and time in that area of tackling criminal activity.
Lord McNallyMy Lords, it just so happens that at 10.36 this morning I received an e-mail from a gentleman in Nigeria who wants my help in disbursing some 8 million dollars. Unfortunately, the money is located in China, the United Arab Emirates and in other parts of Europe and he needs my assistance with air flights. This is of course of interest because my noble friend Lord Rennard and the Liberal Democrat by-election fund could well use that kind of money. There is a certain caveat emptor in dealings on the Internet—the citizen has a certain responsibility to himself or herself when getting involved. I am certainly taking advice on this offer.
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On the wider point, is the Minister convinced that the police are not over-restricted by RIPA and the Data Protection Act and are not over-interpreting them, thereby stopping themselves taking action under that legislation?
Lord Bassam of BrightonMy Lords, I am fascinated by the kind of e-mails that the noble Lord receives. I have not had an e-mail of that kind, but perhaps I should check more closely. Perhaps the Liberal Democrat funds could benefit from such an injection, but they might find that that kind of scam relieves them of money rather than advances them some.
I agree with the noble Lord, Lord McNally, that individuals have a responsibility in this respect, but I cannot see how the RIPA provisions and those in the Data Protection Act can be a bar to the police acting effectively in this area. It is a complex one for police investigating and no one should underestimate that. There are simple measures and good advice that members of the public can make and receive, which will enable them to deal with the problem.
Lord Mackenzie of FramwellgateMy Lords, does my noble friend agree that, if policing is about anything, it is about balancing resources? Perhaps one of the reasons for the criticisms of the shortage of police officers on the beat during the past few years has been the increase in the number of specialist departments, so ultimately there must be a balance.
Does my noble friend also agree that a great deal of fraud is not reported, particularly by the financial institutions because they seem to believe that it brings disrespect to the organisations? Is he aware of the case I dealt with fairly recently where I discovered a man who failed to report the theft of his wife's credit card once he discovered that the thief was spending less then she did?
Lord Bassam of BrightonMy Lords, I do not want to get into that territory—but it is a good one. My noble friend made some sensible points. The best advice I can give is that where someone receives one of these spams, spoofs or invitations to play a money game, he ought to forward the e-mail to his Internet service provider. That prevents such fraudulent activity and we must all be ever-vigilant in this Internet age.

Royal Assent
11 .37 a.m.
(Lord Brabazon of Tara)My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
Appropriation Act,
Age-Related Payments Act,
Gangmasters (Licensing) Act,
University of Manchester Act.

Constitution for Europe (Referendum) Bill [H.L.]
Lord BlackwellMy Lords, I beg to introduce a Bill to make provision for a referendum on the treaty establishing a Constitution for Europe; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.— (Lord Blackwell.)
On Question, Bill read a first time. and ordered to be printed.

Anti-social Behaviour (Northern Ireland) Order 2004
Lord GrocottMy Lords, on behalf of my noble friend the Leader of the House, I beg to move the first Motion standing in her name on the Order Paper.
Moved, That the draft order be referred to the Northern Ireland Orders Grand Committee.—(Lord Grocott.)
On Question, Motion agreed to.

Criminal Justice (No. 2) (Northern Ireland) Order 2004
Lord GrocottMy Lords, I beg to move the second Motion on the Order Paper tabled in the name of my noble friend.
Moved, That the draft order be referred to the Northern Ireland Orders Grand Committee.—(Lord Grocott.)
On Question, Motion agreed to.

Dangerous Wild Animals (Northern Ireland) Order 2004
Lord GrocottMy Lords, I beg to move the third Motion standing in my noble friend's name.
Moved, that the draft order be referred to the Northern Ireland Orders Grand Committee.—(Lord Grocott.)
On Question, Motion agreed to.

Vehicle Testing (Temporary Exemptions) (Northern Ireland) Order 2004
Lord GrocottMy Lords, I beg to move this Motion on behalf of my noble friend.
Moved, That the draft order be referred to the Northern Ireland Orders Grand Committee.—(Lord Grocott.)
On Question, Motion agreed to.

Employment Relations Bill
11. 38 a.m.
Report received.
Clause 3 [Duty of employer to supply information to the union]:
(Lord Sainsbury of Turville)moved Amendment No. 1:
Page 3, leave out line 1 and insert—
"(5) For the purposes of this paragraph, the workplace at which a worker works is—"
The noble Lord said: My Lords, I shall speak also to Amendments Nos. 2 to 4 and 30 to 36. This first group of amendments contains various minor and consequential changes to the Bill's provisions concerning the statutory recognition and derecognition procedure. However, I should like to mention Amendments Nos. 31 and 33. They deal with the consequences for a union where the Central Arbitration Committee declares that it is not entitled to recognition because of unfair practices that it has committed. In those circumstances, the union is not entitled to reapply under the statutory procedure for recognition in the same or similar bargaining unit for three years. The amendments change the starting point for that three-year period.
Noble Lords will remember that the noble Baroness, Lady Miller, tabled an amendment to Clause 9 about the three-year moratorium in Grand Committee. I think that she was then mainly concerned whether there was a moratorium of any sort in such circumstances. In response, my noble friend Lord Treisman reassured the noble Baroness that the union was debarred from reapplying for the same or similar bargaining unit for three years. He stated that the starting point for that three years was the date on which the union's unsuccessful application was declared admissible by the CAC.
However, following remarks of the noble Baroness in Grand Committee, the Government have reconsidered the issue. Those deliberations revealed an inconsistency that Amendments Nos. 31 and 33 are now intended to rectify. The Government consider that the moratorium that results where an application fails because of unfair practices should be consistent with that which applies where the union loses the ballot. Otherwise, a union would have to wait slightly longer before it could apply again for recognition if it lost the ballot fair and square than if it had been guilty of repeated or serious unfair practices. Amendments Nos. 31 and 33 therefore amend the statutory procedure to bring the relevant dates into line.
Amendment No. 31 provides that the three-year moratorium on further Part 1 applications in respect of the same, or substantially the same, bargaining unit contained in the admissibility provisions of Paragraph 40, where the original application failed because of unfair practices, should start on the day after the CAC's declaration of non-entitlement to recognition. Amendment No. 33 makes the same change to the validity provisions contained in Paragraph 48. I am

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most grateful to the noble Baroness, Lady Miller, for her diligent scrutiny that directed attention to that point.
The other amendments—Amendments Nos. 1 to 4, 30, 32 and 34 to 36—either amend cross-references to paragraph numbers that will change as a result of the Bill or make small refinements to the drafting of particular phrases. I beg to move.
Baroness Miller of HendonMy Lords, I am grateful to the noble Lord for mentioning Amendments Nos. 31 and 33 and his kind remark that he was pleased that I had brought the matter to the Government's attention. I agree that most of the amendments concern minor drafting matters. I find it difficult to understand why some of the words sound better than others, but I accept that that is in order. I especially welcome Amendments Nos. 3 and 4, because the Government have conceded the use of the word "coercion" in Clause 9 instead of the words "undue influence". I welcome those amendments and we accept the others.
On Question, amendment agreed to.
Clause 9 [Unfair practices in relation to recognition ballots]:
Lord Sainsbury of Turvillemoved Amendment No. 2: Page 13, line 44, leave out "paragraph 24(5)" and insert "each of sub-paragraphs (5)(a) and (6)(a) of paragraph 24"
On Question, amendment agreed to.
Clause 12 [Unfair practices in relation to derecognition ballots]:
Lord Sainsbury of Turvillemoved Amendments Nos. 3 and 4:
Page 17, line 35, at end insert—
"( ) If a declaration is issued under sub-paragraph (4) the bargaining arrangements shall cease to have effect accordingly."
Page 19, line 14, at end insert—
"( ) If a declaration is issued under sub-paragraph (5) the bargaining arrangements shall cease to have effect accordingly."
On Question, amendments agreed to.
Clause 19 ["Pay" and other matters subject to collective bargaining]:
Baroness Turner of Camdenmoved Amendment No. 5:
Page 24, line 4, leave out "does not" and insert "shall"
The noble Baroness said: My Lords, the Bill sets out the core issues on which negotiation may take place once recognition of the trade union has been agreed. Those include wages, hours of work, and so on, but not pensions. In Committee, my noble friends and I sought to include pensions among those core items. We were not especially keen on our wording, but were anxious to get the matter debated and to learn the Government's attitude. We drew attention to the fact that the Government did not seem very sure that it was right to exclude pensions, as, later in the Bill, arrangements are included whereby the Secretary of State can by order arrange for pensions to be included as an item for collective bargaining.
In Committee, the Government did not accept our amendment or the principle involved. At col. GC65 of Hansard, we were told that there was a question
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whether pensions had achieved the same status as bargaining items as pay, hours and holidays. We were informed that research was being undertaken into actual bargaining procedures. Apparently, where pensions are regularly a bargaining issue, the Government will consider activating the power in the clause enabling the Secretary of State to make an order. We were informed that the Government were sympathetic to the argument behind our amendment and the Minister said that he looked forward to the time when pensions were indeed a core item in collective bargaining, but that the time was not yet.
We were not happy about that response, and I said so. Indeed, I said that we would return to the issue on Report, although we might choose a different form of wording. That is what we have indeed done, although we accept that this wording may not be as complete as it might be. Our amendment simply reverses the clause that removes pensions from the collective bargaining agenda under the Bill.
Recent developments indicate just how important pensions have become for employees. At one time, pension provision was felt to be an item of concern solely to white-collar employees. The large unions organising manual workers were thought to be concerned only with the workaday rate for the job. That was never entirely true and is certainly not now. Recently, one of our most powerful unions achieved a noted success when the employer was forced to abandon its plan to close its final salary scheme to new entrants and gradually phase it out. The final salary scheme was saved when the closure of the whole railway network was narrowly avoided in a dispute not about wages, hours or holidays, but simply to save the final salary scheme. That lesson will not be overlooked by others. Pensions are a core item for employees. I hope that the Government will now agree that they should be included as a core item for collective bargaining.
I emphasise again that unions now take pensions very seriously. They employ people who develop specialist skills and buy in expertise as and when they need it. As I have said on many occasions, my union includes pension training in its schools and specifically runs training courses for members who are nominated to act as pension fund trustees. We need the Government to change their approach on the issue. I beg to move.
Lord McCarthyMy Lords, we have had difficulty in finding a form of words acceptable in principle and practice and have tried a different one this time. The amendment would change "does not" to "shall", so that there is a general right for pensions to be included if a union wins a recognition claim. However, it would leave in place the rest of the clause, which enables the Secretary of State to modify, circumscribe or specify what that right would be in practice. That would seem to be in line with what the Government wanted in Committee, if we understood it correctly.
The Government have not come out and said, as they did in 1999, that pensions are insignificant and that workers do not want to negotiate about pensions.

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No, they admit it. They admit that pensions have become one of the most important items on any negotiation or consultation agenda. There are very good reasons for that. In the absence of any influence over employers on pensions during the past 10 years or so, there have been significant pensions scandals. Companies have gone broke and have had no money to pay contractual pensions. Companies have for years milked their pension funds by reducing their value and giving themselves a pensions holiday. The workers did not know about that.
As my noble friend said when moving the amendment, the Government accept that. They want to do something about it in the Pensions Bill by introducing consultation. But that is not enough. It is not enough for workers to be consulted because all that happens is that when the organisation decides to have a pension scheme, it consults. It has already decided what the pension scheme will be, how much it will pay or whether it will reduce the provisions of an existing scheme, and then it consults. If there is a mechanism for consultation in the firm—there may not be—all that the workers can say, if they have a proper representative system, is that they like the scheme, they do not like it or they wish it were changed.
If there was collective bargaining and if, where the union was recognised for bargaining purposes, that could be done by the Secretary of State, that could be limited so that it was allowed only where there was recognition for collective bargaining. If there was recognition for collective bargaining, then the recognised union would be able to put up its own scheme. From the beginning, it would be involved in the formulation of the scheme.
A pension is regarded by many workers as, in effect, deferred pay—that is what it is. In the present society, it may be even more important than pay, because if you do not like your pay, you can go somewhere else. However, if you retire and find that your pension is not worth anything, there is nothing you can do. Pensions are at least as important as pay. If the Government accept, as they have, that they should assist workers to get trade union recognition for core matters, those core matters should involve pensions. I support the amendment.
Lord TriesmanMy Lords, the importance of pensions could hardly be more powerfully stated. I thank all noble Lords for their contributions in Grand Committee and today. The Government understand the strength of feeling that exists on the issue of pensions among trade unions and their members. I am sure that all workers hope that they can look forward to a comfortable and secure retirement without financial hardship. It is right and proper that trade unions should vigorously defend their members' pension rights.
The Government are taking positive steps to address this very serious issue in the Pensions Bill, which includes assistance to those who have lost their pensions and a right for employees and their
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representatives to be consulted on significant changes to their schemes. There is no question that the importance of the issue to workers and their unions is understood, and we acknowledge the positive effect that employee involvement on pensions can have.
The question is whether it is appropriate at this time to make pensions a subject for statutory collective bargaining. In looking at this, we need to bear in mind the aims of the statutory procedure and the factors which have made it a success to date. Key to this is the principle that the statutory procedure is a fallback. It is designed to encourage the voluntary resolution of recognition claims. It is intended as a last resort, where attempts by the parties to resolve a claim among themselves have ended in failure. That is why the Government do not believe that it would be appropriate at this time to add pensions to the core topics for collective bargaining. The evidence suggests that pensions are not commonly bargained about in voluntary recognition deals. So if we were to add them to the statutory bargaining topics, this would, in effect, make the statutory procedure broader in scope than most voluntary agreements.
That would risk making it far more attractive to unions to go to the CAC than to try to reach a voluntary agreement through dialogue with an employer. For this reason, the Government are making it clear that pensions should not be regarded as part of pay for the purposes of statutory collective bargaining.
I do not accept the contention that the Government are uncertain about this. We are trying to gauge what should be done, and the time at which it should be done, against the realities of experience and the results of research in this area. Recognition of the importance of pensions, and the fact that they appear to be moving up the bargaining agenda, means that we are taking a power so that we can add pensions to the list of core topics at such a time as evidence emerges that their inclusion as a topic for bargaining in voluntary agreements has become typical.
As I indicated in Grand Committee, the Government are undertaking research to get a clearer picture of the coverage and content of agreements signed since 1998. This will act as a benchmark against which to compare the results of further periodic surveys on this subject.
From my own experience, unions often prefer to deal with pensions in ways other than collective bargaining, especially where schemes relate to a specific professional or occupational group, or to a particular tier in a workforce. Unions often elect—sometimes appoint, but generally speaking these days they elect—trustees to pension schemes. This concentrates expertise in a way which is not always apparent in the generality of collective bargaining. From the point of view of the trustees of the scheme—not just the employer trustees, but the union or the workforce trustees—they discuss issues which are for the trustees to decide, not those involved in the practice of voluntary agreements. That is the nature of trusteeship in most cases. It sometimes means that where a union shares collective bargaining

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responsibilities with other unions, but the pension scheme relates to a particular group or tier of workers for which one union happens to be responsible—rather than all the unions that are involved in that collective bargaining process—then that union can deal with those issues specifically, using its specific expertise. For purposes of illustration, that is the common practice across education at all levels in the arrangements for pensions. A general right would not be helpful or appropriate.
The Government have tried to strike a balance between the desire to encourage dialogue between employers, unions and workers on pensions, and the need to protect the smooth running of the statutory procedure. I hope noble Lords will feel that we have struck the right balance and expressed it. In the light of my explanation, I hope that my noble friend will feel able to withdraw the amendment, conscious of the fact that I doubt whether there is any lack of understanding on any side of the House of the importance of pension arrangements to workers.
Baroness Gibson of Market RasenMy Lords, before my noble friend sits down, he mentioned that evidence is being taken at the present time. Can he give the House any indication of the timescale in relation to the results of this evidence?
Lord TriesmanMy Lords, the evidence is being assembled through the research of Dr Sian Moore of the Working Lives Research Institute of the London Metropolitan University. The first phase of research has already taken place and some detailed data have been collected. The second phase is under way, which will look at how recognition has occurred in practice, and whether its scope and depth have developed over time, including in respect of pensions. We hope to publish the results of the second phase later this year.
Lord McCarthyMy Lords, before the Minister sits down, he says he is certain and that he does not like general rights, but what would he say "typical" means? If there were 50 per cent recognition of pensions in the recognition sector, would that shift get us a selective or general right? Would it need to be 45 per cent? What is "typical"?
Lord TriesmanMy Lords, that question was asked in Grand Committee. I shall not answer it at the same length because I am very happy to refer back to what was said then. The Government do not believe that it would be appropriate to set a simple, quantifiable threshold, as that would not take account of the complexities of the issue. Collective bargaining on pensions may take many forms, as my noble friend Lord McCarthy will know. Employers and unions might bargain about the establishment of pension schemes, the eligibility of workers to be members of such schemes, the level of contributions and so on. Likewise, there may be a difference between what a recognition agreement says on paper and what the parties actually bargain about in practice. I know from experience that they are not always one and the same.
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We want to be able to look at the whole situation and reach a balanced judgment. That is why a simple numerical threshold could not reflect the entire picture. We believe that the research will show whether there is a general mood in the direction that is advocated by my noble friends. I make the point to them again—and I apologise if I repeat it, but it is very important—that many of the schemes in which unions have invested huge amounts of time and trouble, as have employers, are now dealt with by trustees. That is where the work is done, rather than through collective bargaining.
Noon
Baroness Turner of CamdenMy Lords, I thank the Minister for his response; it is similar to that given in Grand Committee, about which we were not entirely happy. We were told that, although our proposal was regarded sympathetically, it was not felt to be a matter for statutory requirement in the same way as the core items listed in the Bill. We disagree with that concept. We believe that it is very high up the agenda of bargaining nowadays. As I am sure my noble friend is aware, the TUC is running a campaign about pension rights at the moment. It has had meetings and issued a great deal of material about the need for trade union action in the pensions field.
My noble friend referred to trustees. As I indicated, our union and others run training schemes for member-nominated trustees. We are well aware that, when introducing a pension scheme, there is a difference between being a trustee and being a negotiator. In such schemes I have often negotiated with employers, but we have had entirely different members act as trustees, with a different remit—we know that a trustee is responsible in a different way to the whole membership of the scheme, and that the situation as regards negotiation is different.
I regret very much that the Government have not found it possible to move in our direction. I understand that research continues and I am interested and pleased to learn that the time limit is not very long, and that the Government expect to have at least the first tranche of results by the end of the year. We shall watch that with great interest. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 21 [Information about employees to be balloted on industrial action]:
Lord Sainsbury of Turvillemoved Amendment No. 6:
Page 26, line 27, leave out "of the employees concerned" and insert "at which the employees concerned work"
The noble Lord said: My Lords, I shall speak also to Amendments Nos. 7 to 15. The aim of this group of amendments is to improve the wording used in Clauses 21 and 24 where they refer to workplaces. The current wording in these clauses could give rise to confusion because the language used is not consistent. At some point the clauses refer to,
"workplaces of the employees affected"
and at others they refer to,
"workplaces at which the employees affected work".

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All the amendments seek to ensure that the latter construction is used consistently throughout the clauses. I should point out that we have already considered a similar amendment to Clause 3. Clearly, these are technical amendments and I urge noble Lords to accept them. I beg to move.
On Question, amendment agreed to.
Lord Sainsbury of Turvillemoved Amendments Nos. 7 and 8:
Page 26, line 40, leave out from "workplaces" to "who" in line 41 and insert "at which the employees concerned work and the number of them"
Page 27, leave out line 22 and insert—
"(21) For the purposes of this section, the workplace at which an employee works is—"
On Question, amendments agreed to.
Clause 24 [Information about employees to be contained in notice of industrial action]:
Lord Sainsbury of Turvillemoved Amendments Nos. 9 to 15:
Page 28, line 22, leave out "of the affected employees" and insert "at which the affected employees work"
Page 28, line 35, leave out from "workplaces" to "who" in line 36 and insert "at which the affected employees work and the number of them"
Page 29, line 4, leave out "his workplace" and insert "the workplace at which he works"
Page 29, line 19, leave out "of some or all of the affected employees" and insert "at which some or all of the affected employees work"
Page 29, leave out line 25 and insert—
"(5D) For the purposes of this section, the workplace at which an employee works is—"
Page 29, line 26, leave out "affected"
Page 29, line 28, leave out "affected"
On Question, amendments agreed to.
Clause 28 [Inducements relating to union membership or activities]:
Lord McCarthymoved Amendment No. 16:
Page 31, line 40, leave out "sole or main"
The noble Lord said: My Lords, I shall speak also to Amendments Nos. 18, 22, 23, 24 and 25, which relate to Clause 28. A related issue, although not quite the same one, arises in Amendments Nos. 28 and 29, which refer to Schedule 1.
The amendments are part of our attempt to get the Government fully to implement the decision in the Wilson and Palmer case. That judgment is supposed to be coercive on this Government, their having passed the Human Rights Act 1998, which was to enforce the European Convention on Human Rights. We argue that our law is in breach of Article 11, and that the court was trying to say that in the case of Wilson and Palmer. Therefore, it is the Government's responsibility to put the law in the right position. Although the Government have gone some way, there are two ways in which they have not gone far enough; therefore if they do not accept our amendment, sooner or later they will be back before the court.
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I wish to say three things. First, this is a very long story. For a long time, employers have attempted to discourage trade union membership and activism by various inducements: bribes, favours, promotions and so forth. Nothing could be done about that and nobody attempted to do anything about it until Section 53 of the Employment Protection Act 1975. That worked a little, but we never got rid of the problem entirely until the Ullswater amendment in 1993.
We argue that it was discovered in the Wilson and Palmer judgment that the state of English law was almost the same as it had been before any legislation had been enacted. Unless the Government are prepared to accept our amendments—the first set deals with the problem of "sole or main"—we will not comply with the judgment.
Several things are wrong with the way in which the Government have attempted to modify their approach in respect of the employer's purpose. The judgment said that if the purpose involved an attempt to induce workers to leave the union, and if that purpose was detected by a tribunal, it would mean that the worker was not fully protected and therefore was entitled to compensation. But the Government have changed that. They say that that applies only if the court decides that it is "the sole or main purpose". That takes us right back to the Ullswater amendment, and it is not enforceable.
Any employer could say at any time that an element of what he did was not related to putting pressure on the union. For example, he could argue that, although he may have put pressure on the union or the consequence of what he did may have put pressure on the worker to give up the union, he had other considerations also. That is exactly what the Ullswater amendment says. So long as the employer can find that he had a mixed motive or set of motives, it would be easy to argue that there was no sole or main motive and that if there was one, it was not to discriminate against the union.
We have had most of these arguments; I do not want to repeat myself. However, I wish to respond to several things that the Government said in Grand Committee. We were told that if our amendment were agreed it would be disastrous for employers and that it would be impossible for them to manage the plant efficiently. That is complete nonsense. In most of what we seek, it would be the easiest thing in the world, if the Bill read as we want it to, for the employer to show that no part of his purpose involved discriminating against the union. For example, he would have to show that if he promoted someone or gave them a bonus he was not doing it exclusively for non-union members. As in other forms of discrimination, the employer would have to show that he was applying the benefit across the board and that the promotions or benefits were awarded for reasons other than to put pressure on the union.
The only situation in which it might be difficult for an employer to defend himself, if the Bill were amended as we wish, is if he wanted to do precisely what was done in the Ullswater case—to move a considerable group of workers out of an area of collective bargaining into an area of non-bargaining and therefore in some way to discriminate against the union as much as against them.

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What would the consequences of that be? The worker could retain a very large part of the benefits that he enjoyed as a result of union membership—for example, the right to raise grievances and to bring in his trade union official. If the employer was transferring that group of workers into a non-union area to pay them more money, it would be extremely difficult for either the union or the member to show that there had been any disbenefit.
It is almost certain that in most cases it would be easy for the employer to defend himself against a charge of discrimination unless discrimination was his central purpose. So we do not take the view that disastrous things would happen if our amendment were agreed. We commend it to the House. I beg to move.
Baroness Turner of CamdenMy Lords, I agree that this section of the Bill was very thoroughly discussed in Grand Committee. It was considered by the Joint Committee on Human Rights on two occasions and there was an exchange of correspondence with the DTI, which we have seen. According to that correspondence, the DTI accepts that this is a very difficult issue. It says that it is important to ensure that a remedy is available for all cases that fall within the scope of the well known Wilson and Palmer judgment. That is why we have again proposed that "sole and main" be left out, because the purpose of the clause is so important.
It is surely clear that even the purpose of rewarding valuable staff might well be accompanied by another purpose—perhaps even the main purpose—of weaning staff away from union representation. Indeed, plenty of employers would perhaps regard it as rather valuable to have staff who were willing to move to individualised contracts and to give up trade union representation. As we understand it, one of the purposes of the Bill is to protect such people from being intimidated in any way into giving up union representation. As my noble friend Lord McCarthy has explained, we have put the amendment before the Government on a number of occasions. The wording as it now stands contains a loophole which employers can utilise in order to claim that they are not attempting to wean people away from trade union rights and representation and that that is really in the interests of business or the individuals. I ask the Government to think again about the matter.
Baroness Miller of HendonMy Lords, this is an extensive group of amendments. They would all delete words from the Bill and they are clearly designed to make an absolute prohibition against offers being made to employees outside collective bargaining which do not interfere at all with union membership. However, the Government have clearly stated both in the White Paper and in our debate in Committee that such offers are not to be prohibited or objectionable.
Amendments Nos. 16 and 18 would preclude an employer from making an offer if there were an element in that offer which might, however fancifully, be construed as one of the matters which the clause, as drafted, already prohibits. In other words, the amendments are too restrictive. Furthermore, the use of the phrase "sole or main" throughout Clause 28 certainly induced me to
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withdraw the revised version of the "Miller amendment"; that is, Amendment No. 63 in Grand Committee. I hope that the Government will reject the amendments.
As regards Amendments Nos. 22 and 23, the Bill already imposes an onus on the employer to justify his purpose in making such an offer. That should be more than enough protection for the interests of the worker from inappropriate offers. Therefore, the amendments are unnecessary.
The two subsections to which Amendments Nos. 24 and 25 relate are similarly stringent in requiring justification, supported by evidence, for the making of an offer by the employer. Again, that extra obligation should provide more than adequate protection from inappropriate offers being made, thereby dealing with the problems that the noble Lord, Lord McCarthy, and the noble Baroness, Lady Turner, think are likely to arise.
Amendments Nos. 28 and 29 would alter the Government's amendments to the Trade Union and Labour Relations (Consolidation) Act 1992. That Act refers simply to "the purpose". The Government propose to amend that to "sole or main purpose". Amendments Nos. 28 and 29 would restore the original wording. I do not understand why the Government want to do that. If carried, the amendment would completely negative the Government's amendment, which could of course be the proposer's intention, but I do not suppose that that is the wish of the Government.
12.15 p.m.
Lord Sainsbury of TurvilleMy Lords, Clause 28 contains the core of our proposals to ensure that UK trade union law complies with the European Convention on Human Rights in the wake of the judgment in the Wilson and Palmer case. This large group of amendments deals with an issue which was examined by the Joint Committee on Human Rights in assessing whether Clause 28 complies with the convention. We discussed the same or very similar amendments in Grand Committee.
I shall discuss the six amendments which would remove the various references in Clause 28 to the "sole or main" purpose of the employer in making offers. The words "sole or main" are an essential component of the regime that we are seeking to construct. They are necessary to ensure that employers have some flexibility in setting their reward systems. We do not consider that employers should be prevented from making offers for justifiable business purposes just because a by-product or incidental consequence of making such offers would be to deter a person's involvement with a trade union.
My noble friends Lord McCarthy and Lady Turner of Camden consider that this will allow ill intentioned employers easily to evade the law. We do not share that view. Tribunals are expert at making the kind of judgments required, and can distinguish between true and fabricated accounts by employers of their underlying purposes. That is what they do every day in

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unfair dismissal cases. To assist the tribunals, we have placed the burden on the employer to demonstrate what was the sole or main purpose of his action.
Our proposal is fully compatible with the Wilson and Palmer judgment. The Joint Committee on Human Rights has considered the matter in some detail and it now accepts that there is a case for retaining the "sole or main" purpose test. The Minister for Employment Relations, Gerry Sutcliffe, has also written to the Joint Committee confirming that the Government will monitor the operation of these provisions when they come into force.
Amendments Nos. 28 and 29 relate to our proposals to introduce an explicit "sole or main purpose" test into Sections 146 and 148 of the Trade Union and Labour Relations (Consolidation) Act 1992. Both sections currently refer to the "purpose" of the employer's act or failure to act. As my noble friends would agree, these sections contain important protections against detrimental treatment by the employer on grounds of trade union membership and activities.
As we explained in Grand Committee, our proposals are designed to create a consistent set of provisions across related trade union rights. As we have introduced a "sole or main purpose" test in Clause 28, there are advantages in using the same wording in Sections 146 and 148 of the 1992 Act.
As well as achieving consistency across these closely related provisions, our insertion of the "sole or main" test will clarify the law. The tribunals have to deal with situations where two or more purposes might have driven the employer's conduct. Where that occurs, Sections 146 and 148 of the 1992 Act are unclear about the consequences because they use the term "purpose"; that is, the singular form of the noun.
It is highly likely that, in such cases, the tribunals would interpret the current wording as implying a "sole or main" purpose, but the original wording leaves the position open to at least some doubt. That is a potentially confusing situation which does not help parties to enforce and respect trade union rights.
In Grand Committee, my noble friends Lord McCarthy and Lady Turner of Camden asked my noble friend Lord Triesman to cite an actual case where that situation had arisen. We have checked back through some cases. In fact, we did not need to look very far to find one. I refer here to the Employment Appeal Tribunal's judgment of 24 February 2004 by his Honour Judge Richardson in Smyth-Britt v Chubb Security Personnel. In that case, counsel for Mr Smyth-Britt argued that the employer had been motivated by dual purposes in taking detrimental action against him. Although the case did not turn on the point, the Employment Appeal Tribunal gave a clear view on the meaning of Section 146. It said:
"In our judgment, the statute invites consideration of the main or principal purpose of the employer".
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My noble friends are concerned that the introduction of an explicit sole or main test will diminish the existing protections that they provide. But, as I have argued, the extent of the existing protections is not as wide as they might think, because the sole or main test would probably be applied anyway when complicated cases arise. In fact, our proposals, taken in the round, significantly enhance the protections for trade unionists under Sections 146 and 148.
We are confident that our proposals are fair and workable. In our view, they comply with the European Convention. I therefore ask my noble friend to withdraw his amendment.
Lord McCarthyMy Lords, two points have been made to which I must reply. First, there is the analogy that is constantly drawn with the situation in other forms of discrimination, where the onus of proof is precisely the same as that proposed in the Bill and where it is said that tribunals know how to separate the issues. However, they often have great difficulty in doing that. Those involved in the process often consider that there was discrimination but that it was not possible to prove it. So it is not generally accepted by the parties involved that using this kind of formula has been a total success—not at all.
In any case, there is a substantial difference between the situations. I tried to make this point in Grand Committee, but I probably did not make it well enough. In other types of discrimination case, if the employee wins it is usually because the employer is manifestly a liar. It can be seen that he or she is a liar. When asked, "Why did you fail to promote?", "Why was this excellent person on your shortlist, yet never got the job?", or "Why was there no black face or woman involved at any stage?", they lie because they do not have an answer. They say, "Oh well, this person was a bad performer". When they are asked to provide evidence of that, there is none. When such employers say, "Her attendance record was bad and she kept going off to have a baby", and they are asked for evidence, the employers' answers are manufactured, for the most part. Therefore, when those answers can be shown to be manufactured, the case goes in favour of the employee because the employer has not proved the case.
It is quite different in this case. The employer will not have to manufacture. He or she will not suddenly decide to do something about trade unions, sack the branch secretary and say that is the end of that and all that he says is bogus. It is not bogus. The man is probably a good worker who is entitled to be promoted, moved, made a supervisor or whatever. At least the Government threw out the Ullswater amendment, which was not the same. It specified that even if there was evidence that the employer was discriminating, if he could show that he had some general restructuring reason, he could not be penalised.
The amendment provides for exceptional cases. It will not do all the terrible things that the Government believe. If they do not take the initiative now and fully comply with the decision of the court, they will find themselves back there again. It will be expensive, unjust and the Government would do much better if they took action now.

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Since no one will take the slightest notice of my argument, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Turner of Camdenmoved Amendment No. 17:
Page 32, line 28, leave out "which is recognised by his employer"
The noble Baroness said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 19, 20 and 21 in this group.
Essentially, we are talking about trade union rights. Clause 28 sets out a whole package of new rights which have been drafted as a response to the Wilson and Palmer judgments. The Joint Committee on Human Rights made a series of recommendations which we discussed in Grand Committee. However, the new clause limits the protection and rights accorded to members of recognised trade unions only. In Grand Committee we sought to amend that to include members of unrecognised unions. In doing so, we were able to point to the recommendations of the Joint Committee, which also agreed that the clause should cover members of unrecognised unions.
The Government did not accept our view and we have returned to the issue, first, because it is important and secondly, because the Minister at the time gave the impression that the Government were willing to look at the recommendations in the Joint Committee's 13th report, although they made no firm promise that they were likely to alter their view. However, the Bill is about trade union recognition. Its objective, as we understand it, is to make recognition more easily achievable through a set of fairly simple procedures.
All unions are unrecognised before they are recognised. The unrecognised union obviously campaigns to achieve recognition so that it may represent the interests of its members adequately. It will already have members in the employ of the company concerned. Such members are entitled, as individuals, to the protection which Clause 28 offers to members of recognised unions. As we said in Grand Committee, it is a matter of individual human rights. I do not understand the Government's opposition, particularly in the light of the report of the Joint Committee on Human Rights. For that reason we have returned to this issue on Report.
The other amendments in the group, in particular Amendment No. 21, again deal with union rights. The Joint Committee on Human Rights made it clear that in its view an important part of the ECHR judgment had not been adequately dealt with in this clause. The judgment clearly indicated that by using financial incentives and detriment in order to induce workers to give up their rights to have unions represent them, the rights of both individual workers and the union were infringed.
However, the Bill deals with the rights of individual members only. It has nothing to say about union rights. As it stands the Bill would not enable a trade union to bring proceedings to obtain a remedy for an action taken by an employer to offer inducements for employees not to join a trade union or take part in its
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activities. The Joint Committee stated categorically that this was wrong. It said that failing to provide unions with an avenue for redressing a violation of their rights under Article 11 could result in a violation of that article.
In Grand Committee we drew the Minister's attention to the findings of the Joint Committee. However, at that stage the Government were unwilling to accept our amendment and said that they did not agree with the Joint Committee. However, the Minister did say that the Government would consider seriously what the Joint Committee had to say before deciding their final position. Therefore we have tabled a slightly reworded amendment in the hope that perhaps the Minister will be able to say that the Government have reconsidered their view on the basis of the Joint Committee's recommendations. Naturally, I hope that their view has changed to accept our arguments. I beg to move.
Lord McCarthyMy Lords, this group of amendments deals with the other thing that is wrong with the Government's reaction to the Wilson and Palmer judgment. It will not take long, but I should read a short section of what the court said in the Wilson and Palmer case. Listening to this, how can the Government say that the limitations that they have placed on the rights of non-recognised unions and the rights of unions to defend their members—whether recognised or not—are in conformity with this judgment?
12.30 p.m.
Section 46 says,
"It is of the essence of the right to join a trade union for the protection of their interests that employees should be free to instruct or permit the union to make representation to their employer or to take action in support of their interests on their behalf".
Notice that no one is talking about recognised or non-recognised unions.
"If workers are prevented from so doing, their freedom to belong to a trade union, for the protection of their interests, becomes illusory".
Now, we turn to what the present situation is.
"However, as the House of Lords judgment made clear, domestic law did not prohibit the employer from offering an inducement to employees who relinquished the right to union representation"—
nothing about representation in a recognised situation—
"even if the aim and outcome of the exercise was to bring an end to collective bargaining and thus substantially to reduce the authority of the union".
Notice that we are talking about the authority of the union, not just the worker. This is supposed to affect the influence, power and position of the union. That is what the judgment says,
"as long as the employer did not act with the purpose of preventing or deterring the individual employee simply from being a member of the trade union".
I am almost finished.
"Under United Kingdom law at the relevant time it was, therefore, possible for an employer effectively to undermine or frustrate a trade union's ability to strive for the protection of its members' interests".

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Not just to recognise them. Perhaps a recognised union does not have to struggle in the same way. Perhaps an unrecognised union needs more assistance rather than less; that is what the judgment seems to say.
The Court … considers that by permitting employers to use financial incentives to induce employees to surrender important union rights, the respondent State failed in its positive obligation to secure the enjoyment of the rights under Article 11 of the Convention. This failure amounted to a violation of Article 11".
Article 11 has two parts. The first part establishes all those rights, and then it lists five specific ways in which you do not have to guarantee those rights. I challenge the Government to tell me any one of those five ways that apply in this case. They apply to the armed services, for example. They have nothing to do with this case. Therefore, I suggest that the judgment affects trade unions as well as workers. It affects trade unionists whether they are recognised or not; it applies across the board, and there are no defences in terms of Article 11 to what the Government are trying to do. I support the amendment.
Baroness Miller of HendonMy Lords, I will make a few comments on Amendment No. 21. There is a slight difference between the amendment as originally put down by the noble Lord, Lord McCarthy, and the noble Baroness, Lady Turner, and the current version.
In the first version, it was proposed that an independent trade union with a member or members whose rights have been contravened may present a complaint to an employment tribunal. The latest version apparently seeks to make the point clearer by saying:
"Where the rights of a worker who is a member of an independent trade union have been contravened … the union may complain".
In both cases, the amendment asks that the union be given a separate right to complain on its own volition. The effect of the amendment would be that it would enable a union to intervene, even one that is not recognised by the employer, and even if the employees themselves did not object to the offer, or may even have welcomed it. In other words, this amendment seeks to impose a union's will on workers irrespective of their wishes and democratic rights. It negates the Government's stated policy of allowing workers to make agreements outside of a collective bargain when it is appropriate for the workers to do so, and in no way do they interfere with the worker being a member of the union.
Lord Sainsbury of TurvilleMy Lords, Amendments Nos. 17 and 19 deal with another issue discussed in Grand Committee, namely whether new Section 145B should apply in some way to the members of unions which are not recognised by the employer. The Joint Committee on Human Rights is also interested in the position of such workers because they are not currently covered by the rights under new Section 145 B. The Joint Committee's main concern centres on the position of members of non-recognised unions who receive offers to persuade them not to seek recognition for their own union.
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I note that Amendments Nos. 17 and 19 do not actually deal with that kind of offer. Instead, they focus on offers made to the members of a non-recognised union to opt out of a collective agreement negotiated by another union. We are therefore unsure whether these amendments meet that need, though I thank my noble friends for their suggestions. As I stated in Grand Committee, we are considering the issue again in the light of the Joint Committee's latest report. We have since opened discussions with key stakeholders on the matter, and that consultative process will be completed in time for us to determine our final view for Third Reading.
Amendments Nos. 20 and 21 deal with the question of the union having a right to seek a remedy in its own name. As my noble friends have pointed out, it is the opinion of the Joint Committee on Human Rights that such a remedy should be created. This is in fact a far-reaching idea, which runs counter to the way all other individual employment rights are currently enforced, so it requires very close consideration indeed. We are therefore seeking the views of key stakeholders, both employer bodies and unions, before finalising our position. For example, just yesterday my colleague Gerry Sutcliffe met a delegation from the NUJ that included Mr Dave Wilson of Wilson and Palmer. These consultations will be completed by Third Reading. In the light of the ongoing consultations on both issues, I ask my noble friends to withdraw their amendments.
Lord McCarthyMy Lords, before the noble Lord sits down, will he agree that if he does propose a way forward in time for Third Reading he will let us see his proposals in time for us to decide whether to accept, reject or amend them?
Lord Sainsbury of TurvilleMy Lords, I see no problem in keeping noble Lords informed of our decisions.
Baroness Turner of CamdenMy Lords, I thank the Minister for his response. Of course. I am happy to withdraw the amendment, and I will not move the other amendments, on the basis of what he has said. I look forward to seeing the results of the consultations that are now proceeding. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 18 to 25 not moved.]
Clause 32 [Exclusion or expulsion from trade union attributable to conduct]:
Lord McCarthymoved Amendment No. 26:
Page 37, line 41, leave out "contrary to the rules" and insert "inconsistent with stated rules and objectives"
The noble Lord said: My Lords, this is my last attempt to bother noble Lords this afternoon. Once again this is something on which the Government have moved. At Third Reading in the other place, the Government accepted an amendment to deal with this problem. The problem is that the TUC, which should know, thinks that the amendment does not deal with the problem. I understand that discussions are going on

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through the usual channels to see whether we can find a form of words. Our form of words was the form of words that the TUC was seeking to press on the Government in Committee. That was not acceptable, and certain things were said by the Ministers, so we tried to combine the reference to what they said in our amendment today.
It is about the circumstances in which unions are now to be allowed to expel or refuse to accept members. The Government accept that infiltrating forces of racist, fascist and extremist groups of various kinds are now making a set at British trade unions. Whereas the union might have been able to have dealt with that before the beneficent effect of a shoal of Government Bills in the days of the noble Baroness, Lady Thatcher, it is now difficult for unions to expel anyone. Of course, there is the case of a union confined to Scotland, which can keep out people who do not live in Scotland; or if you fail to provide subscriptions or run out of dues. After that, it gets extremely difficult. The Government propose that that will be all right if it is in the rules. As I understand it, if it is in the rules, one does not have to admit. But if one does admit, one can expel fascist, racist and other extremist groups, and that is all right.
However, the TUC does not think that is all right. On looking at union rule books—we discussed this in Committee—blanket rules would have to be relied on. As the Minister said in Committee, many such rules are still in place. But the unions do not believe that they can be used because some of them have used them and were caught in the courts. Nevertheless, on looking at those blanket rules and the way in which the courts have always interpreted them—which is nothing to do with recent legislation—it is doubtful whether using the current rules or even changing them would deal with the problem.
I looked at a few rule books in order to see how far that is the case. Really, rule books with blanket rules do two things. They contain a number of extremely wide purposes, some of which are rather frightening. One such purpose refers to "furtherance of political objectives of any kind". One wonders what that would cover: the founding fathers of the union just shoved in the first thing that they could think of in order to cover everything.
Another purpose is to "advance the interests of labour". In what way? How? Why did they put that in? The rules of one very important union refer to "any objectives specified by the executive". One could be frightened by that.
We now have a residue of extremely general rules, which were mostly written by the founding fathers and hardly ever used. But there they are.
There are also the ways in which the unions have interpreted those rules and have sought to expel, exclude or in other ways discriminate against workers who could not be caught by a precise rule. Therefore a blanket rule was used.
Quite rightly, the courts have interpreted those rules very narrowly. They do not think very much of rules such as the "furtherance of political objectives of any kind" or "any objective specified". The courts tended to
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say that, if a general rule of that sort was being used, there ought to be a lot of precise grounds against the individual. Ultimately, the rule book is supposed to be a contract between the members of the union. That type of thing cannot be called a breach of contract.
The TUC says that there must be something else. It suggests that the unions could be allowed to specify in policy statements—perhaps of some length with some contemporary relevance—who and what it is they want to guard against. Those principles, not necessarily set out in rule books, could be interpreted by the courts.
As I say, the Government have shown sympathy for this, but they will not accept the introduction of principles. The Government have said that these objectives and principles could simply be made by the general secretary at an annual conference. He could say, "We are against the BNP". But that is not good enough. We accept that and we are trying to bring it on board.
I have slightly rewritten our original suggestion. Amendment No. 26 states:
"leave out 'contrary to the rules' and insert 'inconsistent with stated rules and objectives'".
That would include the rule book, which it must because it tells people what to do and how to do it. But then the objectives have to be stated, published or prescribed. If the Government want to go away and add to that, good luck to them. We are doing our best to try to find a way to do what the trade union movement thinks it needs and the Government say they want to do. I beg to move.
12.45 p.m.
Baroness Turner of CamdenMy Lords, I support the amendment, which is similar to that which I moved in Grand Committee. I made the point then, which is very relevant, that the trade union movement in this country has very good and progressive policies in relation to the recruitment of people from ethnic minorities. The unions are put in a difficult position if they are not able to deal with awkward people who infiltrate unions in order to carry out anti-ethnic and discriminatory practices from inside the union. We need to have policies and legislation in being that will enable the unions to deal with such people and to enable them to deal with discriminatory practices and attempts at discrimination against their own members from within the union, which does happen.
In Grand Committee, the Minister said that the Government were sympathetic to the aims of the amendment and that they would have discussions with the interested parties with a view to putting forward a form of wording. I hope that the consultations have proceeded and that we will hear from the Minister today that he has something to offer on those lines.
Baroness Miller of HendonMy Lords, obviously, I have no idea whether the Minister will offer something to the liking of the noble Baroness, Lady Turner, and the noble Lord, Lord McCarthy. I can simply state my position. The amendment is extremely similar to Amendment No. 67 in Grand Committee. I use the

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words "extremely similar" because I cannot use the word "identical". That is because of the words "stated rules".
In Grand Committee, my argument against the amendment was that the words "contrary to the rules", which are in the clause, are absolutely clear and unequivocal. I also said that,
"inconsistent with the rules and objectives",
is a vague and woolly concept. In my view, Amendment No. 26 is not very different.
I agree with the noble Baroness, Lady Turner, that it is dreadful that there are people in the unions who ought not to be. I would not want to make it difficult for a union to expel someone when it ought to be able to expel them. On the other hand, it is not right that a person should be deprived of his or her union membership except in the clearest possible terms. If the Government can introduce clearer terms than before, I would not object to that.
I remember that the noble Lord, Lord Sainsbury, said:
"We wanted to ensure that the statute is clear and places reasonable obligations on individual members to act in accordance with widely available and accessible information on the union's policies and positions. That is why we refer to the union's rules".—[Official Report, 15/6/04; col. GC 157.]
I would never pretend to the noble Lord, Lord McCarthy, who would never allow me to do such a thing, that I am as knowledgeable as him about union rules. He made a few remarks about some unions having rules that are simply unacceptable, which may be so.
Perhaps the Minister will suggest that he has better wording. But, in the event that he does not, I object to the amendment as it stands.
Baroness Gibson of Market RasenMy Lords, I, too, support the amendment. I particularly like the words, "and objectives" of the unions, for the reasons that my noble friends have given. On occasion, union rule books can be strange. They have evolved over the years. As my noble friend Lord McCarthy said, it is important that we include the union's objectives. That would strengthen the union's position in relation, for example, to racists.
Lord TriesmanMy Lords, among other things, Clause 32 changes the arrangements whereby employment tribunals award remedies to individuals who have been unlawfully excluded or expelled on grounds of their political party mmbership.
A minimum award, currently set at £5,900, applies where the union has not admitted or re-admitted the individual to the union at the time the application for compensation is made. We think that the tribunal should be given greater discretion to decide the amount of the award in cases when the exclusion was unlawful because it was mainly attributable to membership of a political party, but where there were other reasons for the union's decision concerning conduct that were contrary to the union's rules.
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In choosing the wording we wanted to ensure that the statute is clear and that it places reasonable obligations on individual members to act in accordance with widely available and accessible information on the union's policies and positions—an aim that is shared on both sides of the House. That is why we refer to the union's rules within the subsection. The amendment returns to the topic that we discussed in Grand Committee, as my noble friends have rightly said. It would broaden the test which disapplies the minimum award so that it includes subsidiary behaviour that is inconsistent with the stated rules and objectives of the union.
The Government consider it extremely important to ensure that the test to disapply the minimum award works in pratice. Union rule books vary, although I should say that the survey carried out on behalf of the TUC in 2003 showed that of the 34 unions considered in the sample, 22 had explicit national rules on equality issues. Therefore, on the basis of the sample, that is a reasonable proportion thus far. Some explicitly refer to the union's opposition to racist attitudes or conduct. Others do not specify many proscribed behaviours, but leave it to other union documents to set out the union's position on such matters. We recognise that the current wording may not be broad enough to meet union concerns, and we have therefore been working closely with the TUC to devise alternative wording.
In assessing the alternatives, we must be sure of the openness and clarity of what I have described. That point was made in Grand Committee, and the inclusion of the word "stated" in the amendment is in response to that. I am not sure, however, that my noble friends' latest approach would fully meet the need. Just because something is stated does not mean that it is sufficiently accessible to the relevant individuals, and therefore capable of influencing their conduct. The amendment uses the word "inconsistent". As was mentioned in Committee, that word is also open to a wide variety of interpretations, and we are not keen to see unnecessary legal debate at tribunals about the meaning of the word.
I also note that my noble friends' amendment refers to conduct that is inconsistent with the stated "rules and objectives" of the union. I am not sure whether that was intentional or whether, on reflection, they would prefer the word "or" rather than "and". The proposed wording has the effect that subsidiary conduct would need to be inconsistent with both the rules and the objectives of the union for the minimum award to be disapplied. I fear that the amendment would narrow the scope for disapplication in a way that I am sure was not intended.
We are in urgent discussions with the TUC, which are progressing well and should conclude in time for Third Reading. I am grateful to Mr Brendan Barber, the General Secretary of the TUC who has provided me with the TUC's recent documents. I believe that we shall be able to draw on a wealth of sensible thinking, and am confident that that will proceed well in time for Third Reading. In that light, I invite my noble friend to withdraw his amendment.
Lord McCarthyMy Lords, I want to make two things clear. First, it is not and never was, our intention to do something that was inconsistent with the rules. If the wording gives that impression, it must be changed. The rules do a whole series of things, and do not deal only with exclusions and expulsions. They set out the power structure of the union. We do not want another generation of practices that are unlawful or enable the union to exclude or expel, and which are not connected to the rules.
Secondly, it may be that my form of words —
inconsistent with stated rules and objectives—
confuses that point. Perhaps it would be better to say, "inconsistent with either rules or objectives". I do not mind. We do not want to set up those two things in opposition to one another, and we do not want to make them additional qualifications. We have to show both. It is complicated, but we look forward to seeing what the Government will do, and hope that they find the magic words. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 54 [Provision of money for trade union modernisation]:
Lord Triesmanmoved Amendment No. 27:
Page 59, line 34, at end insert—
"(4) If money is provided to a trade union under this section, the terms on which it is so provided shall be deemed to include a prohibition ("a political fund prohibition") on any of it being added to the political fund of the union.
(5) If a political fund prohibition is contravened, the Secretary of State—
(a) is entitled to recover from the trade union as a debt due to him an amount equal to the amount of money added to the union's political fund in contravention of the prohibition (whether or not that money continues to form part of the political fund); and
(b) must take such steps as are reasonably practicable to recover that amount.
(6) An amount recoverable under subsection (5) is a liability of the trade union's political fund.
(7) Subsection (5) does not prevent money provided to a trade union under this section from being provided on terms containing further sanctions for a contravention of the political fund prohibition."
The noble Lord said: My Lords, the amendment makes it clear that unions may not use the money received from our proposed union modernisation fund on their political objects. That was always our intention, but the amendment puts a clear and effective legal prohibition in place. There was consensus in Committee on the need for the amendment, and I am grateful to the noble Lord, Lord Razzall, who cannot be here today, for pressing the case to have the greatest possible clarity.
Clause 54 inserts a new Section 116A into the 1992 Act. The amendment adds four new subsections to that new section. New subsection (4) establishes a prohibition on the payment into a union's political fund of money provided by the Secretary of State under the new section. Under the 1992 Act, all union expenditure on political objects must be made from a separate political fund. The Act also prevents a union transferring money from its general fund into its
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political fund. The prohibition will ensure that money cannot be paid directly or indirectly into a political fund.
New subsection (5) ensures that the Secretary of State must take such steps as are "reasonably practicable" to recover money which has been added to political funds in contravention of the prohibition. Those steps include the taking of legal action against the union.
New subsection (6) ensures that the repayment of money wrongly added to a political fund must come from that political fund, and not from the union's general fund. If that provision were not there, the union could potentially manipulate the arrangement and, in effect, switch money from its general fund into its political fund.
Finally, new subsection (7) makes it clear that when providing money from the union modernisation fund the Secretary of Sate may include terms providing for other additional sanctions against the union if it breaches the prohibition. Such sanctions will be set out in the contractual terms under which money from the fund is given. For example, the Secretary of State could stipulate that the money must be repaid in full with interest.
The amendment fulfils the commitment we made in Committee. It removes any possibility of a misunderstanding about the use of the fund, and addresses the issues that were put to the Government fully and comprehensively. I beg to move.
Baroness Miller of HendonMy Lords, I am grateful to the noble Lord for accepting the amendment tabled by the noble Lord, Lord Razzall, in Committee, and which was one part of a larger amendment that I had tabled. There is still a possibility for a union to circumvent it one way or another—I say that because the plain words which I used are not there. Having said that, I look to the Government to prevent abuses of taxpayers' money, which I am sure they will do both with regard to regulations that they may need to make and by the procedures adopted, including the close scrutiny of applications and supervision of the funds. The Minister said in Committee that that would happen. I am grateful that we have clarified the bit that gave us most problems.
Lord AddingtonMy Lords, speaking as a rather inadequate stand-in for my noble friend Lord Razzall, I can say that he feels that the government amendment achieves, in a slightly better way, what he originally intended with his amendment. He thanks the Government for bringing their amendment forward and hopes that it will deal with this area of possible abuse.
Lord Lea of CrondallMy Lords, I join other noble Lords in welcoming this clarification, which has shot

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Mr Michael Howard's latest fox. If we were to shoot any more such foxes, we would solve the problem of hunting with dogs.
Baroness Miller of HendonMy Lords, I know not what fox the noble Lord refers to, but I am quite certain that if the amendment was bad for our party I would not have accepted it.
Lord Lea of CrondallMy Lords, perhaps it was not a fox; it may have been a red herring.
Lord TriesmanMy Lords, before we go further into the animal realm, I commend the amendment to the House.
On Question, amendment agreed to.
Schedule 1 [Minor and consequential amendments]:
[Amendments Nos. 28 and 29 not moved.]
Lord Triesmanmoved Amendments Nos. 30 to 36:
Page 63, line 39, leave out "27D(2) or (3)" and insert "27D(31, 27D(4)"
Page 63, line 40, at end insert—
"( ) In paragraph 40 (bar on further application after declaration by the CAC of non-entitlement to recognition), in subparagraph (1)—
(a) after "under paragraph" insert "27D(4) or"; and
(b) for "held" substitute "arranged".
( ) In paragraph 41 (bar on further application after declaration by the CAC of end of bargaining arrangements), in subparagraph (1)—
(a) after "under paragraph" insert "119D(4), 119H(5) or"; and
(b) for "held" substitute "arranged"."
Page 63, line 43, leave out "27D(2) or (3)" and insert "27D(3), 27D(4)"
Page 63, 1ine 43, at end insert—
"( ) In paragraph 48 (invalidity of application after declaration by the CAC of non-entitlement to recognition), in sub-paragraph (1)—
(a) after "under paragraph" insert "27D(4) or"; and
(b) for "held" substitute "arranged".
( ) In paragraph 49 (invalidity of application after declaration by the CAC of end of bargaining arrangements), in subparagraph (1)—
(a) after "under paragraph" insert "119D(4), 119H(5) or"; and
(b) for "held" substitute "arranged"."
Page 64, line 12, at end insert—
"( ) In paragraph 89(8) (effect of declaration of entitlement to recognition), after "27(2)" insert "or 27D(3)".
( ) In paragraph 89, after sub-paragraph (8) add—
"(9) Paragraphs (a) and (b) of sub-paragraph (7) also apply if the CAC issues a declaration under paragraph 27D(4).""
Page 64, line 23, leave out "27D(2)" and insert "27D(3)" Page 64, line 25, leave out "27D(2)" and insert "27D(3)"
On Question, amendments agreed to.

Traffic Management Bill
1.2 p.m.
Read a third time.
Clause 18 [Guidance to local traffic authorities]:
Lord Rotherwickmoved Amendment No. 1:
Page 8, line 30, at end insert—
"( ) The guidance shall cover, among other matters, the respective responsibility of a local traffic authority, the police and fire service to attend to spillages of diesel fuel and render the road safe again for the passage of motorcycles and other vehicles."
The noble Lord said: My Lords, I have decided to return once again to the issue of diesel spills. With the patience of noble Lords who have heard it before, I shall briefly outline for those who may have missed it on the previous occasion what the amendment does.
The amendment aims to ensure that diesel spills are cleared up by the local authorities which manage the roads in question in order that such spills do not pose a threat to road users. My particular concern in this case is with the relatively small spills that affect motorcyclists and bicyclists.
I have taken on board what the Minister said on Report—that guidance is available on diesel spills in general—but, on looking at the section to which he referred me in the code of practice for maintenance management, there is no direct reference to diesel spills but only to flooding, high winds, temperature and so on.
While I acknowledge that the Minister outlined the possibility of this issue being discussed in public consultation on the draft network management duty guidance, the department does not have a duty to take on board all aspects of the consultation; the Bill as it stands allows only that guidance "may" be published, rather than a commitment that it "shall" be published.
I welcome the fact that local authorities are given advice on the management of incidents, which covers diesel spills, and I support the idea of the emergency services and local authorities working together. But the Minister did not say whether local authorities have to adhere to such advice, nor whether it is ever checked that they are adhering to the advice by the emergency services. Can the Minister clarify this issue?
It would appear that there is a system in place at the moment for dealing with diesel spills, but in practice it does not always work. The British Motorcyclists' Federation's journal, the Motorcycle News, on 3 March 2004, revealed that there are now less than 3,000 dedicated UK traffic police, down from 9,000 in 1992. The other 6,000 are now used to tackle a variety of crimes. However, the forces claim that they still have time for traffic duties to ensure that our roads are safe.
The British Motorcyclists' Federation tested this claim. In five police force areas where, I understand, those 6,000 police officers have multiple roles, it found five dangerous diesel spills, each of which could have caused a crash. It concluded that four out of five of those diesel spills were not made safe, and the fifth one was made safe only because a road gritting lorry went past.

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The Association of Chief Police Officers has stated that if a diesel spill is likely to cause an accident it is deemed an emergency and you can call 999 to report it. If it is not, you should call the local police force or the council. That does not seem to have any effect on cleaning up a diesel spill. It may get a policeman out, but it does not make it safe.
To highlight this concern, a traffic officer from Norfolk said that a diesel spill should be dealt with as a "grade two emergency", which means that the police can put on their flashing blue lights and get there. At the officers' discretion it can be changed to a grade one, which means that they can exceed the speed limit and go through red lights. The officer said:
"If it's rush hour and only a grade two, you'll get there late to find that some motorcyclist has crashed".
I look to the Government to give an assurance that this issue in particular will be subject to discussions between the department, the emergency services and local authorities, as well as any other stakeholder they deem fit, be it as part of the consultation on another issue or as an issue in itself. This may be a small issue but I believe that it will make a huge difference to road users and the prevention of accidents, which cause congestion.
I make the point, once again, that motorcyclists represent 22 per cent of those killed on British roads each year, even though they represent only 4 per cent of the traffic. I beg to move.
Lord Davies of OldhamMy Lords, I am sorry that I was unable to reassure the noble Lord at the previous stage of the Bill that we are tackling the issue of diesel spillage. I recognise that it is a serious issue, particularly in respect of the safety of motorcyclists and others.
As I mentioned at previous stages of the Bill, there are already regulations aimed at preventing diesel escaping in the first place. It is an offence to spill any oily substance on a carriageway if it is likely to cause danger. The Department for Transport has been tasked with considering the possibility of raising both the profile of the existing regulations and their enforcement.
Turning to the issue of who is responsible for the removal of spills, this clearly falls to the local traffic authority. Guidance on dealing with diesel spillages and similar accidents is already covered in the code of practice for maintenance management, and the network management duty guidance reinforces this in its advice to local traffic authorities on the management of incidents.
In addition—I hope this is a direct response to one of the noble Lord's stronger points—the department is involved in drawing up engineering guidelines for powered two-wheelers, which will include the concerns of motorcyclists, when advising on the planning, designing, implementing and maintenance of the road network. So the action we are taking is not inconsiderable. As I sought to assure the House on the previous occasion, we recognise the issue raised by the noble Lord as a matter of considerable importance.
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I hope that the noble Lord recognises the seriousness with which the Government view the safety of motorcyclists. He will be delighted to know that we will soon be launching a motorcycling strategy with a view to improving conditions for all motorcyclists. With that in mind, the department convened an advisory group on motorcycling that included representatives of the Motorcycling Action Group and the British Motorcyclists Federation. They have been working on a report that will contain recommendations to Government on the issues of most concern. We are expecting it to be published next month. Ministers will give it careful consideration when developing the strategy.
I respect the points the noble Lord made about the accident rate for motorcyclists. Only a short while ago in response to a Question in the House I indicated how concerned we were about the rise in deaths and serious injuries among motorcyclists. That is why we are concerned to take the measures I have outlined. But there is a salient point in relation to the amendment. The noble Lord said that motorcyclists represented 22 per cent of those killed when they comprised only 4 per cent of the traffic. Those are chilling statistics that we take extremely seriously, as we do the upturn in motorcycle casualties, which is a worry to us all.
However, diesel and oil spillages were present in less than 1 per cent of all injury accidents involving two-wheeled vehicles last year. Although I hope I have convinced the noble Lord, I am sure that he is aware that my colleagues and I have the issues of motorcycle safety very much in mind. We need to pursue the matters with vigour. The amendment relating to spillages is not justified by the figures, but we are taking on board the representations that the noble Lord has made so forcefully again today. We will keep the issue under review. I want to reassure him that motorcycle safety is an important feature of the Government's perspective on road safety.
Lord RotherwickMy Lords, I thank the Minister for his kind assurances and for the information he gave us about the report due for publication next month. Perhaps my reading skills are not up to it, but I have a copy of the code of practice for maintenance management and we could not find any reference to diesel spills.
Furthermore, both the times I have come off my motorcycle on diesel spills, neither of those occasions were included in the accident statistics. It would be misleading to think that the accidents caused to motorcyclists due to diesel spills are just 1 per cent; perhaps the figure is much larger because they are not recorded. Notwithstanding that, I am grateful to the Minister for his assurances and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 20 [Interpretation of Part 2]:
Viscount Astormoved Amendment No. 2:
Page 9, leave out lines 8 and 9.
The noble Viscount said: My Lords, we move from the dangerous position of two wheels to the safety of four wheels. My amendment is purely for tidying up because

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your Lordships deleted Clauses 20 to 30 on Report. We needed to table the amendment because it removes the definitions of "intervention notice" and "intervention order" from the current Clause 20 as they are no longer needed in the Bill. I hope that the amendment is helpful to the Government. I beg to move.
Lord BorrieMy Lords, this is an obvious amendment in view of what happened. It was a most unfortunate decision by the House and I hope that it will not prevail indefinitely.
1.15 p.m.
Lord Davies of OldhamMy Lords, I am grateful to my noble friend. Like me he is careful of the Danaans when bearing gifts. Of course the noble Viscount has an unexceptionable and unarguable case that once Clauses 20 to 30 were excised from the Bill—temporarily I trust, like my noble friend—the amendment should be carried. As he will recognise, although we do not accept the reason why it has become unarguable, we accept the amendment.
On Question, amendment agreed to.
Clause 33 [Directions as to placing of apparatus]:
Lord Davies of Oldhammoved Amendment No. 3:
Page 17, line 2, after "to" insert "the persons who may determine appeals and"
The noble Lord said: My Lords, Clause 33 inserts a new Section 56A into the New Roads and Street Works Act 1991. That will provide a new power for street authorities to direct undertakers that in certain circumstances they cannot place new apparatus in a particular street. Subsection (5) already allows the Secretary of State to make provision in regulations for a system of appeals against such directions and the procedure for appeals. Upon reflection, we believe that it would be sensible to make it clear that the regulations can also make provision as to the persons who may determine such appeals, which is what Amendment No. 3 does. I beg to move.
Viscount AstorMy Lords, the amendment clarifies that regulations made by the Secretary of State to allow appeals against directions preventing the placement of new apparatus by undertakers—in particular, for roads as set out in Clause 33—may also make provision as to the persons who may determine such appeals. We welcome the amendment and thank the Government for tabling it.
On Question, amendment agreed to.
Clause 44 [Power of street authority to require undertaker to re-surface street]:
Lord Davies of Oldhammoved Amendment No. 4:
Page 24, line 22, leave out "serve" and insert "give"
The noble Lord said: My Lords, in moving the amendment I shall speak also to Amendments Nos. 5, 6, 7, 24 and 28, which replace references to the "serving" of notices with the "giving" of notices. Elsewhere the Bill refers to the giving of notices and for consistency we consider it best to refer to one term.
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Amendments Nos. 23 and 27 are also grouped with Amendment No. 4. They correct references in two of the schedules for fixed penalty offences. Both Schedules 3 and 6 incorrectly refer to "section". The amendments correct the errors so that they refer to "paragraph", which is the appropriate terminology when referring to schedules. I beg to move.
On Question, amendment agreed to.
Lord Davies of Oldhammoved Amendment No. 5:
Page 25, line 5, leave out "served with" and insert "given"
On Question, amendment agreed to.
Clause 45 [Re-surfacing: regulations and guidance]:
Lord Davies of Oldhammoved Amendments Nos. 6 and 7:
Page 25, line 28, leave out "served on" and insert "given to"
Page 25, line 30, leave out "be served with the notice" and insert "whom the notice is to be given"
On Question, amendments agreed to.
Clause 46 [Contributions to costs of re-surfacing by undertaker]:
Lord Davies of Oldhammoved Amendment No. 8:
Page 27, line 32, leave out "(corresponding to subsections (1) to (5))"
The noble Lord said: My Lords, in moving the amendment I shall speak also to Amendment No. 9. Clause 46 inserts a new Section 78A into the New Roads and Street Works Act 1991 providing for undertakers to make a contribution to the costs of resurfacing roads in certain circumstances. The amendments provide that regulations under subsection (7) are able to make substantive provision for payments and so on and are not simply intended to give powers to the Secretary of State to require payments. The drafting amendments are to make clear the scope of provisions. I beg to move.
Viscount AstorMy Lords, will regulations provide undertakers with a choice, or will they prescribe the circumstances in which an undertaker is entitled to pay a sum with regard to resurfacing? It would help if the Minister could give me some understanding of how they consider the regulations will be framed. In principle, we support the amendment.
Lord Davies of OldhamMy Lords, I am grateful to the noble Viscount for asking that question. The regulations will indeed prescribe. I believe that clears up the uncertainty that he expressed.
On Question, amendment agreed to.
Lord Davies of Oldhammoved Amendment No. 9:
0Page 27, line 39, at end insert—
"( ) The power in subsection (7) includes power to make provision corresponding to provision that may be made under subsections (1) to (5)."
On Question, amendment agreed to.
Lord Lucasmoved Amendment No. 10:
Page 27, line 46, at end insert—
"( ) No contribution may be requested under this section in respect of works carried out before regulations under this section have first been made."
The noble Lord said: My Lords, I thought that we knew where we were on this new section, and that through the process of Committee and Report we had gained an understanding that no retrospection was involved. But then it appears from comments made very recently by Ministers that there is to be retrospection, and that the way in which this section of the Bill will work is that it will be brought into effect next year some time, but the regulations will not be promulgated for the first time until some years afterwards. When the regulations are promulgated, the whole period between the Bill coming into effect and the regulations being agreed to will then be covered by the section, and there will be an immediate back-charging of the utilities which have done works in that period.
My objection is not that utilities should be charged for such things; we are all agreed on that point. I object, however, to the idea that an unspecified and unquantified charge will suddenly materialise in five years' time. Utilities are presumably meant to reserve for that eventuality—but how can they reserve for something when they do not know the scale and extent of the charges? The Minister has said that these cases will be rare and occasional, but there is nothing in the Bill to say that; it all depends on the nature of the regulations.
The Minister must be straight and keep to what he has said before—that there will not be retrospection. Until it is possible for the utilities to know when the charges will arise and how large they are likely to be, they should not be asked to pay them. That seems to me the very basis of fairness and reasonableness, on which we thought we had agreed.
My decision on the amendment depends very much on how the Minister replies. Given that we are at this stage, I shall not know until he has whether this is a matter that I want to take seriously. I would hope that if my noble friend Lord Astor and the Liberal Democrats have some reason for me not to divide the House on this matter, if the Government are going retrospective, they will let me know—because I certainly shall divide the House if they are. I beg to move.
Lord BorrieMy Lords, I do not find myself very often in agreement with the noble Lord, Lord Lucas, so it is a pleasure to agree with him today. It seems quite unreasonable that utilities should engage in work tomorrow, next week or the month after on the basis of the present law, then find that because regulations are made retrospective some time in the future their liabilities are much greater than they thought. I hope that the Minister will be able to reassure the noble Lord, Lord Lucas, and myself, that that is not intended. Otherwise, I believe that the noble Lord has an important point.
Viscount AstorMy Lords, I understand the point that my noble friend Lord Lucas is making, and I entirely agree with him. I had thought, although I may have got it wrong, that the Minister had given assurances about this matter before. I may not be right, and it would be very helpful if the Minister could clarify the situation.
Lord Davies of OldhamMy Lords, I shall address myself to the issues, although I regret that I shall have at one stage to indicate in a rather technical way that the amendment would not quite achieve what the noble Lord seeks. However, it would do the noble Lord a disfavour if I merely addressed the technicality and not the real issues that he has raised.
As the noble Viscount, Lord Astor, said, we have had considerable debate on these issues in Grand Committee and at Report. The concerns of utilities about the resurfacing powers have been raised previously, and it is right that they should be today. There is not a great deal to add to what I said before; I had sought to meet these points in the assurances given about the use of the powers. The assurances have been given, not only during the proceedings of the Bill in this House and in another place but outside the House by my colleagues in the department.
I emphasise the point that the provision is not a way for authorities to get their roads resurfaced on the cheap. The Government envisage that the powers would be used only where problems were most serious, and where a succession of works had left roads in a particularly bad condition. Regulations will place the appropriate limitations on the circumstances in which these powers could be used. We gave the assurance on Report that the first of the regulations will be subject to affirmative resolution, so both Houses of Parliament will have the opportunity to consider them.
We envisage that the authority itself would still be expected to make the largest contribution to resurfacing costs even when the new powers were triggered. The basis on which costs are to be shared between undertakers and the authority would of course be part of the regulations, so there will be an opportunity for this House to scrutinise the powers before they come into effect. As and when the regulations are brought forward, they will be developed with the help of undertakers and authorities, and will be subject to full public consultation.
The amendments that the Government tabled at Report already limit the liability of undertakers to exclude any works before commencement of these clauses. Amendment No. 10 seeks to stretch that exclusion to the time when regulations are made. I understand the concerns about how contingencies for resurfacing costs can be dealt with by utility companies. But we need to balance that against the principle that where utilities' street works have made a significant contribution towards damaging a road, the utilities in question should contribute towards the necessary resurfacing.

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As I said at Report, the Government have increased substantially the funding of maintenance on our roads, and we do not want to see that investment prejudiced. We do not of course want to make it difficult for utility companies to operate. I can assure your Lordships that all these matters will be the subject of proper discussion and consideration when developing the regulations so that we can come to a reasonable conclusion, which will take on board the point that the noble Lord has made.
The amendment itself in fact only partially addresses the concerns that the noble Lord articulated so clearly. This is where I shall lapse into the slightly more technical argument. While the amendment would add a subsection making liability start only after the regulations have been made, it leaves intact subsection (2)(a), which was amended at Report to make it clear that the starting point is that, subject to the eventual provisions made in regulations, liability may start at commencement of the clause, irrespective of whether regulations have been made. So the amendment would inadvertently cast doubt on the intended effect of the provisions in new Section 78A, if it were made. That would be deleterious to how we envisage these issues developing and to how the noble Lord addressed them.
Returning to the point of principle, I want to give the assurance that I have given in the past about these powers. The regulations will be developed in conjunction with the undertakers and authorities. They will take into account all the points that have been raised during the passage of the Bill. They will be subject to the fullest public consultation and of course they will be subject in the first instance to parliamentary scrutiny under the affirmative procedure for regulations. On that basis I hope that the noble Lord, Lord Lucas, will feel able to withdraw the amendment.
Lord LucasMy Lords, not really—not at this stage. If my noble friend Lord Astor chooses to indicate that he would rather I did not divide—by a thumbs down or similar motion—I will of course follow his advice. However, I thought that we had established the principle in Committee and on Report that there would be no retrospection, and now we find that there is this long period between commencement and the issuing of regulations when retrospection will apply. Furthermore, there will be no indication of the extent of the coverage or of the costs when they are incurred.
I thought that we had all agreed that there should be no retrospection, or at least not for more than six months or a year, which is survivable in the context of company accounts. The prospect of five years of retrospection is just not on and what the Minister said did not satisfy my concerns. I appreciate that the amendment is defective, but I hope that it is irritating enough to get the Government to correct it and put something in place that will work in principle. We all agree that utilities should pay their share of the costs. I hope that the amendment will make the Government hurry on the regulations so that they can.
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1.32 p.m.
On Question, Whether the said amendment (No. 10) shall be agreed to?
Their Lordships divided: Contents, 81; Not-Contents, 126.

Division No. 1

CONTENTS

Anelay of St Johns, B.

King of Bridgwater, L.

Astor, V.

Knight of Collingtree, B.

Astor of Hever, L.

Lamont of Lerwick, L.

Attlee, E.

Lane of Horsell, L.

Blaker, L.

Lawson of Blaby, L.

Blatch, B.

Liverpool, E.

Bridgeman, V.

Lucas, L. [Teller]

Brooke of Sutton Mandeville, L.

Luke, L.

Brougham and Vaux, L.

Lyell, L.

Burnham, L.

Mancroft, L.

Byford, B.

Mayhew of Twysden, L.

Campbell of Croy, L.

Miller of Hendon, B.

Carnegy of Lour, B.

Molyneaux of Killead, L.

Cockfield, L.

Montrose, D.

Colwyn, L.

Murton of Lindisfame, L.

Cope of Berkeley, L.

Norton of Louth, L.

Crathorne, L.

O'Cathain, B.

Crickhowell, L.

Oppenheim-Barnes, B.

Dixon-Smith, L.

Park of Monmouth, B.

Eden of Winton, L.

Pilkington of Oxenford, L.

Elliott of Morpeth, L.

Platt of Writtle, B.

Elton, L.

Plumb, L.

Ferrers, E.

Plummer of St. Marylebone, L.

Flather, B.

Prior, L.

Fookes, B.

Rawlings, B.

Freeman, L.

Renton, L.

Geddes, L.

Rotherwick, L.

Glentoran, L.

Seccombe, B.

Goschen, V. [Teller]

Selsdon, L.

Hanham, B.

Shaw of Northstead, L.

Hanningfield, L.

Skelmersdale, L.

Hayhoe, L.

Slim, V.

Higgins, L.

Soulsby of Swaffham Prior, L.

Hodgson of Astley Abbotts, L.

Strathclyde, L.

Howe, E.

Swinfen, L.

Howe of Aberavon, L.

Trumpington, B.

Hunt of Wirral, L.

Ullswater, V.

James of Holland Park, B.

Wade of Chorlton, L.

Jenkin of Roding, L.

Wilcox, B.

Jopling L.

Williamson of Horton, L.

Windlesham, L.

NOT-CONTENTS

Acton, L.

Brookman, L.

Addington, L.

Burlison, L.

Ahmed, L.

Campbell-Savours, L.

Alton of Liverpool, L.

Carter, L.

Amos, B. (Lord President of the Council)

Carter of Coles, L.

Andrews, B.

Clarke of Hampstead, L.

Archer of Sandwell, L.

Clinton-Davis, L.

Ashley of Stoke, L.

Cohen of Pimlico, B.

Avebury, L.

Corbett of Castle Vale, L.

Bech, L.

Crawley, B.

Barker, B.

Dahrendorf, L.

Bassam of Brighton, L.

Davies of Oldham, L.

Berkeley, L.

Dean of Thornton-le-Fylde, B.

Bernstein of Craigweil, L.

Drayson, L.

Bhattacharyya, L.

Dubs, L.

Blackstone, B.

Elder, L

Blood, B.

Evans of Parkside, L.

Borrie, L.

Evans of Temple Guiting, L. [Teller]

Brooke of Alverthorpe, L.

955

Falconer of Thoroton, L. (Lord Chancellor)

Ouseley, L.

Pendry, L.

Falkner of Margravine, B.

Pitkeathley, B.

Farrington of Ribbleton, B.

Ponsonby of Shulbrede, L.

Faulkner of worcester, L.

Prys-Davies, L.

Filkin, L.

Puttnam, L.

Garden, L.

Randall of St. Budeaux, L.

Gavron, L.

Rendell of Babergh, B.

Gibson of Market Rasen, B.

Rodgers of Quarry Bank, L.

Gilbert, L.

Rogers of Riverside, L.

Goldsmith, L.

Roper, L.

Graham of Edmonton, L.

Russell-Johnston, L.

Grocott, L. [Teller]

Sainsbury of Turville, L.

Harris of Haringey, L.

Sawyer, L.

Harris of Richmond, B.

Scott of Needham Market, B.

Harrison, L.

Sewel, L.

Hart of Chilton, L.

Sharp of Guildford, B.

Haskel, L.

Sheldon, L.

Henig, B.

Simon, V.

Hollis of Heigham, B.

Stone of Blackheath, L.

Hooson, L.

Strabolgi, L.

Howells of St. Davids, B.

Symons of Vernham Dean, B.

Hoyle, L.

Temple-Morris, L.

Hughes of Woodside, L.

Thomas of Walliswood, B.

Hunt of Kings Heath, L.

Thomson of Monifieth, L.

Irvine of Lairg, L.

Thornton, B.

Janner of Braunstone, L.

Tomlinson, L.

Jay of Paddington, B.

Tope, L.

King of West Bromwich, L.

Tordoff, L.

Lea of Crondall, L.

Triesman, L.

Lipsey, L.

Truscott, L.

Livsey of Talgarth, L.

Turnberg, L.

Macdonald of Tradeston, L.

Turner of Camden, B.

McIntosh of Hudnall, B.

Uddin, B.

MacKenzie of Culkein, L.

Wall of New Barnet, B.

Masham of Ilton, B.

Walmsley, B.

Massey of Darwen, B.

Warner, L.

Maxton, L.

Watson of Invergowrie, L.

Miller of Chilthorne Domer, B.

Weatherill, L.

Mitchell, L.

Whitaker, B.

Morgan, L.

Whitty, L.

Morgan of Drefelin, B.

Williams of Crosby, B.

Morris of Aberavon, L.

Williams of Elvel, L.

Newby, L.

Woolmer of Leeds, L.

Northover, B.

Oakeshott of Seagrove Bay, L.

Resolved in the negative, and amendment disagreed to accordingly.
1.42 p.m.
Lord Berkeleymoved Amendment No. 11:
Leave out Clause 48.
The noble Lord said: My Lords, this is a probing amendment about the inspectors' role in looking at road works. I am seeking a few words of comfort from my noble friend that those who do the roadworks well will get some reward for good behaviour because the inspections cost money. There has been a lot of correspondence between my noble friend and the noble Viscount, Lord Astor, on this subject. I shall not go over it now.
The Government have commented that they see the role of using a stick to punish those companies that do not improve their service. However, they have said little about a corresponding carrot for those who do improve; that is, a reduction in the number or proportion of inspections, and therefore a reduction in cost, if a company's work is shown to be good. It would good to hear from my noble friend whether the percentage of inspections carried out will vary
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according to the previous performance of the utility, or maybe even the local authority. It would be good to see whether the Government will accept the principle that the better company should, after a bit, have the proportion of its works inspected reduced, even down to something like 10 per cent. Of course, if the inspections found that its work was getting worse, it would be perfectly reasonable to put the percentage up higher. It would be very nice to hear a few words from my noble friend about the carrot as well the stick. I beg to move.
Lord Davies of OldhamMy Lords, I appreciate the spirit in which my noble friend proposes to delete an important clause of the Bill. But, despite bringing a nuclear weapon to his aid, I understand that he is seeking to air a concept and a principle that I find attractive.
As the noble Lord will know, it is certainly the case that in other areas where we have regulation it becomes lighter-touch when the performance record of the body to be inspected merits confidence. I think that that is the burden of my noble friend's remarks. I think it is an attractive concept and one that is not unknown to government in a number of areas. I will bear in mind the principle that he is identifying. We have quite a way to go before we reach conclusions on these issues so it is a helpful contribution.
As the noble Lord will know, it is certainly the case that in other areas where we have regulation it becomes lighter-touch when the performance record of the body to be inspected merits confidence. I think that that is the burden of my noble friend's remarks. I think it is an attractive concept and one that is not unknown to government in a number of areas. I will bear in mind the principle that he is identifying. We have quite a way to go before we reach conclusions on these issues so it is a helpful contribution.
Lord BerkeleyMy Lords, I am very grateful to my noble friend for that response. It is exactly what I hoped he would say. I had no intention of throwing any nuclear weapons in his direction. I was trying to convert my thoughts into an amendment that fitted into the Bill in order to get some very helpful words of comfort. I am sure he will understand why I chose the simpler option. I am very grateful to him. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 68 [Immobilisation of vehicle where penalty charge payable]:
Lord Davies of Oldhammoved Amendment No. 12:
Page 45, line 6. leave out sub-paragraphs (ii) and (iii)
The noble Lord said: My Lords, in moving Amendment No. 12 I shall speak also to Amendments Nos. 13, 14 and 15. On Report, we debated an amendment moved by the noble Viscount, Lord Astor, that sought to prevent the immobilisation of a vehicle for a period of 15 minutes after a penalty charge notice had been issued for a parking contravention. On that occasion, I explained that we could not accept that amendment because it would apply not just to overstaying in a paying parking bay but also to other circumstances. It would have also prevented

957
immobilisation for 15 minutes following the issue of a charge notice for other parking contraventions, such as parking on yellow lines. That is why we could not accept it as drafted. People who knowingly park unlawfully in the first place should not be given a period of grace against having their vehicles immobilised.
However, I indicated that we were prepared to amend what is now Clause 68 so that a vehicle cannot be immobilised for contravening the conditions of use of a paid-for parking bay until a period of 15 minutes has elapsed from the time that a penalty charge notice for the contravention was issued. That is the purpose of our amendments to Clause 68 and I think they meet the argument that the noble Viscount advanced in Committee and on Report.
Amendment No. 12 removes the existing prohibition on immobilisation for overstaying until a period of 15 minutes has elapsed from the end of the period of parking paid for. Amendment No. 13 replaces it with a prohibition on immobilising a vehicle in a parking place for a period of 15 minutes after a penalty charge notice has been issued for failing to pay a parking charge, failing to display properly a parking ticket showing that parking has been paid for or failing to remove a vehicle from a parking space at the end of the time paid for.
The prohibition on immobilisation for failure to pay a parking charge or to display a ticket would cover, for example, the eventuality of someone who went to a nearby shop to obtain change for the ticket machine and who, as matters stand at present, could potentially receive a penalty charge and have his vehicle clamped while carrying out that activity. The noble Viscount made a persuasive case that people may not immediately be able to meet the requirements of the parking charge, and that an element of grace would be appropriate.
The proposed new paragraph in Amendment No. 9 replaces the provision on overstaying removed by Amendment No. 8. It means that there would be a period of grace of at least 15 minutes before a vehicle could be immobilised for overstaying. In practice, that period could be longer, depending on when the contravention of overstaying was detected and when the penalty charge notice issued.
Amendments Nos. 14 and 15 are consequential. They address the anomaly that the Government seek to correct. Rather than a no-score draw, which is how the noble Viscount characterised our position last time we discussed the issue, I hope that we have the most unusual phenomenon of a win-win situation. I hope that he will accept the government amendments in those terms. I beg to move.
Viscount AstorMy Lords, I thank the Minister for addressing the concerns that we raised in Committee and on Report, and for bringing forward his own amendment, which deals with the problem. As I said previously, I have no problem with the issue of a ticket, but my concern has always been for someone who is trying to find a machine that works having to pay a
958
charge. They might get a ticket and can then write to say that the machine was not working or whatever, but there are too many instances in London where the clamping car follows the traffic warden issuing the ticket. Suddenly the innocent comes back and has been made guilty, inconvenienced, and has to pay and then appeal.
The amendment will not lead to people parking in places where they should not park, and one advantage of it is that it will reduce the number of appeals in which the payment of clamping has to be refunded, because of the 15 minutes. It will be beneficial to the system, and I support it.
On Question, amendment agreed to.
Lord Davies of Oldhammoved Amendments Nos. 13 to 15:
Page 45, line 22, at end insert—
"( ) The regulations shall also provide that an immobilisation device must not be fixed to a vehicle in a parking place in respect of a contravention consisting of, or arising out of, a failure—

(a) to pay a parking charge with respect to the vehicle,

(b) properly to display a ticket or parking device, or

(c) to remove the vehicle from the parking space by the end of a period for which the appropriate charge was paid,

until 15 minutes have elapsed since the giving of a notification of a penalty charge in respect of the contravention."
Page 45, line 23, leave out "subsection (5)" and insert "this section"
Page 45, leave out line 26 and insert—
""parking device" means a parking device within the meaning of section 35(3B) or 51(4) of that Act; "parking place" means—

(a) a parking place designated by an order under section 45 of that Act, or

(b) an off-street parking place provided under section 32(1)(a) or 57(1)(b), or under a letting or arrangement made under section 33(4), of that Act."

On Question, amendments agreed to.
Clause 69 [Representations and appeals]:
Viscount Astormoved Amendment No. 16:
Page 46, line 2, at end insert—
"( ) enabling an adjudicator to refer an appeal made under subsection (1) back to the enforcement authority if he sees fit."
The noble Viscount said: My Lords, I see that a similar government amendment is grouped with my Amendment No. 16. However, it may be for the benefit of the House if I briefly explain the purpose of mine. The Government have again been very helpful and addressed my concern, and I will leave the Minister to put the case for his own amendment.
Amendment No. 16 is about adjudication, fairness and mitigating circumstances. It gives parking adjudicators the statutory power to refer an appeal case back to the enforcement authority if they feel that the authority should reconsider the case in the light of mitigating circumstances. Amendment No. 17 is the wording suggested by the London chief adjudicator, Martin Wood, who argued that the adjudicators need more teeth so that, in particular cases, they should have the power to alter penalty charges. The example

959
raised was if someone has been on holiday and his permit falls off his windscreen, so he returns to find £1,000-worth of tickets that he then has to try to contest.
The amendment is also supported by the National Parking Adjudication Service and its chief adjudicator, Caroline Shepherd. She and Martin Wood have been enormously helpful to me in addressing the issue, for which I am grateful.
National and London parking adjudicators have expressed concern, in various annual reports over the years, that some councils have not been using their power to take into account mitigating circumstances when reconsidering fixed penalty notices in the correct manner, and that there should be more scrutiny and transparency. Recent Department for Transport figures published in the Evening Standard, no less, on Tuesday 6 July showed that drivers across England spent £1 billion on parking charges and fines last year, which is 50 per cent up since the Government came to power in 1997. I am not sure what the Minister feels about that, or what it says about motorists' behaviour during the period of his Government, but I leave him to consider that.
It is important to point out that adjudicators already refer cases back to local authorities, but the adjudicators are concerned that those referrals are not considered properly. Not all local authorities are bad, but not all are good. I can give some examples of good local authorities—Winchester, Oxford and Harrogate—but in Birmingham and Liverpool it can take up to seven months to get a reply to a letter.
The amendment ensures that the ability to take account of mitigating circumstances remains with local authorities, but the power of the National Parking Adjudication Service to refer cases back to them will encourage them to be more responsible and accountable in the use of that discretionary power. Importantly, it avoids making the power subject to judicial review, which was a concern of the Minister. Therefore, it will be of no additional cost to the taxpayer. It has received support from the National Parking Adjudication Service as well as the RAC Foundation. It would give tribunals a firmer overseeing principle.
The National Parking Adjudication Service has highlighted that it is vital, in conjunction with the amendment, to have strong guidance to ensure that when a case is referred back to the local authority it will be undertaken or overseen by the chief executive of the complaints department within that council, so that it is not reconsidered only by the same individual who looked at the case to start with. The NPAS has also called for better standards for dealing with parking penalties, and is calling for secondary legislation to allow the Audit Commission to outline standards that should be met, rather than the arbitrary system of enforcement that exists today. It would be interesting to hear what the Minister says on that.
The NPAS has also suggested—again, we look to the Minister to give us some understanding of the Government's thinking—that local authorities should
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not be allowed to spend the additional money raised from parking fines on other things until certain standards have been attained.
The Government have moved a long way on the issue, and their amendment is rather similar to mine. However, there are still some questions which I hope the Minister will answer when he comes to explain his amendment. I beg to move.
Baroness Scott of Needham MarketMy Lords, I thank the noble Viscount for his persistence on the matter. Were my noble friend Lord Bradshaw here, he would add to my thanks, because he has also expressed some concerns about it. In supporting the amendment, I plead guilty to a certain amount of inconsistency. My feeling is usually that most things are best left to local authorities and local discretion. Nevertheless, it has become evident that, at the worse end of the scale, some of the activities of local councils in not taking mitigating circumstances into account are virtually a miscarriage of justice, and cause immense anger and frustration among the public.
Under those circumstances and given the very strong will of the adjudication service that such a provision be in the Bill, I am glad in principle to support any such amendment on offer today. I look forward to hearing what the Minister has to say.
Lord Davies of OldhamMy Lords, I had it in mind to congratulate the noble Viscount, both on his assiduity in pursuing the issues over a long period and on the considerable success of the drafting of the amendments. We will not move our amendment to score a point over him at all; we merely seek to make eminently workable the case that he has established. I was in my most benign mood, but it never lasts long. It certainly does not last very long if I get an onslaught on the issue of the present parking policy of local authorities and what the Government are meant to do about it. First, we would be here all day on this issue of where the motorist stands in his right to park in certain areas. Secondly, I do not think that this is the time to pick up the cudgels in that respect. There is probably a good deal more agreement between all three Front Benches on these issues than might be thought when tendentious matters arise in particular cases in the press.
I bear in mind the point that the noble Baroness, Lady Scott, mentioned a moment ago. We have become concerned at the increasing number of cases—and the noble Viscount, Lord Astor, established this case at earlier stages of the Bill—in which there could be a real miscarriage of justice because of the rather rigid way in which the procedures operate. So we are entirely sympathetic to the case that the noble Viscount, Lord Astor, has made so ably and well.
The noble Viscount's amendment highlights the important issue of the need for proper consideration of cases where penalty charges are incurred, but compelling mitigating circumstances suggest that they should not be enforced. He gave us a number of examples on previous occasions including one in which a vehicle was abandoned in a snow storm the

961
previous night and the owner was penalised the next day before he could even get to his car. That, to put it mildly, is not the basis on which parking penalties should normally be enforced.
When we discussed this issue on Report, we said that we intended to take into account how to tackle mitigating circumstances. However, that rests first and foremost with the local authorities undertaking the civil enforcement of traffic contraventions. It is their decisions that are important. The real need is to get enforcing authorities properly to consider mitigating circumstances.
One element will certainly be our determination to issue statutory guidance to authorities under Clause 76 on dealing with such cases. By virtue of subsection (2) of that clause, authorities will be under a duty to have regard to such guidance. However, giving adjudicators the ability to refer cases back to the enforcing authorities if they think that they have not properly exercised their discretion would be an additional useful string to add to the bow. The noble Viscount has made his case and we agree with him.
We have subjected the noble Viscount's amendment, as we are bound to do, to the scrutiny of parliamentary draftsmen. Government Amendment No. 18 would enable regulations to be made providing that mitigating circumstances are a ground for appeal and that the potential outcome of such an appeal is that the adjudicator could decide to refer the matter back to the enforcement authority for reconsideration. That would effectively be giving the adjudicators a supervisory role over how enforcing authorities exercise their discretion in cases where there are mitigating circumstances. If the case is cut and dried and there are no issues to be discussed, the regulations would go through in the normal way. However, we are talking about cases where there might be mitigating circumstances.
We believe that, with our amendment, Clause 69 will provide sufficiently wide powers to enable regulations to be made to deal with representations and appeals, including giving adjudicators a lever to address the issue of mitigating circumstances. That is the burden of the noble Viscount's argument and all the discussions on this issue. As I think will be recognised, the detail of those regulations is for another day. However, I assure the House that their preparation will be subject to wide-ranging consultation. We will certainly be discussing their scope with the chief adjudicators. I would also remind the House that the regulations will be subject to parliamentary approval under the affirmative procedure.
So there will be another opportunity to look in detail at how these regulations will actually work. I therefore commend Amendment No. 18 and ask the noble Viscount to withdraw his amendment. He has made his case, but I think our amendment hits the nail slightly more accurately.
Viscount AstorMy Lords, before the Minister sits down, perhaps I can ask one question. When it comes
962
to the guidance, will the Government undertake to address the point raised by both adjudicators—that it is important that, when cases are sent back to local authorities, they are not overseen by the same individuals who looked at the case initially, but go to the chief executive's complaint department within that council? It would be very helpful if the noble Lord could answer that point.
Lord Davies of OldhamMy Lords, I am again happy to reassure the noble Viscount. I accept the point. It would not be appropriate to return the matter to those who may not have been as judicious in their assessment as the adjudicator would have liked. If an adjudicator asks quite specifically for mitigating circumstances to be taken into account, the local authority should recognise that as a quite serious point. I can therefore give the noble Viscount that assurance.
Viscount AstorMy Lords, I am very grateful to the Minister for his contribution and indeed for his amendment. I accept that his ability to draft amendments is sometimes better than mine-not surprisingly; he has rather a larger team behind him. This is important for one reason which perhaps has not been addressed today. The Bill is going to extend the powers of civil enforcement officers to move vehicles; therefore, there will be much more opportunity for difficulties and problems to arise. When that happens, it is important that we have a strong and robust appeals service that works. As I said, I am very grateful to the Minister for his reply. I will of course beg leave to withdraw my amendment in favour of his.
Amendment, by leave, withdrawn.
[Amendment No. 17 not moved.]
Lord Davies of Oldhammoved Amendment No. 18:
Page 46, line 2, at end insert—
"( ) The regulations may provide that, as respects a ground on which representations may be made, the adjudicator's function on an appeal is to decide whether to direct the enforcement authority to consider or re-consider (as the case may be) any representations relating to that ground."
On Question, amendment agreed to.
Clause 70 [Adjudicators]:
Lord Davies of Oldhammoved Amendment No. 19:
Page 47, line 7, leave out "Lord Chancellor" and insert "appropriate national authority"
The noble Lord said: My Lords, this is a minor operational amendment. It provides for enforcing authorities to report to the appropriate national authority rather than to the Lord Chancellor on the discharge by adjudicators of their functions. The appropriate national authority is the Secretary of State or the National Assembly for Wales.
The change brings the provision in Clause 70 about annual adjudicator reports into line with the current arrangement under Section 73(18) of the Road Traffic Act 1991. This requires that the local authority joint committees responsible for the appointment of adjudicators make an annual report on the discharge of their functions to the Secretary of State. The change

963
reflects the fact that, on balance, we feel that the reports issued by adjudicators will be more likely to contain substantive comments about enforcement mechanisms as a whole, rather than about the role of parking adjudicators. I beg to move.
Viscount AstorMy Lords, I have only one question for the Minister. He said that the Secretary of State will be the appropriate national authority. Am I not right that the Lord Chancellor is the person who makes regulations with regard to the adjudicators? Is it therefore not sensible that he should receive the report on how they discharge their functions, as he has set them up to do? Will that still happen? As far as I can see, the Minister's amendment changes that. The report would go to the Secretary of State, who is not responsible for making the regulations for adjudicators. Will there be a split? It seems a slightly strange process. I may not have phrased the question correctly; I accept that I may not have. However, I should be grateful for clarification from the Minister.
Lord SwinfenMy Lords, it would be totally illogical if the amendment were agreed to, because the Bill states that the Lord Chancellor appoints the adjudicators and makes the regulations. Therefore, as my noble friend said, why should the report go to another authority? That seems totally illogical.
Lord Davies of OldhamMy Lords, the issue concerns the functional operation of the adjudicators and the effectiveness of their actions. The report goes to the Secretary of State because they are working within his purview. The reason the Lord Chancellor establishes them is that they have a quasi-legal position. But the reports go to the appropriate Secretary of State or, in the case of Wales, the National Assembly.
It is not quite as the noble Lord suggested—perhaps I did not make the matter entirely clear. The Lord Chancellor approves the appointments—they are made with his consent—but the adjudicators are appointed by the enforcing authorities, which are within the purview of the Secretary of State. I should have thought that it was obvious why those appointments are made with the consent of the Lord Chancellor: because of the quasi-judicial dimension. But they are bodies established by the enforcing authorities and answerable to the Secretary of State or, in Wales, to the National Assembly.
Lord SwinfenMy Lords, before the noble Lord sits down, if the report states that the regulations need to be changed, which could well happen, surely that should go to the Lord Chancellor, not the Secretary of State. It is obvious that the report could cause a change in the regulations.
Lord RotherwickMy Lords, before the noble Lord replies to that question, perhaps he could answer a brief question of mine. As the Minister is only too well aware, we are on Third Reading but this issue has not come up before. Indeed, the Government drafted the Bill naming the Lord Chancellor as the appropriate person. The Minister has not explained why the Government have changed their mind since the original drafting of the Bill and have now proposed this change.
964
As my noble friend said, if the Lord Chancellor makes regulations about the adjudicators, he is responsible for their successful function. I entirely accept that the Secretary of State, in his role at the Department for Transport, is responsible for the traffic rules and regulations of local authorities and nationally, but the adjudicators are clearly set up by regulations from the Lord Chancellor. The report concerns not what they are adjudicating on, but how well they are doing their job. That is the cause of the confusion.
Lord Davies of OldhamWell, my Lords, the reports are about the operational matters with which the adjudicators have been concerned. Those reports are therefore matters appropriate to be dealt with by the Secretary of State. The consent of the Lord Chancellor and the reason why he features does not relate to a line-management function. His consent is required because there is a quasi-judicial aspect to the adjudicators' work. But their work concerns operational matters and their reports are judgments on enforcing authorities. That is why it is appropriate that they should go to the Secretary of State who, after all, is responsible for that whole area of policy.
On Question, amendment agreed to.
2.15 p.m.
Lord Rotherwickmoved Amendment No. 20:
Before Clause 83, insert the following new clause—
The maximum speed on a motorway shall be 80 mph and in bad weather determined by highway controllers with access to the motorway warning signs system."
The noble Lord said: My Lords, we on these Benches believe that raising the maximum speed limit to 80 miles an hour would ensure the most expeditious, effective and efficient use of our motorway network. That is just one prong of our ideas on transport. I disagreed with the Minister when he said on Report:
"Defining bad weather and determining the appropriate speed limit needs more serious consideration".—[Official Report, 29/6/04; col. 251.]
We have all seen speed limits enforced on motorways in bad weather and speed limits varied during congestion on roads such as the M25. If such evidence shows that such decisions can already be made, that is not a problem.
Although I welcome the fact that the issue is not settled for all time, and that powers are already in place to alter speed limits on our roads, when will the next review of motorway speed limits take place? If the Minister cannot tell me, will he now give me a commitment on the Floor of the House that the Government will undertake a review within a year? In 2005, it will be four years since the last review and I argue that it is time to reconsider the issue.
I do not want to waste time reiterating points from previous debates. I beg to move.
Lord Faulkner of WorcesterMy Lords, the amendment moved by the noble Lord is identical to one that he moved in Grand Committee on 4 May. He may recall that he and I exchanged some words then and he challenged me to produce figures for the increase in accidents on motorways and on smaller roads that has taken place elsewhere when speed limits have been raised. I then undertook, as president of the Royal Society for the Prevention of Accidents—an interest that I declare in this debate—to ensure that a brief was prepared for the noble Lord, Lord Rotherwick, and sent to him. That was done three days later and copies were sent to the noble Viscounts, Lord Goschen and Lord Astor.
I am a little surprised that the noble Lord, Lord Rotherwick, is moving the amendment again given the information contained in that briefing. For example, it stated:
"A study of the effects of raising the speed limit on Washington State's rural freeways from 55 mph to 65 mph in 1987, found that the incidence of fatal crashes more than doubled afterwards compared with what would have been expected if the limit had not been raised.
"A 1999 study compared the number of motor vehicle occupants killed in 24 States that raised their speed limits in 1995–96 with the period before the speed limits were increased, and with 7 States that did not increase the speed limit. The study concluded that where the limits were increased deaths on interstates and freeways rose by 15%, but did not increase in those states where the speed limit was left at 65 mph".
There is a great deal more, but I do not intend to read out the whole letter. I will just make the point that it is a three-page briefing which counters, point by point, the arguments used by the noble Lord in Grand Committee. As I said, it is a pity that he is not using that in this debate.
I shall give one more example. The briefing states:
"In states that increased speed limits to 70 mph, deaths were 35% higher than expected based on deaths in states that did not increase their speed limit, resulting in 1,100 extra deaths".
It would be the height of irresponsibility for us to contemplate an increase in the speed limit, largely—if I recall the noble Lord's argument in Grand Committee—on the grounds that, as most people do not observe it, the obvious thing is to raise the limit. The truth is that if the limit were raised, the acceptability of a new breaking of the law would be raised by 10 or 15 miles an hour. Instead of breaking the law at 80 miles an hour, people would be breaking it at 90 miles an hour.
Baroness Oppenheim-BarnesMy Lords, on the point about American freeways, as a past vice-president of RoSPA for many years, I point out to the noble Lord that the way in which freeways operate in the United States is not remotely comparable with motorways in this country. There are many more lanes and there is no outside lane as such—you can pass on either side. Under those circumstances, there may be a case for reducing speed. Those circumstances do not exist on our motorways.
Lord Faulkner of WorcesterMy Lords, unfortunately that is not at all what the Transport Select Committee in another place said when it looked at this issue. It said that
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if speed limits were raised to 80 miles per hour, casualties on motorways would rise by between five and 10 per cent. Based on 2002 casualty figures, that would suggest an extra 75 to 150 would be killed or seriously injured.
I quote the final sentence in the letter that went to the noble Lord, Lord Rotherwick:
"But ultimately, the public as a whole needs to be persuaded that driving at inappropriate speeds is not a minor, technical offence that everyone commits, but a serious, dangerous and antisocial activity in which the speeding driver places his or her own convenience above the safety and well-being of other people".
I hope he does not press this amendment.
Baroness Scott of Needham MarketMy Lords, on these Benches we have consistently opposed the notion that the speed limit on our motorways should increase. It seems extraordinary, given that our motorways are currently the safest roads we enjoy, that we should jeopardise that position by tacking such a complicated subject on to a Bill such as this, and taking such a drastic step with so little debate and evidence. I hope the noble Lord, Lord Rotherwick, does not push this amendment, because we will certainly not be supporting it from these Benches.
I have a fragment of sympathy with the noble Lord and his sense of frustration about general speed limit policy. It has become clear that we need a proper debate—what I think people call a "mature debate", whatever that means—on the whole question of speed limits: how they are set, and whether they are enforced. In that context, I would be quite happy, and would support the Government looking at motorway speed limits again, but not in isolation from all other types of roads, and certainly not in the context of this Bill.
Lord SnapeMy Lords, it would be extremely irresponsible if the amendment were pressed to a Division. The rules of your Lordships' House precluded me from speaking at an earlier stage in the debate and, despite being very new to this place, I am surprised that something so fundamentally important should be tagged on the back end of a debate in the way this amendment has been.
Like every other motorist, I have broken speed limits on a regular basis. I probably tempt providence when I tell your Lordships that the last time I was fined for doing so was in the mid-1970s. I feel—having done 30,000 miles per year until comparatively recently, much of it on motorways—that an extension of the speed limits in the way outlined in this amendment would be grossly irresponsible.
We are all familiar with the dangers of driving on our roads. My own motorway experiences tell me that the problem is not so much speed but, quite often, driver reflexes. Even smallish modern motor cars are capable of speeds undreamed of 30 or 40 years ago, when I first got a driving licence. There are far too many vehicles being driven at 80 miles per hour by people with their brains firmly stuck at 30 miles per hour. Anyone who has seen the carnage on our motorways caused by excessive speed would feel that to pass such an amendment after so little debate would be grossly irresponsible.

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I notice from reading the national newspapers that there is an organisation called the Association of British Drivers, which seems to be one of the few bodies in favour of this measure. I do not know who it speaks for. It certainly does not speak for me, having held a driving licence for more than 40 years. It is supported by the Daily Mail. I have a simple rule of thumb: if the Daily Mail is in favour of it, I am, by and large, against it. The Association of British Drivers does not speak for the majority of drivers, I am sure. We all think that we are better drivers than we are, I suspect. It is a bit of a male characteristic, as one sees on the motorways. I know that if I catch up with a Jaguar—I used to drive one myself, so I am not picking on Jaguar drivers—with a personalised number-plate, it will rarely move out of the outside lane. All too often, the driver appears to feel that he—and it is invariably a "he"—is somehow diminishing his masculinity by doing so.
If this amendment were accepted and that driver could drive legally at 80 miles per hour—which, as we all know, would mean 90 miles per hour—it would mean he was driving in exactly the same way, except that he would do so just that bit faster. We need not higher speed limits but better driver education. I know it is not, strictly speaking, a matter for this amendment. Despite the attacks on the proliferation of cameras, I am inclined to drive more carefully since their proliferation, for the reason—like everyone else—that I do not wish to risk my own driving licence.
Will the noble Lord, Lord Rotherwick, consult other Members of his own party before pushing this amendment to a vote? It strikes me as one of the populist and irresponsible measures that oppositions all too often introduce in the run-up to a general election. I rate it no higher than that. It is perhaps a measure best left to the counterparts of the noble Lord down the Corridor.
Viscount GoschenMy Lords, we have heard it suggested that introducing this amendment is an irresponsible act. Nothing could be further from the truth.
My noble friend Lord Rotherwick is quite right to draw attention to the fact that, at the moment, we have a totally unacceptable situation with a de facto speed limit on motorways of around 85 miles per hour, below which the police will not stop drivers in good weather. Anyone who drives regularly on motorways will see people driving quite happily at 85 miles per hour and not being stopped by the police. My noble friend is quite right to draw attention to the fact that this uncertainty about speed limits—having a law that the Government know perfectly well is not designed to be enforced at the level set down in statute—is quite wrong. For the benefit of the noble Lord, Lord Snape, my noble friend has already admitted that the Secretary of State has the powers to vary the speed limit without resorting to primary legislation. The purpose of this debate, I would suggest, is more to draw attention to the fact that the Government cannot just brush this under the carpet and pretend it is all too difficult to deal with. There does need to be a proper debate about speed limits. To the
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noble Lord, Lord Faulkner, I would suggest that the answer is to determine the appropriate speed limit, and for it to be agreed by Parliament and then properly enforced. At the moment it is not properly enforced, as the Government admit. That is an unsatisfactory situation.
Lord BerkeleyMy Lords, the noble Lord, Lord Rotherwick, said that increasing the speed limit would get you there quicker. I would draw his attention to the report of the Transport Committee of the House Commons on the road traffic speed. It found that:
"Higher speeds would do little to reduce journey time; on the congested motorways of England an 80 mph limit might well increase them because it would create an uneven flow".
So you are not going to get there quicker. Yes, we need some enforcement, and if the Government are going to have a review of speed limits, I hope that they will consider reducing them as well as increasing them, along with enforcement.
Given the facts that my noble friend Lord Faulkner has given to the House, both in his letter and today, and many other facts that we have seen, I just cannot understand how the Conservative Party can be promoting a policy that will increase by many hundreds a year the number of people killed or seriously injured on the roads. I cannot understand it. I strongly oppose this amendment.
Lord Davies of OldhamMy Lords, we had the benefit of this debate on Report and in Committee, although, as I recall, there were slightly fewer participants than today. My noble friend Lord Snape has got the perfect alibi for that: as he was not eligible to speak earlier in the Bill, he has taken his opportunity now. But I agree with him. His main point is that this is not the occasion upon which this debate ought to take place, because the amendment is misplaced in relation to this Bill. That is certainly the Government view on the broad issues, and I am going to speak very negatively on the case put forward by the noble Lord, Lord Rotherwick, and supported by the noble Viscount, Lord Goschen.
The concept I find most difficult to accept is that if we legitimise those who are breaking the law by travelling at over 80 miles per hour now, we will consolidate it nicely around 80 by moving the speed limit up to that position. The obvious question is: why would not those who currently break the law by 10 to 15 mph and appear to get away with it increase their speed with considerable abandon by another 10 or 15 mph when we have the higher speed limit? It seems obvious—
Viscount GoschenMy Lords, I thank the noble Lord for giving way. I have no desire to prolong the debate. There is an obvious answer to the noble Lord's argument: enforcement. Technology now allows us to enforce speed limits perfectly well. If the speed limit that is eventually decided were properly enforced, motorists

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could not travel at 10 to 15 mph faster without being apprehended regularly. Proper enforcement must be the answer.
Lord Davies of OldhamMy Lords, but the enforcing authorities have due regard to what is reasonable in their policing of the motorways and the rules of enforcement. It is not because they think that the speed limit ought to be 10 mph higher, but they recognise that a considerable number of motorists have difficulty in regulating their cars precisely to the speed limit—as evidenced every time one travels on the motorway. That will occur no matter what speed limit is enforced on motorways.
The noble Baroness, Lady Oppenheim-Barnes, challenged my noble friend Lord Faulkner on his American illustration on the grounds that American roads are not exactly the same as ours. Of course they are not; each country has a road system to reflect its geography, the weight of traffic and to some extent the nature of its drivers. In Europe, where speed limits are much higher than 70 mph—indeed, much higher than noble Lords opposite dream of—we see carnage. The figures for road deaths in France and Italy are horrendous.
Noble Lords may argue that French roads differ from British roads. That is certainly so, but Britain has tremendous problems with pedestrian deaths on urban roads, which is why children suffer so on our roads. France has much freer motorways and lighter traffic than is customary on all our main motorways. I hate to say it, but whereas there have been 6.1 deaths per 100,000 in the United Kingdom, there have been 11.1 in Italy and 13.8 in France.
When we debated the issue on Report, the noble Lord, Lord Rotherwick, asked me whether I recognised that the autoroutes in France were much safer. He asked me when I had been worried about speed in France. I have been worried pretty much every time I have been in France. Whenever the motorways have become crowded, I have been anxious. I doubt that many noble Lords who have driven on French autoroutes are unaware, first, that the speed limit is 10 mph higher than ours, and, secondly, that there is a built-in tolerance level that means that a fair percentage of drivers expect to travel a good deal faster. Therefore when one travels at around the legal limit of 80 mph, in an outside lane, in reasonable queues of traffic—that is to say, those regulated in distance—regularly you have drivers coming at you at over 100 mph. We all know that phenomenon. Not a motoring correspondent in the country does not attest to that from time to time and even indicate that it sharpens one's reflexes. I am afraid that it also produces drastic accident statistics.
I accept one aspect of the noble Lord's argument. He asked whether it was not time that we had a review of speed limits. Yes, it is. Such a review is under way.
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We expect it to conclude before the end of the year. It will give us further evidence on how we should tackle the issues.
When the reputable organisation on whose behalf my noble friend Lord Faulkner spoke, the Royal Society for the Prevention of Accidents, produced statistics indicating that speed kills, they were sufficiently strong for the Government to feel the need to convey that message to the whole country. Extending the motorway speed limit would give an indication in the wrong direction. Nevertheless, our minds are not closed on these issues. If our review indicates that we can safely increase the speed limit without deleterious effects, we will return to the issues after the end of the year.
Lord RotherwickMy Lords, that was an exciting debate. I am not sure whether the rest of the Traffic Management Bill will be so lively; perhaps it will be, now that lunch has finished.
The emotion expressed is perhaps derived from the fact that people envisage drivers travelling faster on the motorways. Our angle is to try to legalise motorists who already travel at 80 mph and not to criminalise them as they are at the moment. We have already heard from one noble Lord opposite that, if he travelled at 70 mph, everybody overtook him. I do not agree with many of the arguments that increasing speed means that accidents will occur. There was a period in the 1980s when speeds went up and the number of incidents went down, so that cannot be a logical argument.
Cars in the USA are built to travel at only 50 to 60 mph; they do not perform technically in the same way as European cars. The argument about Europe is more difficult, but I still believe that in some respects the difference is like chalk and cheese.
I am confused by the views expressed by the noble Baroness, Lady Scott of Needham Market, because her party's Front-Bench spokesman in another place says the exact opposite of what she said. As the Front-Bench spokesman, presumably he has some view. He says:
"I have said that I see nothing wrong in the principle with the possibility of raising the speed limit to 80 mph".
He goes on to say:
"I remember that when I worked in a business in the south of England, I had a conversation with the then chief constable for the area, who said that he, too, was quite happy with the concept of increasing speed limits on motorways".—[Official Report, Commons Standing Committee A, 10/2/04; col. 354.]
He continues very much in the same mode.
It was very nice to hear from the noble Lord, Lord Snape, although I am sad that we could not have heard from him earlier. I am very grateful to the Minister for what he said. I do not wish to waste any more of the House's time or to leave noble Lords on the edge of their seats. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Astormoved Amendment No. 21:
After Clause 84, insert the following new clause—
"PUBLIC CONSULTATION ON THE LONDON CONGESTION CHARGE

(1) Section 295 of the Greater London Authority Act 1999 (c. 29) (road user charging) is amended as follows.

(2) After subsection (1) there is inserted—

"(1A) After the coming into force of section (Public consultation on the London Congestion Charge) of the Traffic Management Act 2004, the Mayor of London and Transport for London may not establish, extend or operate a scheme under subsection (1) above unless the scheme has been approved by a majority of the residents of any London borough proposed to be included, wholly or in part, in the charging area.

(1B) The approval of a scheme mentioned in subsection (1A) shall be determined by—

(a) a local referendum conducted by the borough concerned under section 116 of the Local Government Act 2003 (c. 26) (local polls); and

(b) where at least 50 per cent of the residents of the borough concerned have voted in that referendum.

(1C) Subsection (1A) shall not apply in the case of a scheme already in operation, but Transport for London shall take into account the result of any referendum that may be conducted by a borough in which such a scheme is in operation in determining—

(a) whether it is reasonable to continue to operate an existing scheme concerned; or

(b) whether the existing scheme shall be modified."

(3) After paragraph 3 of Schedule 23 (road user charging) there is inserted—

"3A. A charging scheme may only be made by the Mayor if it is also approved by the council of the borough or boroughs, included wholly or partly within the boundaries of the scheme, following a referendum conducted by the borough or boroughs concerned under section 116 of the Local Government Act 2003."
The noble Viscount said: My Lords, this is a simple but important amendment. I see no reason that the Government should not accept it. After all, they believe in local people being consulted on local issues. The amendment requires that the congestion charge should be extended in London only if it is clearly supported by local people and local councils, who know best about the local economy and the effects that the introduction of a charge might have on the local way of life. It does not empower any council to enforce the lifting of an existing charge zone, although it rightly says that the Mayor and Transport for London should take note of local opinion on the impact of the charge.
The Minister said in a rather brief debate on Report that he accepted that there should be consultation on such a controversial policy—and so there should be. But the trouble with the congestion charge is that its impact on business and local life is very local while the Mayor's consultation, such as it is—apparently, 3 million letters were sent out to which there was a 3 per cent response; not a very high hit rate—covers the whole of London, including areas far distant and totally unrelated to those areas where the charge is threatened to be introduced. Even the Mayor admits that, according to his private surveys, over 60 per cent of local people are against extending the charge.
I take no particular view on the charge. I believe, as set out in the amendment, that it is a matter for local people. Surely they must be allowed to decide. The
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Government legislated for local referendums only last year, so what possible reason can the Minister think of to say that they should not be used as is proposed in this amendment?
My amendment states that local people should have the right to have their say and that the Mayor should be required to listen to them. In this, as in other areas, we believe in extending the right to choose. I would be surprised if the Government were, by contrast, to defend the Labour Party's newest member's right to dictate.
Local determination featured heavily in the mayoral election and was supported by the Liberal Democrats, particularly by their candidate, Simon Hughes. I am sure that the Lib Dems will show their normal consistency in these matters. Perhaps I may remind your Lordships' of what Simon Hughes said in the campaign:
"Liberal Democrats support the principle of Congestion Charging in central London and are committed to making it work better for all Londoners. We will:… Only consider expansion of the zone in boroughs already partly covered by the zone. Decision would ultimately be decided by a vote in a local ballot of registered electors in the possible extension areas".
That is exactly what my amendment provides. I hope that the Government will support local democracy instead of just paying lip service to it. I beg to move.
Lord BorrieMy Lords, this is a mischievous and misguided proposal. It is mischievous because, among other things, it proposes a hurdle of 50 per cent of the voters having to take part before a referendum would have any validity, knowing that that is a very high hurdle. It is also mischievous because not only today but also on a previous occasion when the noble Viscount, Lord Astor, raised this matter he referred to his amendment as a "simple little amendment". It is no such thing. It is an amendment that seeks to do battle not just against the existing congestion charge system in London but against any extension of it in London and against the possibility of it being introduced in many other cities and towns, which are naturally thinking about it now because of what we all know to be the great success of the congestion charge system so far in London.
The other reason why I think that the amendment is misguided, misconceived and mischievous is because it provides that a very narrow electorate should determine for everybody whether the congestion charge system should be extended or initiated in another city. It is concerned to have a vote among,
"the residents of any London borough proposed to be included … in the charging area".
Whether there is a congestion charge in any London borough is of vital interest, not only to the residents or the businesses of that area but also to vast numbers of other people who drive into or through it. I refer not only to visitors but also to people who commute regularly. They have at least as much interest in the matter as anyone else.
If we are to have voting or consultation, surely it must be done on a wide scale. I need hardly remind the noble Viscount—who knows very well but deliberately

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did not mention in his speech—that the Greater London Authority Act 1999 requires the Mayor to consult before any congestion charge system is introduced or extended. Consultation has been carried out already and will be done again. That is a much more sensible way of dealing with the matter than having a narrow voting system as proposed by the noble Viscount.
2.45 p.m.
Baroness Oppenheim-BarnesMy Lords, I hesitate to cross swords with the noble Lord, Lord Borrie, who knows that my respect for him is second to none, so I do so with due humility.
One important aspect of the amendment is the issue of local accountability. One of the most unacceptable features of the current congestion charge is that there is no accountability for anybody outside the GLA. Have we ever been told exactly how much the scheme has cost, how much it has raised and how much of that has been put into improving public transport other than empty red bus after empty red bus, one behind another? There is no accountability for the ordinary people who use London's streets. I would hazard a guess that, given the operating costs, the system is not only not making money but also losing a substantial amount.
The system is also totally unacceptable for people who live very close to the edge of the zone. The amendment refers to boroughs that are partly but not wholly within the scheme. That is another consideration to which your Lordships should give some thought before deciding whether to reject the amendment.
Lord MonsonMy Lords, I warmly support the amendment. It is extraordinary that a measure that would cause so much hardship for tens of thousands of people for extremely dubious net benefits could be pushed through against the wishes of the majority by somebody elected by a minority of the electorate—who, moreover, was elected not with vast enthusiasm this time round, but simply as the least unattractive to the electorate of the major candidates.
I declare an interest as a long-time Kensington resident. However, that is a peripheral interest, because, with the big proviso that the weekly charge for residents is the same as that paid by central London residents—most of whom are business people, not residents—it will not be seriously disadvantageous for me or my wife. However, younger members of my family definitely will suffer.
Let us suppose, for example, that my son and daughter-in-law drive in from Hammersmith to have Sunday lunch with us, when no congestion charge is payable, but one of my granddaughters accidentally leaves behind her favourite toy or colouring book. At present, my daughter-in-law could arrange to pop in on Monday for no charge, leaving the engine running as she collects the item from my wife at the front door. However, if the measure goes through she will have to pay £5 for the privilege. It would be much cheaper to go out and buy a new toy or colouring book.
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Others will be far worse affected, such as all those whose school runs necessarily take them through Kensington, to say nothing of those who live in the part of Kensington on the other side of Earl's Court Road, who will not be included and will have to pay to come east of Earl's Court Road.
I hope that your Lordships enthusiastically support the amendment.
Baroness Scott of Needham MarketMy Lords, the noble Viscount, Lord Astor, made a rather unworthy point about our mayoral candidate and the Liberal Democrat position on the issue. The debate so far has given the game away, because, although the amendment purports to be about consultation on the congestion charge, the debate has been about the charge itself. In that sense, he is driving a Trojan bus through your Lordships' House. Sorry, that was a bit feeble. From the point of view of these Benches, it is a matter for London people and the London Mayor. My friend in another place who was our mayoral candidate was quite right if he wanted to offer, as part of his package for Mayor, a local referendum on this subject. It is not for your Lordships' House to impose that condition on the Mayor, who has after all only just been elected on a perfectly open platform.
I am a little surprised to hear the noble Lord, Lord Monson, refer to the Mayor's mandate perhaps being wafer-thin because so few people voted. The entire British constitution is based on that. It is often the case that the government do not enjoy a majority. We are skating on rather thin ice if we pretend that immediately after an election the views and the platform on which the winner stood can be overturned by Members of your Lordships' House. From the point of view of these Benches, we take this amendment at face value. It is about whether some sort of local referendum should be a statutory obligation. We do not think that it should, and in that sense there is no inconsistency between that and the voluntary offering of such a ballot or referendum by my friend in the other place.
Lord Harris of HaringeyMy Lords, my noble friend Lord Borrie referred to this amendment as misguided and mischievous, and the look on the face of the noble Viscount as he moved the amendment suggested that there was a significant element of mischief in it. This is also a highly misconceived amendment. The noble Viscount, Lord Astor, said when he introduced it that there was no intention to undermine the position of the existing congestion charge. However, the proposal is that they,
"may not establish, extend or operate a scheme".
I am not a lawyer, so I have probably got it wrong, but I read that as meaning that unless there was instantly a referendum on the existing scheme, it would have to be dropped. That may not be the intention of the noble Viscount, Lord Astor, and I can see that he is looking at it again, which probably means that I got the legal phraseology wrong. I suspect that this is a misconceived part of the amendment.

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I take issue with the proposals about a referendum. There are existing, clear obligations on the Mayor of London who was, incidentally, elected by more than a simple plurality of votes. The supplementary vote system required that second choices were counted in the election. There is already a strong obligation on the Mayor of London to consult. Indeed, the consultation that seems to have excited some noble Lords is not about a specific proposal to extend the area of the congestion charge in London. It is about a proposal to amend the transport strategy of the Mayor of London. If having considered the outcome of that consultation, the Mayor of London believes that he should amend the transport strategy, there would then be a further detailed consultation on specific proposals in respect of the extension of the congestion charge zone. There are already substantial requirements on the Mayor to consult in the Greater London Authority Act 1999.
In his amendment, the noble Viscount is attempting to impose belt, braces, string and sealing wax in a series of tests that must be passed by the Mayor of London before any congestion charge change can take place. Not only would there presumably still be those requirements for two stages of consultation; there would then be the requirement of a referendum and a further requirement for the approval of the individual local authorities concerned. The fundamental fallacy of all of this is that it is restricted to those residents of particular boroughs who are affected by the change.
I recently fought an election for the London Assembly. The proposed extension of the congestion charge zone did not apply anywhere within the borders of the constituency that I fought in the London Assembly elections. It was, however, an extremely topical issue as far as people in the southern part of my constituency were concerned, because they might have been affected. We have heard the touching tale of the putative issues affecting the family of the noble Lord, Lord Monson, and events of cuddly toys being left behind. However, there were residents in the area that I previously represented for the London Assembly who were concerned that they would have to pay a congestion charge any time they went to the supermarket or to visit the graves of relatives in nearby cemeteries.
The problem with this amendment is that they would still have no more say in the proposals concerned than exists at present in terms of the consultation. They would not be enfranchised in any way, and they would not be given any more right to intervene. That is a fundamental fallacy in the amendment. I was unconvinced by the logic of the proposed extension to the congestion charge. What we were being asked to do as Londoners was agree to the subsidy of the residents of Kensington and Chelsea, many of whom are extremely well-off already, so that they could get discounts on the congestion charge, whether they were visiting family members or driving at random across central London, because they would be enabled to have the residents discount. Why give a referendum to the people who would benefit from the change—the people who would receive the subsidy—through a reduced payment of the charge? They will get
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the residents discount. That is the illogicality of this amendment. Not only it is misguided and mischievous, it is also misconceived.
Viscount GoschenMy Lords, I draw the attention of the noble Lord, Lord Harris, to subsection (1C) of the amendment. It says,
"Subsection (1A) shall not apply in the case of a scheme already in operation".
That addresses the point.
Lord Harris of HaringeyMy Lords, I am well aware of subsection (1C). My point was that it was poorly drafted, because subsection (1A) clearly refers to schemes that are in operation.
Viscount GoschenMy Lords, apart from those in subsection (1C). Let us not argue over the legalese or whether it could be drafted in a more concise way. The point that the noble Lord was worried about is taken care of in the amendment.
I support my noble friend in his desire to ensure that those affected most by the congestion charge should at least want it. That is what the amendment boils down to. My reading of the amendment is not that the residents of the borough concerned can make it happen but that they can make it not happen; in other words, they have a veto. Of course, there are others who are concerned and who have a considerable interest. The noble Lord, Lord Borrie, referred to commuters. Surely those living in the borough concerned have the greatest interest. Before such a scheme happens, those people at least should really want it. They should not as a group be heavily against such a charge being made within their borough. For that reason, I do not think that this is as nuclear as noble Lords who have spoken against the amendment have suggested. It is merely ensuring that the residents of the borough have the greatest say before anything happens.
Lord Faulkner of WorcesterMy Lords, I am getting a sense of déjàvu in this debate. Many of the arguments were used during the passage of the Greater London Act and in the months prior to the introduction of the congestion charge. All sorts of dreadful warnings were being given at that point of how London would grind to a halt, that people would refuse to pay and that it would add to congestion, not alleviate it. Indeed, we had a debate that the noble Baroness initiated on traffic in London, in which I remember I crossed swords with her on this subject. I think that I can claim that I was one of the first people on this side of the House to support the congestion charge when some of my colleagues were not quite as enthusiastic.
I hope that the majority of noble Lords will realise that the congestion charge has been a thundering success. It has made a huge difference to the volume of congestion in London. The volume of traffic has fallen by 30 per cent in the centre. Londoners are able to move about much more freely. The air is better; the quality of public transport has improved; the red buses

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that the noble Baroness referred to are not running around empty. I came in on one this morning and it was packed.
Baroness Oppenheim-BarnesMy Lords, is the noble Lord aware that figures were published only last week showing that the air quality on Marylebone Road is one of the worst in any inner city in the world?
Lord Faulkner of WorcesterMy Lords, I am talking about air quality in central London as a whole, which has improved as a result of the diminution of traffic.
We have had a long debate on this. But, briefly, my second point relates to the will of the public. I cannot think of any better way to ask the public what they think than to have an election for the whole of London in which everyone has a vote. That happened in June and it produced a result that was not to the liking of the party opposite. Sadly, it was not to the liking of my noble friend Lord Harris either.
It is an inescapable fact that in the mayoral election the only candidates who were in favour of scrapping the congestion charge were from the Conservative Party and, I think, the UKIP. All the other parties and candidates were in favour of continuing it and support the Mayor's approach. If the people of London have spoken in that way, it is outrageous for this House to attempt to undo that result.
3 p.m.
Lord MonsonMy Lords, before the noble Lord, Lord Faulkner, sits down, does he not agree that central London, which is mainly non-residential, where there are excellent bus and Underground services, is quite different from the outer, almost totally residential boroughs that do not have such good bus and Underground services?
Lord Faulkner of WorcesterMy Lords, the increase in the number of bus services in the outer suburbs since the introduction of the charge has been very considerable. Certainly, there are bus routes operating to places like Kensington, Clapham and other parts of London that did not exist before. There are now buses serving parts of London that have been deprived of public transport for many years.
Baroness HanhamMy Lords, I have been lured into the discussions on this Bill in which up to now I have not taken part. I declare an interest as an elected member of the Royal Borough of Kensington and Chelsea council. The prospect of an amendment dealing with proposals for the extension of the congestion charge into my borough even made me bolt down my coffee to get here in time.
The amendment handles the principle of extending the congestion charge in London. Currently, that principle relates only to the Royal Borough of Kensington and Chelsea. The Mayor has already said that he has no intention of extending the congestion charge to anywhere else in London.
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As part of the consultation process, the electors of the whole of the Greater London area have been consulted on extending the congestion charge that would apply to 160,000 residents within central London, Kensington and Chelsea and the associated and nearby businesses. It seems to be a very strange consultation that would allow 13 million people to impose on 160,000 people something that the 160,000 do not want. The voices of those 160,000 people would be very muted in terms of the responses from 13 million people. To some extent, here, there is a fairness and justice in how that consultation will and does take place.
The noble Lord, Lord Harris, is correct. There has been a consultation. But it is a consultation against the background of the Mayor's determination to extend the congestion charge into a borough which has said that it does not want it. This is a principle of how to test the voice of those who will be affected. Of course, it is nonsense—if I might say that—to say that those people should not have a say about what goes on within their own streets and boundaries.
First, the proposals for Kensington and Chelsea exclude about 30,000 residents who live in the area. The boundary is a nonsense. The Mayor knows that it is a nonsense. But because of the technology he cannot change that nonsense into anything that makes a fairness for the residents who live on the western side of the borough.
Secondly, of course, I am sure it is correct that arrangements will be made for discounts, and so forth. But the residents have got to think and see that there is a problem: there is no existing problem on the main roads going through Kensington and Chelsea at any time, unless, for example, the Grand Prix is being run along Regent Street, which affects us all.
There does not seem to be any fairness that something of such importance to one part of London should be judged and governed by what has been asked through the rest of London. I am bound to say that I am not sure why the residents of Redbridge, for example, who have just a touching acquaintance with the problems of the traffic in Kensington of Chelsea, should have their voice sought on this matter.
It boils down, does it not, to how, as part of the consultation process, account is taken of what the residents want to say? Some surveys have been undertaken, most of which I consider to be spurious. But I believe that the only way to hear what the residents believe would be to test their opinion. I have to talk about Kensington and Chelsea because that, currently, is the only area of London where the proposal is to extend. Should the Mayor suddenly decide to go out to the east, I assume that those residents would also want their voice properly taken into account.
There is independent government in London. The Greater London Authority, under the Greater London Authority Act, has powers to deal with the congestion charge and it has powers over some roads. But the independent government of London rests with the 32 London boroughs. It must be right that not only is the GLA consulted, but that the residents are also

979
consulted about something that would have a very major effect on them. For those reasons I support the amendment.
Lord Davies of OldhamMy Lords, we have had a most interesting debate on this issue. However, I must say to the noble Viscount, Lord Astor, that if he is accused of putting forward an amendment which is considered mischievous and misguided by my noble friend Lord Borrie, he had better address himself to the quality of his arguments. My noble friend, Lord Borrie rendered most of what I have to say entirely otiose by the way in which he, effectively, destroyed the case for the amendment.
I shall reiterate the points made in the debate, which show the weakness behind the thinking. First, it has been maintained that the residents should participate because they are most affected. As has been pointed out in several speeches, they are also the people who get 90 per cent of the discount. It has also been suggested that the residents are those most concerned and most affected and that they are the people who should be consulted. That is a very odd concept with regard to traffic.
As has been indicated, not all of London is affected by the congestion charge and the congestion zone that currently operates. If it is extended, there are implications for a much wider area than Kensington and Chelsea. There are implications for a very large number of people. Why should only the residents of the immediate area be consulted in circumstances where there are interests for a much wider group?
I am grateful to my noble friend Lord Harris who emphasised this point. Let me make it absolutely clear, that is why we have a Mayor and a GLA. They are charged with the responsibility of strategic consideration of traffic. How can traffic be managed only on an intensely local basis in a vast area like London? That is their responsibility.
The Opposition set at naught the fact that their candidate who stood against the congestion charge lost and the fact that the candidate who stood in favour of the congestion charge won: they say that we should have a referendum among a relatively small group of those people who are affected. When they have that consultation, will it be on the basis of local democracy? Is the noble Baroness, Lady Hanham, saying that of course it should follow normal, local, democratic consideration?
But that is not so. It would require a 50 per cent turnout of voters, which, I venture to think, would be higher, probably, than any of the councillors in her borough enjoyed at the last election. Of that 50 per cent, it has to be a majority of those who vote. We are creating not a democratic consultation but an artificially high hurdle to win the battle against the congestion charge, which was the subject of the last mayoral election. As has been said, it was a very lively issue in that election, and it was won by the candidate in favour of the congestion charge.
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The amendment is mischievous and misguided. It purports to open in this House an issue that was the subject of a democratic election only a matter of weeks ago. The Bill is concerned with the broad issues of traffic management across the country. We recognise how significant traffic is in London, and that is why we want to improve congestion and traffic flow by having a strategic plan across the whole of London. I cannot believe that the House would support an amendment to put all power and all decisions on the next stage of the congestion charge into the hands of any one borough that was directly affected.
I hope that the noble Viscount will think that he has had a good run for his money in an intensive debate, but the amendment should not be on the face of the Bill.
Viscount AstorMy Lords, I have to say to the noble Baroness, Lady Scott, that I am somewhat confused by her party's position. Simon Hughes in his manifesto said:
"Decision would ultimately be decided by a vote in a local ballot of registered electors in the possible extension areas".
Not anywhere else. He said:
"in the possible extension areas".
If the noble Baroness, or anyone else had said that the 50 per cent threshold is a bit too high but we accept the principle, I would understand that argument. We could debate that, and at least we would understand the point about letting local people have some say in local democracy. It pains me that the noble Lord, Lord Borrie, should think that my amendment is mischievous. It is far from it. He said that consultation matters, but the problem with the Mayor's consultation is that it does not work. Three-million letters were sent out and he had a 3 per cent return. Let us say that half of those were in favour and half were against. That means that 1.5 per cent of the people who responded will be taken into account when deciding major changes in London. That is not good enough.
The noble Lord, Lord Harris, talked about local democracy. I sympathise as he has unfortunately met local democracy head on. Perhaps it will give him an opportunity to spend more time in the House. We certainly welcome his presence here. His argument seemed to be that if the local borough did not agree, one should extend it and ask the borough next door. If it does not agree, one should go further and ask the one next door to that. Eventually if one goes far enough, one is bound to get a majority. That does not work either.
Lord Harris of HaringeyMy Lords, that is a travesty of my argument. I said that there are people who are profoundly affected by the congestion charge who would not get the benefit of the subsidy that would be given to the residents of Kensington and Chelsea in any putative extension of the zone. They are excluded by the terms of the amendment.
Viscount AstorMy Lords, the noble Lord, Lord Harris, is very much misguided if he thinks that the only reason why people are in favour or against the

981
congestion charge in their area is because of financial incentive. That is nonsense. There are wider and more important issues that affect local people and businesses. The noble Lord should support my amendment if we follow his logic because he is assuming that because someone in a borough receives 95 per cent discount he will automatically support the congestion charge. His argument falls flat on its face.
The noble Lords, Lord Faulkner and Lord Davies, seemed to think that the only issue on which the two mayoral candidates fought was the congestion charge. I admit that I did not read every manifesto as closely as perhaps I should—of course, I read ours very carefully—but my brief glances showed that there were other issues. To say that the result of the recent election was solely because of the congestion charge is extraordinary. There was the recent convert—the returnee to the noble Lord's party. We must respect that. The election was not won solely on the basis of the congestion charge.
I hope that your Lordships will accept the principle of my amendment. I accept that we could debate the 50 per cent. The noble Lord, Lord Harris, misreads my amendment. It does not mean that there would have to be an instant referendum anywhere there is a congestion charge. This is about keeping local democracy with local boroughs in London. That is what is important.
3.16 p.m.
On Question, Whether the said amendment (No. 21) shall be agreed to?
Their Lordships divided: Contents, 90; Not-Contents, 132.

Division No. 2

CONTENTS

Allenby of Megiddo, V.

Eden of Winton, L.

Ampthill, L.

Elles, B.

Anelay of St Johns, B.

Elliott of Morpeth, L.

Astor, V.

Elton, L.

Astor of Hever, L.

Erroll, E.

Attlee, E.

Feldman, L.

Biffen, L.

Ferrers, E.

Blackwell, L.

Flather, B.

Blaker, L.

Freeman, L.

Blatch, B.

Geddes, L.

Bridgeman, V.

Glentoran, L.

Brooke of Sutton Mandeville, L.

Goschen, V.

Brougham and Vaux, L.

Hanham, B.

Burnham, L.

Hanningfield, L.

Byford, B.

Higgins, L.

Campbell of Alloway, L.

Hodgson of Astley Abbotts, L.

Chadlington, L.

Howard of Rising, L.

Colwyn, L.

Howe, E.

Cope of Berkeley, L.

Howell of Guildford, L.

Craigavon, V.

Hunt of Wirral, L.

Crathorne, L.

Jenkin of Roding, L.

Crickhowell, L.

Jopling, L.

Darcy de Knayth, B.

Kalms, L.

Dean of Harptree, L.

Kingsland, L.

Deedes, L.

Kirkham, L.

Denham, L.

Laing of Dunphail, L.

Dundee, E.

Lane of Horsell, L.

Eccles of Moulton, B.

Lawson of Blaby, L.

982

Lucas, L.

Patten, L.

Luke, L.

Platt of Writtle, B.

Mancroft, L.

Plummer of St. Marylebone, L.

May of Oxford, L.

Prior, L.

Mayhew of Twysden, L.

Rawlings, B.

Miller of Hendon, B.

Renton, L.

Molyneaux of Killead, L.

Rotherwick, L. [Teller]

Monson, L.

St John of Fawsley, L.

Montagu of Beaulieu, L.

Seccombe, B. [Teller]

Montrose, D.

Shaw of Northstead, L.

Mowbray and Stourton, L.

Simon of Glaisdale, L.

Murton of Lindisfame, L.

Skelmersdale, L.

Newton of Braintree, L.

Strathclyde, L.

Norton of Louth, L.

Swinfen, L.

O'Cathain, B.

Trenchard, V.

Oppenheim-Barnes, B.

Wade of Chorlton, L.

Park of Monmouth, B.

Windlesham, L.

NOT-CONTENTS

Acton, L.

Harris of Richmond, B.

Addington, L.

Harrison, L.

Ahmed, L.

Hart of Chilton, L.

Amos, B. (Lord President of the Council)

Haskel, L.

Hollis of Heigham, B.

Andrews, B.

Howarth of Breckland, B.

Archer of Sandwell, L.

Howe of Idlicote, B.

Ashley of Stoke, L.

Howells of St. Davids, B.

Bach, L.

Howie of Troon, L.

Barker, B.

Hoyle, L.

Bassam of Brighton, L.

Hughes of Woodside, L.

Beaumont of Whitley, L.

Hunt of Kings Heath, L.

Berkeley, L.

Irvine of Lairg, L.

Bernstein of Craigweil, L.

Jay of Paddington, B.

Billingham, B.

Jordan, L.

Blackstone, B.

Judd, L.

Blood, B.

Lea of Crondall, L.

Borrie, L.

Lipsey, L.

Brooke of Alverthorpe, L.

Listowel, E.

Brookman, L.

Livsey of Talgarth, L.

Burlison, L.

Macdonald of Tradeston, L.

Campbell-Savours, L.

McIntosh of Haringey, L.

Carter, L.

McIntosh of Hudnall, B.

Carter of Coles, L.

MacKenzie of Culkein, L.

Clarke of Hampstead, L.

Mackenzie of Framwellgate, L.

Clinton-Davis, L.

Massey of Darwen, B.

Corbett of Castle Vale, L.

Maxton, L.

Crawley, B.

Mitchell, L.

Davies of Oldham, L.

Morgan, L.

Dean of Thornton-le-Fylde, B.

Morgan of Drefelin, B.

Dholakia, L.

Moser, L.

Drayson, L.

Oakeshott of Seagrove Bay, L.

Dubs, L.

Ouseley, L.

Evans of Temple Guiting, L.

Paul, L.

[Teller]

Pendry, L.

Falconer of Thoroton, L. (Lord Chancellor)

Phillips of Sudbury, L.

Pitkeathley, B.

Falkland, V.

Plant of Highfield, L.

Farrington of Ribbleton, B.

Ponsonby of Shulbrede, L.

Faulkner of Worcester, L.

Randall of St. Budeaux, L.

Filkin, L.

Redesdale, L.

Finlay of Llandaff, B.

Rendell of Babergh, B.

Fitt, L.

Richard, L.

Garden, L.

Rodgers of Quarry Bank, L.

Gavron, L.

Russell-Johnston, L.

Gibson of Market Rasen, B.

Sainsbury of Turville, L.

Giddens, L.

Sandberg, L.

Gilbert, L.

Sawyer, L.

Goldsmith, L.

Scotland of Asthal, B.

Goodhart, L.

Scott of Needham Market, B.

Graham of Edmonton, L.

Sewel, L.

Greengross, B.

Sharp of Guildford, B.

Grenfell, L.

Sheldon, L.

Grocott, L. [Teller]

Simon. V.

Hamwee, B.

Smith of Gilmorehill, B.

Harris of Haringey, L.

Snape, L.

983

Stallard, L.

Wall of New Barnet, B.

Stone of Blackheath, L.

Walmsley, B.

Strabolgi, L.

Warner, L.

Symons of Vernham Dean, B.

Warwick of Undercliffe, B.

Temple-Morris, L.

Watson of Invergowrie, L.

Thomas of Walliswood, B.

Weatherill, L.

Tordoff, L.

Whitaker, B.

Triesman, L.

Wilkins, B.

Truscott, L.

Williams of Elvel, L.

Turnberg, L.

Williamson of Horton, L.

Turner of Camden, B.

Woolmer of Leeds, L.

Uddin, B.

Resolved in the negative, and amendment disagreed to accordingly.
3.27 p.m.
Lord Hanningfieldmoved Amendment No. 22:
After Clause 84, insert the following new clause—

Except as provided in subsection (2) a London borough acting as a local transport authority shall be responsible for deciding and setting the times for bus lane enforcement on any road or any proposed road within its jurisdiction in order to secure the expeditious movement of traffic on the authority's road network.

A road or proposed road designated by the Secretary of State, Transport for London or the Mayor of London as a strategic road during peak rush hour periods shall be exempt from the provision of subsection (1).

In deciding the time for peak rush hour periods for a strategic road, the Secretary of State, Transport for London or the Mayor of London must consult and take have regard to the advice of the relevant London borough or boroughs."

The noble Lord said: My Lords, the amendment seeks to bring a degree of common sense to the issue of bus lanes in London. It does not seek to remove bus lanes; it merely attempts to improve the way in which they are used and to refine their use.
All too often we witness empty bus lanes and congestion in other lanes. On the flip side, we witness bus lanes that have 24 hour/seven days a week enforcement notices on them, effectively banning for ever all other traffic from those lanes. We cannot see the common sense behind this. Why ban traffic from such lanes at week-ends, when the volume of traffic is substantially lower and the number of buses in operation is dramatically lower than during rush hours?
The approach is inflexible; the amendment seeks to give more flexibility in the use of bus lanes. The policy is too rigid to cope with modern traffic flows around the capital. We have peaks and troughs—not necessarily during traditional rush hours—and if we could be more flexible in the use of bus lanes we would effectively see traffic moving rather better around London.
Under the Bill, the Mayor and Transport for London could, in effect, nationalise any road they desire in Greater London by designating it as a strategic road. This in itself is an erosion of boroughs' powers. I have no doubt that the number of these 24 hour/seven days a week bus lanes will increase as the Mayor takes over more and more roads.
984
3.30 p.m.
The amendment therefore attempts to ensure that London boroughs have an opportunity to influence the times of bus lane enforcement on strategic roads within their area. On other non-strategic roads the boroughs would be able to decide on the times of enforcement. Surely they and local people in an area know—going back to our previous debate—what their traffic flows and peak times are. They must know the best way to ensure the smooth running of traffic in their boroughs.
Therefore we are seeking to improve the relationship between all parties with a vested interested in keeping London moving. That is why the Mayor and Transport for London will have a duty under the amendment to consult on the times of bus lanes enforcement on any strategic road in the relevant London borough. That will guarantee that the knowledge and expertise that the boroughs presently have on traffic flow within their areas will not go to waste.
This is a sensible and rational amendment that will help maximise the use of bus lanes for traffic but also assist in the smooth running of traffic around London. I beg to move.
Lord SnapeMy Lords, I declare an interest as a special adviser to the National Express Group. I used to be chairman of its bus division so I have a strong interest in these matters. I cannot agree with the views of the noble Lord, Lord Hanningfield. It is logical that if London boroughs are to have different times of enforcement for bus lanes the opportunities for confusion—I put it no more strongly than that—are fairly high.
I am always fascinated when I listen to debates about bus lanes, because the intention behind the amendment—whether or not inadvertent—is to defend the motorist. We live in a world where, even though we are all motorists, there is a strong lobby that says that the motorist is being hounded and pursued and should be—if I may paraphrase the noble Lord—allowed to drive in bus lanes at certain times of the day or week.
However, the reason why London's bus lanes are so successful is that people are aware that there is proper enforcement in London and because by and large in central London the bus lanes operate 24 hours, seven days a week. If one shares the view expressed by the noble Lord, there would be different times of enforcement in different boroughs, which would lead to obvious confusion. There would be a temptation for motorists to say, "It was five to seven,"—or whatever time—"there was nothing around and so I thought I would use the bus lane".
I am sure that I speak for other noble Lords in saying that there is nothing quite so annoying as sitting in a lane of traffic watching someone driving improperly up the adjacent bus lane. Whether it is white van man or black Jaguar man—it is usually a male of the species who behaves in such a way—it annoys those of us who believe that bus lanes have been enormously successful, particularly in this city.

985
Comparatively recently I have taken to using buses again in London, largely because of their efficiency. I took the bus this morning from Paddington to Euston at seven o'clock. It was quicker than the Underground, largely because of the bus lanes on Marylebone Road. They are seven days a week bus lanes. Those who criticise their provision say that much of the time they are empty. Of course the same people would criticise them if they were choked with buses. The reason they are empty is because they are successful and the reason they are successful is because they are reserved 24 hours a day in this city and motorists know that they should avoid them.
I hope that for those reasons, if the amendment is pressed to a Division, your Lordships will oppose it.
Lord RotherwickMy Lords, we have a busy city. One of the Bill's main points, especially for London traffic, is to have the most efficient road network. If bus lanes are not being used during the day, surely it is only correct that we make the most efficient use of them.
I understood the noble Lord, Lord Snape, to say that it would be confusing for motorists if we could use bus lanes outside the rush hour when they are not being used. I do not believe that that is the case, because if one drives beside a bus lane one sees blue and white signs stating clearly when it is active. It does not take much to understand whether it can or cannot be used outside those times, so this would not be difficult.
Viscount AstorMy Lords, I support the principle of my noble friend's amendment. The noble Lord, Lord Snape, did not give the whole picture about bus lanes in London. He said that on some of the busiest routes they operate for 24 hours. That is not the case; for example, on the road from Victoria station to Hyde Park Corner, which I would have thought was a major London route, the bus lanes operate from seven to 10 in the morning and four to seven in the evening.
I accept that some bus lanes operate for 24 hours but I have always failed to understand why some of them do not have similar hours. Central government should not be over-prescriptive. We should allow sensible local decisions to be made. There are signs that say what the restrictions are, which are easy to see.
There are bus lanes in Oxford Street permanently clogged with buses. One could probably walk along Oxford Street from bus to bus. There are certain times of day when they do not seem to work at all, which is another problem. There are also contraflow bus lanes. I accept that it would be almost impossible for cars to use those, but some thought should be given to instances where we should be more flexible. I hope that the Minister will be able to give a positive response to my noble friend's proposals.
Lord Davies of OldhamMy Lords, I am certainly able to give some elements of a positive response to the noble Viscount because I agree that we need flexibility
986
in the hours of enforcement of bus lanes, which the legislation covering the operational hours of bus lanes is designed to provide. The relevant authority, whether it is a borough or TfL, can decide what times are most appropriate in each situation. They can take into account all the relevant local factors such as the need to service properties alongside bus lanes and many other factors in reaching such decisions.
I approach the issue of bus lanes with a slight degree of caution. In my former life I had the dubious privilege of introducing the Greater London Authority Act 1999, which brought bus lanes to London. I would glory in that, but at the time we were not sure how to deal with taxis' use of bus lanes and whether they could stop in them. I was persuaded that we had the legislation a mite wrong only when 300 black cabs invaded my constituency, parked outside my constituency surgery on a Saturday and created the greatest congestion one could imagine in the London Borough of Enfield at that time.
I am a little cautious about discussing bus lane legislation, but I am confident on this matter. The noble Lord's proposed new clause does not hit the target that he seeks. It refers to,
"deciding and setting the times for bus lane enforcement".
Enforcement is the key word. It means the pursuance of contraventions of the bus lane during its operation hours by the London borough on whose roads it has been installed. Where the borough rather than the police carries out the enforcement, that is done under the London Local Authorities Act 1996.
The times at which enforcement is carried out are in the hands of the borough concerned. Of course roads may become strategic roads after being designated under the powers in Part 5. The provisions amend the existing powers in the Highways Act 1980 and Road Traffic Regulation Act 1984. Similar powers are already provided in the case of GLA roads. That means that Transport for London is, in certain circumstances, able to object to the exercise of any power under those Acts by the borough in any way where it would affect, or would be likely to affect, a strategic road.
The powers in Part 5 do not extend to other legislation, so Transport for London cannot decide on the enforcement on borough roads, which is what the clause relates to. Therefore the clause as drafted does not have the desired effect, if the reference to enforcement was intentional. That said, we would certainly expect there to be close co-operation between Transport for London and the boroughs on enforcement of bus lanes on strategic roads as many of those roads could be significant bus routes, important both locally and strategically. Of course, the network management duty would also play a key part here given the need for authorities to work together to consider the network as a whole.
The noble Lord, Lord Hanningfield, was perhaps really trying to address the decisions about the hours of operation of bus lanes, rather than their enforcement. When bus lanes are installed, the works involved could be covered by the relevant powers in Part 5 in relation to strategic roads—that is, the exercise of powers to

987
determine the times at which bus lanes operate flow from the powers in the Road Traffic Regulation Act 1984. Therefore, Transport for London could have a say in what happens on a bus lane when it affects, or is likely to affect, a strategic road, when it is put in or if the times of operation were changed.
In practice, statutory procedures for making traffic regulations orders for bus lanes require consultation between authorities; and the network management duty in Part 2 of the Bill requires co-operation between authorities to keep traffic moving, buses included. Again, we therefore expect to see boroughs and Transport for London working together in ways that both give the priority to buses that is essential to keep the services reliable and attractive and reflect local issues about use of roads.
I hope that the noble Lord will appreciate that we have constructed the Bill to guarantee that there is necessary consultation and co-operation between the relevant authorities on this crucial issue—and I do not for one moment deny the significance of the issue. However, I must insist to him that the way in which the amendment is drafted does not hit the target he intends to hit. I hope that he will withdraw the amendment.
Lord HanningfieldMy Lords, I thank the Minister very much for that reply, which was very helpful indeed. I was pleased to see him nodding, too, when my noble friend Lord Rotherwick said that we needed to make the most efficient use of roads as possible. Roads cost a lot of money to build and we want to maximise their use. A noble Lord opposite referred under a previous amendment to the United States, where lanes can change and one can go one way down a road one hour and a different way another hour. With modern technology, we can make certain that roads are effectively signed.
I thank the Minister because, although we did not get the wording of our amendment right, he understood that the principle behind it was to maximise the use of our roads. He also suggested that he agreed with my amendment, rather than with the comments of the noble Lord, Lord Snape—that we need to make the maximum use of our roads in London to ensure that the traffic flows are as best as they can be.
The Minister's answer was very helpful. We shall consider it in detail, but the provisions would enable the boroughs, the Mayor and Transport for London to work together to make certain that they maximise the use of our roads in London. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 3 [Schedule 4B to the New Roads and Street Works Act 1991]:
Lord Davies of Oldhammoved Amendments Nos. 23 and 24:
Page 61, line 25, leave out "section" and insert "paragraph"
Page 61, line 25, leave out "served with" and insert "given"
On Question, amendments agreed to.
988
Schedule 4 [Schedule 3A to the New Roads and Street Works Act 1991]:
Lord Davies of Oldhammoved Amendments Nos. 25 and 26:
Page 64, leave out lines 8 to 18 and insert—
"() A direction to an undertaker under this paragraph is a direction as to the date on which he may begin to execute the works proposed by him."
Page 65, line 6, leave out "to whom it sent the notice under" and insert "specified in"
On Question, amendments agreed to.
Schedule 6 [Schedule 22B to the Highways Act 1980]:
Lord Davies of Oldhammoved Amendments Nos. 27 and 28:
Page 68, line 17, leave out "section" and insert "paragraph"
Page 68, line 17, leave out "served with" and insert "given"
On Question, amendments agreed to.
Lord Davies of OldhamMy Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Davies of Oldham.)
Viscount AstorMy Lords, I do not wish to detain your Lordships. However, I must thank the Minister for the helpful way in which he has conducted the Bill, with the assistance of the noble Lord, Lord Evans. Together with the noble Baroness, Lady Scott, we have agreed on more issues than we have disagreed. I thank him for his help as regards meeting his officials, which has allowed us to come up with sensible compromises that will benefit all those involved in traffic management.
Lord Davies of OldhamMy Lords, I thank the noble Viscount, Lord Astor, for those kind words. We have sought to be constructive about a Bill that has had its intricacies. We have benefited from some intensive discussion in Committee, at Report and on Third Reading. I thank both Front Benches for their constructive approach to the Bill. I also thank my officials for the support that they have given in troubled times. I place on record my enormous thanks to my noble friend Lord Evans of Temple Guiting, who took the Bill through Committee unaided during a period when I had had a small traffic accident—although that was on a bicycle.
On Question, Bill passed, and returned to the Commons with amendments.

Draft European Communities (Definition of Treaties) (Stabilisation and Association Agreement between the European Communities and their Member States, and the Republic of Croatia) Order 2004
3.47 p.m.
Baroness Symons of Vernham Deanrose to move, That the draft order laid before the House on 21 June be approved [23rd Report from the Joint Committee].

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The noble Baroness said: My Lords, the conclusion of a stabilisation and association agreement—or an SAA, as such agreements are also known—represents an important milestone on Croatia's path towards the European Union. SAAs constitute a formal contractual agreement between the countries of the western Balkans and the European Union, covering inter alia trade, regional co-operation, political dialogue, economic and institutional reform and co-operation in the field of justice and home affairs. In order to conclude an SAA, countries must meet clear political, economic and technical criteria.
An SAA also confirms that the country in question is a potential candidate for European Union membership. Such agreements are a key element of the EU's overall policy framework towards the Western Balkans—the stabilisation and association process, intended to help the region move closer to Europe by promoting political dialogue and increased co-operation both with the EU and within the region. The British Government fully support this policy, and the European Union aspirations of the western Balkans countries.
In Croatia's case, confirmation through an SAA that she is a potential candidate for EU membership has been somewhat overtaken by events. At last month's European Council, EU heads of state and government agreed to declare Croatia a candidate for EU membership, with a view to opening accession negotiations in early 2005. That is a significant achievement, which the British Government warmly welcome.
However, ratification of Croatia's SAA by the UK Parliament is still a very important step. The SAA will provide the contractual basis for EU-Croatia relations as Croatia moves towards accession. Noble Lords will also recall that a draft order ratifying Croatia's SAA was laid before Parliament in October 2002, but was subsequently withdrawn due to concern about Croatia's lack of co-operation with the International Criminal Tribunal for former Yugoslavia—the ICTY. Full co-operation with the ICTY is a prerequisite for the further integration of the western Balkans countries into the EU.
I am pleased to tell the House that there has in recent months been a step change in Croatia's co-operation with the Hague Tribunal. The ICTY chief prosecutor, Carla del Ponti, has confirmed that she is now satisfied with the level of co-operation being offered by the Croatian Government. In recognition of this the British Government took the decision to restart the parliamentary process leading to ratification of Croatia's SAA, and I am able to commend this order to the House.
This improvement in co-operation with the ICTY was also the key factor in the decision by heads of state and government to declare Croatia an official candidate for EU membership. Of course, Croatia's obligation to cooperate fully with the ICTY remains. In particular, Carla del Ponti and the EU have made it clear that Croatia must take all necessary steps to locate and detain fugitive ICTY indictee Ante Gotovina. This obligation is also set out in a number of United Nations Security Council
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resolutions. The Croatian Government have acknowledged that this obligation remains. Until the Gotovina issue has been resolved, Croatia cannot truly draw a line under her painful past.
Lack of co-operation with the ICTY remains a fundamental obstacle to lasting stability, reconciliation and prosperity in the region, so we encourage other governments in the region, in particular Serbia, Montenegro and the Republika Srpska entity of Bosnia and Herzegovina to take all necessary steps to return outstanding ICTY indictees to the Hague. We hope that Croatia's achievements send a clear signal that difficult decisions really do pay off.
More generally, Croatia's experience sends an important signal to the region about the EU's policy of conditionality. If a country meets the political, economic and technical criteria for further integration into the EU, the EU will indeed honour its part of the bargain. Those criteria are the same for every western Balkans country. There are no short cuts. Croatia's experience shows that this policy of conditionality works. The prospect of EU integration is a powerful stimulus for reform.
In spite of Croatia's impressive achievements during the past 12 months, we should not underestimate what more remains to be done before Croatia's EU accession becomes a reality. I have already referred to the need to resolve the case of fugitive indictee Gotovina, but more also needs to be done to ensure the reality of life for returning refugees and for ethnic minorities, and that those match the legislative theory. Croatia's judiciary is also in need of further reform. The EU will continue to support Croatia in addressing these outstanding issues, but resolving them will ultimately depend on the continued political will of the Croatian Government.
Croatia's progress towards the EU represents a success story for the western Balkans and for the European Union. It demonstrates that the European Union is right to continue to invest politically and financially in the stability of the region. The fact that I am able to come to the House today and commend this order to the House is a testament to the power of EU integration and the possibility of really encouraging reform. In ratifying Croatia's SAA, the United Kingdom will send an important signal about our support for reform throughout the region. My Lords, I commend the order and I beg to move.
Moved, That the draft order laid before the House on 21 June be approved [23rd Report from the Joint Committee.]—(Baroness Symons of Vernham Dean.)
Lord Astor of HeverMy Lords, I thank the Minister for explaining the draft order so clearly. As the Minister said, this is an important milestone for Croatia and we very much welcome it. The Minister mentioned General Ante Gotovina, the main Croatian suspect wanted by the ICTY, who is yet to be apprehended. Many observers are less sure of Croatian good faith on this issue. Arresting Gotovina was the condition for Croatia's EU accession talks to start. We are concerned at the message that is being sent out to other fugitives in the Balkans.

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I would like to ask the Minister three questions. First, what progress has been made in finding possible solutions to the settlement of the border issue between Slovenia and Croatia? Secondly, what progress has Croatia made in the preparation of an agreement between Croatia and Serbia on the protection of Serb minorities? Thirdly, what is the number of Croatian Serbs expelled from the Krajina area in 1995 who have since returned to their pre-war homes?
Lord Russell-JohnstonMy Lords, on behalf of the Liberal Democrats I welcome this order, which is a practical demonstration of the European Union's commitment to the eventual accession of all the countries of the former Yugoslavia and those of the southern Balkans. I would be more modest than the noble Lord, Lord Astor—I would like to ask only two questions. He has already asked some to which I would be very interested in hearing the answer—particularly those about the position of the Serbs in Krajina, and the residual number of Serbs in Croatia.
Much interest has been expressed in General Gotovina. As the Minister said, Carla del Ponti, who after all is not given to scattering compliments about loosely, has been very complimentary about Croatia's co-operation. Nevertheless he is still at large and one wonders where the protection is coming from. Noble Lords will have observed that the UN High Representative in Bosnia, the week before last, removed 60 people in Republika Srpska from their positions on the grounds that they were actively involved in the concealment of at least Karadzic—we are not so sure about Mladic. Does the Minister have any more information on that?
I ask my second question despite the fact that it may well reveal that I am calamitously ignorant of procedure—I must confess that I have never been terribly interested in it. I observe that the original stabilisation and association agreement was signed on 29 October 2001, which was some time ago. I gathered from the Minister that the reason that the United Kingdom has not ratified up until now—during two and a half years—was mainly because of the issue of co-operation with the Hague Tribunal. Is that correct, and have any other members of the European Union ratified already?
Altogether, we very much welcome this order and are pleased, as the Minister announced, that Croatia is on its way towards the European Union.
The Earl of DundeeMy Lords, I declare an interest as chairman of the all-party parliamentary group for Croatia. As the Minister has implied, the passing of this draft order is a happy and important event. It supports the resolve of the European Council to begin with Croatia next year negotiations for European Union membership. Many of us will agree that this timing is sensible, and in so far as the United Kingdom has assisted in it, credit should thus be given both to the Minister and to the Government for the balanced approach which they have adopted towards relevant matters affecting Croatia.
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I would like to raise two issues: first, in the interests of efficiency, the usefulness of fixing a date in 2005; secondly, the effect of Croatia's example on other states in the former Yugoslavia. Once 2005 has been confirmed in general for the beginning of negotiations, which it now has, it becomes desirable to set an approximate date in that year. This will encourage an efficient response within Croatia, where further reforms have to be addressed, and also within the European Union, which monitors that process. Therefore reference to, and deployment of, a date within 2005 will enable the process to become more sharply focused at the outset for both the applicants and for the monitors. Does the Minister agree? Can the Government recommend to the European Council that an approximate date be soon indicated accordingly?
Secondly, there is the effect of Croatia's EU entry on other states within the former Yugoslavia. Clearly, the better expedited the stages of Croatia's EU negotiations and entry are, and are seen to be, the more other states within the former Yugoslavia stand to benefit. Your Lordships will share that view. I know that the noble Baroness does. I thank her for her support and for introducing this draft order today.
Lord GrenfellMy Lords, I rise to intervene not as the chairman of the European Union Select Committee but as the secretary of the All-Party Group on Croatia, a country for which I have considerable affection. I am very pleased indeed that the Minister is commending this order to the House. From my own knowledge of the new administration, my impression is that they are doing everything they can to take care of some of the priority issues that have already been mentioned, not least on cooperation with the ICTY, judicial reform, the return of refugees, minority rights and regional co-operation, to which the noble Earl, Lord Dundee, has already referred.
Can the Minister confirm my understanding that at the end of last year the new government concluded an agreement with the Croatian Serb representatives in the Croatian Parliament that will make it far easier for Serbs who fled during the war to return to their homes and that some 250 million euros have been devoted to this? If this is a sign of the level of determination of the new authorities in Croatia to solve the remaining problems, then I think that they are probably on the right track.
I endorse what the noble Earl, Lord Dundee, and the Minister said about the impact that Croatia's progress towards membership of the European Union will have on the region as a whole. The stability of the region depends on the eventual integration of its countries into the European Union. The steps that Croatia is taking to put itself on the road to membership bode well for the future stability of the region as a whole.
Baroness Symons of Vernham DeanMy Lords, I thank your Lordships for the warm welcome that this order has received. A number of specific points were raised but I am pleased to note that the Government's priority is embraced by your Lordships. That priority is to encourage all the countries of the western Balkans to implement the reforms necessary to make full integration into Euro-Atlantic structures a reality.

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As the noble Earl, Lord Dundee, said, Croatia is at the head of the pack and deserves praise for its achievements. Of course, it will be that balance of praise and frank advice to Croatia over the coming period that will be so very important. I agree very strongly with the point that he made about it providing encouragement to other countries that have aspirations to join the European Union. Where real effort is made to meet the criteria, the hand of friendship is extended even further and encouragement given to go through the important accession process.
The noble Lords, Lord Russell-Johnston and Lord Astor, wanted to know more about the efforts to secure the indictee, Ante Gotovina. I say to the noble Lord, Lord Russell-Johnston, that the requirement is not to apprehend an indictee; it is to demonstrate full co-operation in efforts to do so. That is the point. The indictees do not have to be under lock and key but a country has to demonstrate that it is making every effort to do that. The ICTY chief prosecutor, Carla del Ponte—who is no slouch when it comes to these matters—has said that she is satisfied that Croatia is co-operating fully with the tribunal and is doing all it can to apprehend Gotovina. The ICTY and the European Council have made it clear that the Croatian Government have to maintain that full co-operation. They cannot let up on their efforts to secure Gotovina and to take all necessary steps to ensure that he is arrested and transferred to The Hague.
I think that the Croatian Government recognise that that is essential—there is no sign that they are going to let up—and that it is essential irrespective of the requirements of the European Union for accession. The early detention of Gotovina would send a very powerful signal about Croatia's continued commitment to EU values.
The questions about Republika Srpska were, I hope, covered in my initial remarks. It is true that the Republika Srpska entity of Bosnia and Herzegovina has not demonstrated anything like that degree of co-operation with the ICTY. Carla del Ponte has not been able to say those things about it. That is why there is the difference. One country may be trying and not quite succeeding but others are not trying to anything like the same degree.
The noble Lord also asked about ratification. I understand that all the European Union countries have ratified. The most recent was Italy, only two days ago. I hope that what we are doing now in your Lordships' House will be part of the completion of the process.
The noble Lord, Lord Astor of Hever, asked me three questions. The first was about the progress in resolving the difficult border dispute between Croatia and Slovenia. In the absence of an agreed demarcation of the border between them, a temporary agreement is in place providing, among other things, access for fishermen. The United Kingdom continues to encourage Croatia and Slovenia to resolve this dispute through bilateral channels.
The noble Lord was also concerned about the progress being made in reaching a bilateral agreement between Serbia and Montenegro and Croatia on the protection of the Serb minorities in Croatia. There is no
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bilateral agreement between the authorities in Serbia and Montenegro and in Croatia on the protection of Serb minorities in Croatia. However, the constitutional law on national minorities provides a comprehensive framework for the protection of minorities in Croatia, including Croatian Serbs. We have consistently encouraged the Croatian authorities to ensure full and proper implementation of the constitutional law.
The noble Lord was also concerned about how many Croatian Serbs were expelled from the Krajina area during the conflict in the early 1990s, and about how many had been able to return to their pre-war homes. According to the Organisation for Security and Co-operation in Europe—the OSCE—approximately 320,000 Croatian Serbs left Croatia during the conflict. Of those, an estimated 110,000 have returned to their pre-war homes. Of the approximately 208,000 remaining outside the country, 189,000 are in Serbia and Montenegro, with 19,000 in Bosnia-Herzegovina. I hope that that gives him some reassurance on those points.
I thank the noble Lord, Lord Grenfell, for his support on the issues. He assured us that he was speaking as a particular friend of Croatia and not in his capacity as chair of his committee, which I was delighted to see was recognised yesterday evening in the parliamentary awards, as it justifiably should have been. I hope that I have been able to cover the points that he raised.
The noble Earl was very anxious about the date. The European Union has said that bilateral discussions will start early in 2005. I cannot give him a precise date at the moment but, as we go through the next few weeks and months, I am sure that it will become much clearer. I shall convey to my honourable friend the Minister for Europe, Denis MacShane, his point about a date being important because it focuses attention and encourages people to proceed with all dispatch on the important negotiations.
I thank noble Lords for the warm support that the measures have received. It has been very important that the United Kingdom Government have been able to add our voices on the important issues around the Croatian-Serb refugees. The noble Lord, Lord Grenfell, was particularly concerned on those points. We have assisted the Croatian Government in providing housing for the Serb returnees, as I am sure that noble Lords know. Between 2001 and 2003, we donated more than £500,000 to the Catholic Relief Service, which has resulted in the renovation of more than 200 homes, to house more than 700 Serb returnees. We are not merely encouraging in the way in which I described to the noble Lord, Lord Astor, but putting our money where our mouth is and giving some very practical help.
By making progress towards the EU condition on clear political, economic and technical criteria, we have been able to make real progress with our friends in Croatia. This is a success story, and one that I hope will encourage other western Balkan countries. I commend the order to the House.
On Question, Motion agreed to.

Taiwan
4.11 p.m.
Lord Faulkner of Worcesterrose to ask Her Majesty's Government what steps they are taking to improve relations with Taiwan.
The noble Lord said: My Lords, I declare an interest as a vice-chairman of the All-Party Group on Taiwan, in which capacity I have twice visited Taiwan, most recently for the inauguration ceremony following the re-election of President Chen Shui-bian on 20 May.
I start by acknowledging that there is little prospect, at present at least, of Her Majesty's Government breaking away from the collective decision taken in 1971 by the international community to grant recognition to the People's Republic of China at the expense of Taiwan. However, we do not need to debate the "One China" policy in discussing how we can improve relations with Taiwan.
Let us be clear how important to United Kingdom interests Taiwan is. Taiwan is the UK's 20th-largest export market worldwide. Our exports were worth £940 million in 2003, an increase of 6 per cent on 2002. Between January and April this year, our exports to Taiwan increased by 20.4 per cent from the same period in 2003. It is a hugely important target market for British trade internationally. Some 70 per cent of all Taiwanese manufacturing investments in Europe are in the UK, with 175 firms from Taiwan having a presence here. Between them, they maintain more than 10,000 jobs. There are now 14,000 Taiwanese students pursuing their studies in the United Kingdom, which is almost 30 per cent of the total Taiwanese overseas student market. They make a great difference to the financial viability of many educational courses, particularly in our newer universities.
There is, I am pleased to say, strong British government support for all those links. When I was in Taipei, I heard nothing but praise for the efforts of our permanent mission—the British Trade and Cultural Office there. Taiwan's annual GDP growth rate in the past 30 years has averaged 8 per cent. One example of its manufacturing success is that it makes 70 per cent the world's personal notebook computers, turning out 32 million of them this year.
So if one is looking for tests of statehood, there is no doubt that Taiwan passes every economic test. However, another attribute of a sovereign state is a free and open democratic system of government. Taiwan does not do badly in that regard. The turnout in the recent presidential election was 80.28 per cent. Would that we could achieve a figure even approaching that in any sort of election here.
How different from what is happening not too far away in Hong Kong, where the "one-country, two-systems" agreement for its transition from British to Chinese rule is being systematically torn up by the PRC and hundreds of thousands are taking to the streets to defend freedoms which are being eroded by the government in Beijing. A diplomatic masterstroke on the part of the Beijing Government is the decision to locate 500 missiles on the south-eastern coast of the Chinese mainland, all pointing directly at targets on
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Taiwan. That is twice as many as there were just three years ago. That military threat would be a sufficient reason alone why Her Majesty's Government must not falter in the face of pressure from France and Germany and possibly other EU countries to lift the European Union embargo on the sale of arms to mainland China.
How else can we do more to improve relations with Taiwan? We should, for example, review the way in which we treat Taiwanese visitors to the United Kingdom, particularly high-ranking Taiwanese officials from the President downwards, who have not been granted admission to the United Kingdom even on purely private or transit visits. We should also review how we treat official representatives of the Taiwan Government working in London compared with how our officials in Taipei and Taiwanese officials in other EU capital cities are treated. I know that a number elsewhere are accorded a much better diplomatic status than their counterparts are here.
I turn to Taiwan's membership of international organisations. Its admittance to the World Trade Organisation in 2001 was a welcome and important step forward, and I congratulate the Government on supporting that. That makes it all the more disappointing that they did not support Taiwan's application for observer status at the World Health Assembly at the annual World Health Organisation meeting in Geneva in May this year.
There are two compelling reasons why Taiwan should be admitted. The first is that Taiwan has made remarkable progress in improving standards of public health, to the point where it has one of the highest levels of life expectancy in Asia. It has shared these advances with many developing nations and has given generous help to countries suffering earthquakes and other natural disasters.
The second reason is that Taiwan's exclusion from the WHO has meant that Taiwan has been denied help when it was really needed, such as when the SARS epidemic came across the Taiwan Strait and infected so many of its people last year. It reported the first SARS cases immediately, in March 2003, and begged the WHO for help. It took until 3 May before the WHO experts became involved, by which time more than 100 cases had been diagnosed and eight people had died.
The response of the People's Republic of China was that it takes care of the lives of the 23 million Taiwanese people. That would be a joke if it did not have such deadly consequences. The WHO already has observers which are entities rather than states, such as the PLO and the Holy See, and even Liechtenstein has observer status. So why cannot our Government follow the lead set by the United States and Japan which backed Taiwan's observer status in the WHO in the World Health Assembly in May this year?
Rather more encouraging was the Explanation of Vote by the EU in the WHA on 17 May, which stated:
"We hope that the Secretariat, and others organising technical meetings and working groups under the WHO auspices, will show flexibility in finding mechanisms to allow Taiwanese medical and public health officials to participate in these activities".

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By contrast, the support given by the WHO director-general, Dr Jong-wook Lee, for the PRC's proposal that Taiwan join the Chinese delegation, was really very unhelpful and inappropriate.
There are, I am afraid, many other examples of how the PRC and its agents attempt to block the legitimate involvement of Taiwan in important international forums. Only this Sunday, four days ago, I received a letter from Professor Barry Rider, the retiring director of the Institute of Advanced Legal Studies. For the past 21 years, Professor Rider has run a symposium on economic crime at Jesus College Cambridge, attended by 800 participants from around the world.
One of the most important of those has been the Ministry of Justice Investigation Bureau in Taiwan—it is their FBI—which shares its knowledge of organized crime to the benefit of everyone who attends. This has covered economic crime, money laundering and murder investigations. It has also continued to welcome the involvement of the PRC in the symposia. In his letter to me, Professor Rider says,
"The Chinese Embassy has been very concerned about the symposium according any kind of recognition to Taiwan. Several years ago there was a great flurry of activity when the programme referred to the RoC and several senior officials from the Embassy demanded to meet with me in Cambridge and more or less threatened me. They indicated that pressure would be applied to ensure that the symposium did not remain in Cambridge and I would lose my job".
Professor Rider goes on to describe how the PRC's attitude has worsened over the past three years, and that a large delegation of Chinese officials who had intended to participate in the symposium last year has been stopped, apparently at the behest of the PRC embassy in London.
What this alarming story demonstrates, as does the PRC's resistance to Taiwan's participation in the WHO, is that political point scoring at Taiwan's expense seems to matter more to mainland China than the greater public good that comes from involving Taiwan and its experts in international organisations.
Finally, I say to my noble friend that I hope the Government will take an understanding and sympathetic approach to the democratic reforms likely to be undertaken by President Chen's new administration in Taiwan. He has repeatedly made it clear—most recently in an interview with the Washington Post on 29 March this year—that he has no intention of changing the status quo as far as cross-strait relations are concerned. His aim in this regard is to achieve a permanent, peaceful settlement. He is, however, intending to conduct major constitutional reforms in the next fours years of his second term, which aim to make Taiwan's democracy more competitive in a globalised economy, and take the government closer to the people.
It would be neither right nor appropriate for us in the West to get involved in this debate, which should involve the people of Taiwan and no one else. There is nothing in this approach which is even faintly threatening or challenging to mainland China. If the concept of an ethical foreign policy has any meaning at all, it requires
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democracies such as ours to stand up for the rights of other democracies which are threatened and intimidated by their neighbours.
4.22 p.m.
Lord Russell-JohnstonMy Lords, I pay tribute to the noble Lord, Lord Faulkner, for introducing and thereby enabling this short debate.
As the noble Lord said, we were in Taipei together on 20 March. We observed the election earlier, and it was very close: a majority of 30,000 in 13 million votes cast. So there was a bit of rumbling going on, which you might expect. It would happen in this country if there were a very close election, and in the same way that we had recounts, they had recounts. The interesting thing for me was, although I have observed a lot of elections in the former area of Soviet influence, there were always suggestions, in advance, that the election would be rigged. In Taiwan, there was no such suggestion by anybody.
I begin by relating a personal experience from some two and a half years ago which made me think intensely about Taiwan and our reaction in the democratic world—which the noble Lord, Lord Faulkner, has been talking about—to its position. Every year, Liberal International—which is the worldwide organisation of Liberal parties, just as Socialist International is for the socialist equivalent—awards a prize for freedom. This is not at all confined to Liberals, and previous recipients have included, for example, Aung San Suu Kyi, who was mentioned in the House this week, and Mary Robinson and Vaclav Havel. In 2001, we awarded the prize to President Chen of Taiwan.
So it came about that, on 14 November 2001, I found myself presenting this prize to his wife, Wu Shu Chen, who is confined to a wheelchair. At that time, I was president of the Parliamentary Assembly of the Council of Europe, but I presented the award in my personal capacity as a Liberal. Pat Cox, who had already been nominated to become the next President of the European Parliament, was also present but as a leader of the Liberal group there.
I hope that noble Lords will forgive my slight indulgence in quoting part of the speech that I made on that occasion. I said:
"Each of those who have received our Liberal Prize for Freedom has made a very particular contribution to the advance of liberty and tolerance on our planet but the situation of Taiwan, the role of President Chen and the decision to make the award itself, make the ceremony, in which we are participating, unique.
"We are living through the aftermath of the brutal and cruel terrorist attacks on the United States"—
Noble Lords should remember that the speech was made on 14 November, 2001—
"and everywhere there are calls to defend freedom and stand up for democracy. Yet President Chen, despite his long and courageous and ultimately triumphant battle for democracy in Taiwan—which cannot be disputed! —is prevented from coming here, to accept his award in person, by a decision of the European Union which I can only describe as cowardly and hypocritical. Their decision is to deny visas to the five most senior representatives of Taiwan—President, Vice President, Prime Minister, Foreign Minister, Defence Minister—even for private visits. It is a decision which makes me ashamed".

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Incidentally, that decision is not clearly available in writing anywhere. It was an informal decision taken behind closed doors with no microphones.
In case it is thought that in saying this I am selectively attacking socialist or Conservative administrations, let me make it clear that that is not so. I am attacking the consensus of realpolitik against any perceptible democratic principle which seems to span the whole democratic political spectrum when dealing with Taiwan.
Obviously, when deciding where the award would be presented, we considered those European governments where there were Liberals in coalition. We went off to see the Danes, our first choice. They said, "It is very difficult, as we have a lot of trade with the People's Republic of China and there is this agreement of the European Union". So we went to the Netherlands and then to Belgium, from both of whom we got the same story. No European country would give a visa. Finally, we reached the Strasbourg compromise, with France giving Madame Chen a visa on the informal understanding that her visit would be "low profile".
The position of France, for which the Minister is not responsible, makes me particularly sad when I consider its contribution to democracy, which I greatly admire. It made me sick when, just before the recent election and referendum, President Chirac, in the presence of the Prime Minister of the People's Republic of China, said that the proposed referendum was "a provocation". A referendum is a provocation? A consultation of the people is a provocation? There are certainly no referendums in the People's Republic of China.
Like the noble Lord, Lord Faulkner, I welcome the support given by Her Majesty's Government to Taiwanese membership of the WTO. Like him, I do not understand why that is acceptable when membership of the WHO is not acceptable. The noble Lord, Lord Faulkner, set out the argument clearly, so I do not need to repeat it. I agree that it is a good thing that the United Kingdom resisted lifting the European Union ban on weapons sales that was introduced after the Tiananmen Square massacre, for which there has never really been an apology. Last November or December, in a remarkable vote in the European Parliament, there was cross-party opposition to lifting the ban.
More fundamentally, it is offensive that democratic countries prefer to trade with a country that is guilty of huge human rights abuses, is not democratic and threatens Taiwan with missiles, than with 23 million people who have chosen a democratic path, often with great difficulty. That is especially true in light of my clear understanding that there has been no international resolution of Taiwan's status. China's historical claims to sovereignty therefore have far from legal acceptance, even before we begin to look at what is right in today's circumstances.
I end with another quotation. I am glad to tell noble Lords that it is not my own, but one from Federica Sabbati, the Italian secretary-general of Liberal International. She put it so very clearly and I can do no better. In an article about the problems surrounding the prize about which I spoke, she wrote:
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"In all this, then, the question seems to be what value do we give to promoting freedom? How important is it for the democratic countries like the ones composing the European Union to promote the universality of those principles enshrined in their constitutions? On paper, it seems paramount.
"However, there seem to be exceptions…in particular when it is more convenient to us or when asserting our principles may seem to have embarrassing consequences. But what is a principle if we have no courage to fight for it? Why bother with principles in the first place"?
4.32 p.m.
Lord Astor of HeverMy Lords, I also pay tribute to the noble Lord, Lord Faulkner of Worcester, for introducing this debate. The recent elections in Taiwan, at which both he and the noble Lord, Lord Russell-Johnston, were clearly observers, and Taiwan's growing stature on the global economic stage, make this a timely question and one which has brought forth excellent points from both noble Lords.
I echo all sides of the House when I say that we on the Opposition Benches welcome the continuing growth of democracy in Taiwan. Although the March elections were sadly overshadowed by controversy over disputed votes and allegations of a rigged gun attack on President Chen Shui-bian, it is heartening to see Taiwan's success in encouraging democratic rule and participation.
Having said that, I regret that the recent election results appear to be inconclusive and have therefore resulted in an atmosphere of uncertainty and confusion within the government of Taiwan. Coupled with that, the Government's inability to reach a definite resolution on rapprochement with Beijing has caused further disarray and done little to calm the situation.
The potential conflict between China and Taiwan has been a serious threat to the stability of the Asia-Pacific region for some years. Although interaction between the two sides has increased, particularly in the aftermath of their accessions to the World Trade Organisation, the situation there remains volatile.
Obviously, we echo the view of the Government in acknowledging that Taiwan is a province of China and that the future of Taiwan should be decided by people on both sides of the straits. However, a process of reconciliation between Taiwan and China should be carried out and we would encourage both governments to promote this. Even the most basic efforts could be built on, such as establishing direct flights between Taipei and mainland China. Would the Minister comment on that and whether this might in turn lead to more open communication and improved economic links?
We would be extremely alarmed if either side was driven to military action and we hope that the situation will eventually be decided peacefully and calmly. Therefore, we would encourage Taiwan's leaders to approach their relations with China in such a way as to promote useful open dialogue and to avoid confusion and misinterpretation. In the past, the Chinese Government have been offended by speeches made by President Chen,

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which has undermined attempts at reconciliation. For example, the Chinese spokesman for Taiwan affairs, Zhang Mingqing, described President Chen's inaugural speech of 20 March 2004, as showing, he said,
"no sincerity to improve relations".
As far as concerns developing British relations with Taiwan, we would encourage the Government to do so, while also exercising caution. We believe that developing a strong commercial relationship with Taiwan is highly favourable for the UK. Taiwan's reputation as a significant member of the global economic community is long established and building close links with Taiwanese businesses can only be advantageous to the British market. The noble Lord, Lord Faulkner of Worcester, pointed out that Taiwan is our 20th largest export market. Unofficial links with Taiwan through educational and cultural programmes have been developing in this country for some time and have obvious benefits for both sides. In that context, will the Minister say a word or two about the good work that the British Council is doing in Taiwan?
The United Kingdom's relationship with Taiwan should be actively encouraged by the Government, providing it is cultivated within the boundaries set by our acknowledgement of Taiwan's status and its own relationship with China. We hope that our informal ties with Taiwan remain strong and, if possible, are a means through which to encourage a peaceful resolution in the Taiwan Straits.
4.37 p.m.
Baroness CrawleyMy Lords, I am grateful to my noble friend Lord Faulkner of Worcester for raising the important subject of UK relations with Taiwan. Our bilateral relations in areas such as commerce, education and culture are in excellent shape and we have had a useful and informative debate, although compact. I thank my noble friend and other noble Lords who are members of the all-party parliamentary group for the time and effort that they dedicate to strengthening bilateral relations. My noble friend said that his most recent visit to Taiwan was to lead a parliamentary delegation for Chen Shui-bian's inauguration. Her Majesty's Government continue to welcome the development of democracy in Taiwan.
My noble friend touched on Taiwan's relationship with mainland China and the EU arms embargo. On the specific question of the arms embargo my noble friend will know that a review is ongoing. I have noted his comments, but it would be inappropriate to comment further before the end of that review.
We consider that the future of Taiwan is a matter for the people on both sides of the Taiwan Straits to settle among themselves. We welcome any efforts by both sides to lower tensions and to find a mutually acceptable basis for a resumption of peaceful dialogue—an issue that was raised by all noble Lords this afternoon. We would view with extreme concern any recourse to military action. We take every suitable opportunity to convey to the Chinese Government our
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strong opposition to the use of force. In the absence of diplomatic relations with Taiwan, representations to the Taiwanese authorities must be informal. We are confident that they are aware of our views.
My noble friend raised the issue of the World Health Organisation and Taiwan, as did the noble Lord, Lord Russell-Johnston. This year, the World Health Assembly debated at length its relationship with Taiwan. Taiwan's healthcare is of a high calibre. However, in response to the noble Lord, Lord Russell-Johnston, there are practical difficulties of sharing that expertise in a UN forum where statehood is a prerequisite for full membership. I assure the noble Lord that Her Majesty's Government fully endorse the views expressed in the European Union's explication de vote that he quoted.
Lord Faulkner of WorcesterMy Lords, I do not think that anyone is arguing for full membership for Taiwan. The issue is observer status, of the sort that is granted to the PLO and the Holy See. Why is that so difficult?
Baroness CrawleyMy Lords, the reason that we endorsed that explication de vote at the World Health Assembly was that Ireland, in speaking on behalf of all the EU member states, having the EU presidency, expressed the EU's hope—I hope that this will answer my noble friend to some extent—that the WHO secretariat and others organising meetings and working groups under the WHO auspices would show flexibility in finding mechanisms to allow Taiwanese medical and public health officials to participate in the activities. Her Majesty's Government fully endorse any research into finding that flexibility.
I now turn to the bilateral relationship that we have. Her Majesty's Government's position on Taiwan's status is well known. It remains our policy and forms the foundation of our dealings, but non-recognition should not inhibit the development of close relations in areas such as education and trade. The UK strongly supports Taiwan's membership of the World Trade Organisation. Taiwan has an important contribution to make in bringing about free and fair world trade. We welcome the progress that has been made so far in relation to Taiwan's WTO commitments, which was one of the key issues discussed at our recent annual trade policy talks.
The UK remains the favoured destination for Taiwanese investment in Europe. There are about 150 Taiwanese companies in the UK. We are encouraging them to diversify their work from manufacturing into research and development. Recent manufacturing successes include the decisions by China Magnetics Corporation and Ritek, the world's two leading producers of digital storage media, to build and produce next generation products here in the UK. UK exports to Taiwan last year amounted to just over £900 million. During his recent visit to Taiwan, my noble friend will no doubt have been impressed by the number of familiar names that he saw on the high street in Taipei: B&Q; MFI; Boots; Tesco, which all now have significant operations in Taiwan, with plans for further expansion.

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As the noble Lord noted, the British Trade and Cultural Office, the non-governmental office in Taiwan that represents UK economic and cultural interests, is active in boosting Britain's profile in Taiwan and improving our unofficial links. The British Trade and Cultural Office is supported in Taiwan by an active British Chamber of Commerce and by the Taiwan British Business Council. Formed in 1999, the TBBC is an industry-led, government-supported organisation, which aims to promote business and investment between Taiwan and the UK. I am particularly grateful to my noble friend for giving a keynote speech at the TBBC's sixth annual meeting this April.
Our links in education, culture and science are also very strong. The noble Lord, Lord Astor of Hever, asked about the work of the British Council. I am happy to report that the British Council is very active in Taiwan. In early June, Sir David Green, director-general of the British Council, opened its new premises in Taipei. As well as beginning to teach English for the first time in Taiwan, the British Council and Taipei City have jointly developed a teachers' resource pack that is used in all primary schools in Taipei.
The British Council and BTCO are also working to promote British science. Last year, their exhibition on the discovery of DNA was seen by more than 500,000 people in three museums around Taiwan. They also organised a visit by Nobel laureate, Sir John Sulston, to promote public understanding of science.
Artists' exchanges and residencies continue to improve the links between British and Taiwanese artists, dancers and musicians. The Taipei Representative Office in London must also take a great deal of credit for the improving relations. It shares our aim of developing substantive links between the UK and Taiwan. The TRO is headed by the distinguished academic, Dr Tien Hung-mao.
Our lack of diplomatic relations means that we cannot afford Dr Tien and his colleagues the privileges that go with diplomatic status. But we try to minimise the practical inconveniences that they may face. I have noted my noble friend's comments.
Lord Slynn of HadleyMy Lords, I am grateful to the noble Baroness for giving way. Before she finishes this aspect of her speech, perhaps I may ask whether she would include, together with art, culture and so forth, the very important role played by many Taiwanese lawyers in the development of international law.
I raise that here because the headquarters of the International Law Association, of which I am chairman, is in London. The Government should know, if they do not already know—in fact, the Minister probably does already know—what a very great contribution
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international law has received from Taiwanese lawyers and members of the government, and so forth. They always come to functions here. They always assist lawyers from other countries who may not have the means to go to international conferences. They have done a great deal to organise conferences, including conferences on the World Trade Organisation, to encourage international law. That has done a great deal to bond British and Taiwanese lawyers.
Baroness CrawleyMy Lords, I am very happy to welcome and acknowledge that most interesting contribution to our debate from the noble and learned Lord.
I was saying to my noble friend that I have noted his comments that other EU capitals treat the Taiwanese better than we do. If he will write to me with explicit examples, I shall be very happy to review that situation.
We have a substantial programme of unofficial visits by Ministers responsible for non-political areas. Taiwan's Minister with responsibility for education visited the UK in January 2004 with a programme to look at the UK's management of higher education and secondary schools. Other recent visits include Ministers responsible for economics, health, finance, environment and science.
Last year, Alan Johnson and Nigel Griffiths visited Taiwan to promote UK interests there. Sir David King visited Taiwan in February this year to boost our profile in major science infrastructure projects and to expand scientific and educational ties.
In common with EU partners—I have noted the strong views of the noble Lord, Lord Russell-Johnston on the subject of EU visas—we see visits by the most senior political figures in Taiwan as inconsistent with our non-recognition policy. Such visits are looked at on a case-by-case basis.
The noble Lord, Lord Astor of Hever, asked me about flights between Taipei and Shanghai. During the lunar new year in 2003 there were indirect charter flights between Taipei and Shanghai. Recently we have also seen the restoration of shipping links between the islands of Jinmen and Matsu and the mainland. Like the noble Lord, we believe that such practical measures are good ways to build confidence and help promote peaceful dialogue.
In conclusion, I hope that your Lordships will agree that UK/Taiwan relations are in excellent shape. Non-recognition imposes real constraints on what we can and cannot do. However, overall we have a strong relationship. We shall continue to work with the Taiwanese to develop and build that relationship in areas such as commerce, culture and education.
House adjourned at eight minutes before five o'clock.

Official Report of the Grand Committee onthe Pensions Bill
  (Second Day)
  Thursday, 8 July 2004.
  (Second Day)

    The Committee met at a quarter past three of the clock.
    [The Deputy Chairman of Committees (Lord Tordoff) in the Chair.]
    Clause 10 [The Determinations Panel]:
    [Amendment No. 36 not moved.]
    On Question, Whether Clause 10 shall stand part of the Bill?
    Lord SkelmersdaleWe now get to the nuts and bolts of the Determinations Panel which we discussed in brief on earlier clauses and on Schedule 1. I recall that my noble friend wanted to separate out Schedule 1, but we have dealt with that.
    I find the Determinations Panel a most peculiar animal. I searched my first port of call, the Explanatory Notes, for an explanation of why it was there, what the policy behind it was and so on, but failed to find one. I then consulted the report of the Committee stage in another place, where I discovered that the Minister made a very bland speech.
    [The Sitting was suspended for a Division in the House from 3.17 to 3.27 p.m.]
    Lord SkelmersdaleDuring our short break, I recalled the shortest ever speech I made some years ago and now recorded in Hansard, which was "Ditto, my Lords". Perhaps I should show a little more courtesy to the Committee and start again.
    I was saying that the Determinations Panel in Clause 10 is a most peculiar animal. It does not build on any experience that I can find of OPRA, which is replaced by the regulating authority in the Bill. So I looked at the Explanatory Notes, where I expected to find an explanation. Of course, I did not. The notes really reword the clauses in what one might call everyday layman's language but do not tell us much about the policy behind the nuts and bolts of the Bill, and certainly the nuts and bolts of the regulator.
    All I could find was—unusually—in Hansard for the Committee stage in another place. The Minister made a rather bald statement:
    "The creation of the determinations panel will not only enable best use of the regulator's resources but ensure that the regulator remains efficient and accountable. It will also provide a comfortable degree of objectivity whenever evidence suggest that action should be taken against those with responsibilities for pension schemes".—[Official Report, Commons Standing Committee B, 9/3/04; col. 58.]
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    There is a whole chunk of the regulator that could do this job anyway.
    The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham)I take the noble Lord's point about the matter not being in the Explanatory Notes. That is why I produced six pages for the Peers' briefing pack, which the noble Lord has had since before Second Reading. I had hoped that that would make good any such shortfall and therefore would answer some of the questions that he might pose.
    Lord SkelmersdaleThe noble Baroness will have to wait and see. She does not yet know what the questions are.
    Baroness Hollis of HeighamThe noble Lord must read the briefing pack.
    Lord SkelmersdaleOf course, I have seen it and read it, and I hope I have understood it.
    In another place, there was a suggestion that one of the reasons for this was that it would produce Chinese walls within the regulator, but I do not see how. The panel will be selected by the nominations or appointments committee—whatever it is called—of the regulator. I can find nothing in the Bill that says that a non-executive may or may not chair it. I rather suspect that it will be chaired by a non-executive. After all, the nominations panel is composed of non-executive members of the regulator. Perhaps we can clear up that matter straightaway. Can a member of the regulator chair the Determinations Panel?
    Baroness Hollis of HeighamNo.
    Lord SkelmersdaleNot even a non-executive?
    Baroness Hollis of HeighamNo.
    Lord SkelmersdaleIn what capacity do the members act? One assumes that it is not a full-time job, even as a chairman. From the notes that the noble Baroness kindly sent us, we know the kind of people who will comprise the panel and who will be eligible for appointment to it; but we do not know how often they are likely to work, what they are likely to be paid, whether there will be expenses only, and so on. There are still quite a few points on which the note did not provide answers. I would be grateful if, in due course, the noble Baroness could answer those points.
    Baroness Hollis of HeighamClause 10 provides that the regulator must establish and maintain a committee known as the Determinations Panel. The panel's duty will be to exercise, on behalf of the regulator, the reserved regulatory functions that are set out in Schedule 2. Schedule 1 deals with the regulator's functions and Schedule 2 with the Determinations Panel. Of course, the Determinations Panel is part of, although at the same time distinct from, the regulator. I can understand the need to probe our thinking on that.

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    The decision whether or not to exercise any of those regulatory functions would also be reserved to the panel. The Determinations Panel must consist of a chairman and at least six other members. The chairman of the panel will be chosen by a special committee convened for that purpose and chaired by a non-executive member of the regulator. The non-executive member of the regulator chairs the selection committee which determines the independent chairman of the Determinations Committee. That may be where the misunderstanding occurred.
    The remaining panel members will be appointed by the panel's chairman. None of the panel's members may be a member of the board or the staff of either the regulator or the pension protection fund. Those provisions will further enhance the fact that the Determinations Panel is effectively independent of other parts of the regulator.
    Lord SkelmersdaleClause 10(5) states:
    "The following are ineligible for appointment as members of the Panel—
    (a) any member of the Regulator".
    From what the Minister has said, is one to assume that that includes non-executive directors?
    Baroness Hollis of HeighamYes. The push behind the question raised by the noble Lord, apart from actually understanding and appreciating the structure, would be why it is necessary. That is what I want to address.
    The push is that regulatory decision making will be kept, and needs to be kept, separate from the setting of strategy and other functions of the board. More importantly, it also separates the decision makers from the investigatory staff and, therefore, a degree of interdependence in the regulator's decision-making process.
    In part, this model is based on the structure of the FSA. Section 395 of the Financial Services and Markets Act 2000 requires the FSA to separate its investigation and recommendation functions from the decision-making functions. To achieve that, the FSA has set up a regulatory decisions committee which effectively serves the same purpose as the Determinations Panel. When I met the FSA, I checked on that and it appears to be an entirely satisfactory way of working.
    However, because the panel forms part of the office of the regulator, it will not be an independent and impartial tribunal within the meaning of Article 6 of the European Convention on Human Rights, which sets out the right to a fair trial. In other words, it goes part of the way to meeting human rights obligations, but it is not sufficient as it stands. That right will be secured by enabling directly affected parties to refer to the Pensions Regulator tribunal any of the regulator's determinations made by the regulator or the Determinations Panel.
    However, the panel's separation from the members and staff of the regulator enhances the impartiality of decision making. That is particularly important when it is decided that a regulatory function must be
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    exercised immediately in order to protect members of a scam—I mean, of a scheme, against a scam. I think that my Freudian slip was quite correct. In many cases, such actions may encroach upon individual rights, but the interference will be justified by the need to protect the interests and rights of others.
    An example of such a regulatory action is the issue of a freezing order under Clause 20. For a short time, the order may have the effect of reducing the benefits payable to particular members. That is acceptable because the action is intended to protect the interests of the generality of members. However, I hope, and believe, that the fact that only the Determinations Panel may issue a freezing order on the regulator's behalf improves the impartiality of that initial decision.
    Therefore, the creation of the panel will not only enable best use of the regulator's resources but will ensure that the procedures remain fair and accountable. It will provide a degree of objectivity for those concerned.
    The noble Lord also asked me how significant we thought that responsibility would be. My best understanding is that, at present, that function is contained within the membership of OPRA, and the members exercising those functions take about 20 days a year. However, they are not full days; the members are paid allowances pro rata. Some of the problems that that causes have been pointed out to me. The chairman of OPRA goes into a huddle and then has to exclude herself from the decision making in order to try to invent Chinese walls, and everyone would be happier if they existed more effectively and publicly.
    Therefore, we are seeking to improve the level of confidence in the decision-making process by separating the Determinations Panel from the rest of the body of the regulator. That goes part of the way towards meeting our compliance with ECHR. However, it does not go all the way, and therefore appeals can obviously be made to the pensions tribunal both from the regulator and the Determinations Panel. Clearly, if any party is unhappy with any of the regulator's proposals, the Determinations Panel is in a position to enforce them. It may decide that it wishes to amend them or it may ask either party to think again.
    Lord BorrieBefore the noble Lord, Lord Skelmersdale, speaks, I must admit that I sympathise somewhat with the kind of questions that he put to the Minister. From what the Minister said, I now understand far more clearly than I did the clear separation, and the reasons for the separation, between the regulator and the Determinations Panel. But I still have a slight difficulty in understanding it from the wording in the Bill.
    Clause 10 begins with the words:
    "The Regulator must establish and maintain a committee".
    It is only later that we learn that no member of the regulator or any member of the staff of the regulator is allowed to be on that committee. To those of us who are familiar with authorities, councils and committees, the committee is a committee of the council or of the authority. In this case, that is only so in a very technical

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    sense because, for perfectly good reasons which the Minister explained, there is not allowed to be any overlap whatever. I think that I have understood that correctly—the Minister is nodding her head. But, from the point of view of explaining the adjudicatory set-up, whether in Explanatory Notes or in the desire to publicise this issue to those who want to know about it, the use of the word "committee" in line 16 on page 5 of the Bill seems to be somewhat unfortunate.
    Baroness BarkerI thank the noble Lord, Lord Skelmersdale, for raising questions in which I share an interest. The noble Lord, Lord Borrie, is right: the inter-relationship is not clear in the Bill. I want to ask the Minister whether, in choosing to follow the model of the FSA as opposed to the existing OPRA model, any calculation has been made about how much additional time it would take for the Determinations Panel to conduct and conclude its business. I ask that because time is a critical issue for those involved.
    I assume that the Determinations Panel will have to get its information from the same sources as the regulator. How will all that be managed? Is the noble Baroness confident that those arrangements will be more efficient in terms of the panel's output?
    Viscount TrenchardI agree entirely with the remarks made by the noble Lord, Lord Borrie. I have been confused by these arrangements. Every time I read the Bill, it strikes me as strange that the regulator is a body corporate, a point the noble Lord drew attention to at Second Reading. Its board of directors are called members not of the board of the regulator, but of the regulator itself. That is confusing. A "member of the regulator" would exclude a member of the staff of the regulator since it refers to a member of the board of the regulator. I would much prefer words along the lines of "regulatory authority" rather than simply "the regulator". I hope that the noble Baroness agrees that it would be clearer if the regulator had a board.
    Following on from the point introduced by my noble friend, which I strongly support, the Determinations Panel is a committee of, and maintained by, the regulator. How many members of staff will the panel have? Also, is it true that they will not be members of the staff of the regulator?
    Baroness Hollis of HeighamI do not want to take up the time of noble Lords, but it may help if I trace what might happen to a case in these situations so that we have a record of it in Hansard. The example was included in the briefing pack.
    In a normal case, the regulator would have received information, either from a whistle blower or via the scheme return, of the failure on the part of the trustees to produce a copy of the scheme's annual accounts as required by the Pension Schemes Act 1993. The trustees' failure could point to a number of other breaches. It may be that they have failed to appoint an auditor or, more seriously, because of a failure to
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    produce accounts because there is no schedule of contributions, which is vital to ensure that a scheme is properly funded.
    The regulatory arm of the regulator would investigate the circumstances. It may consider whether its current information suggests that there are any other relevant risks. It could ask the trustees for an explanation or it could use its new information-gathering powers to acquire further data. If there appears to be no risk to scheme members and no reason to believe that the trustees are not in the process of complying, the trustees might be given a further period in which to comply. But if the work has not been started or if the trustees are not co-operative, the regulator might decide to issue an improvement notice to the trustees requiring a display of the accounts within a specified period. The regulator may also issue an associated third party notice if it appears that the trustees are being impeded by, for example, the scheme's auditors. I have been briefed on a case where exactly that happened.
    All that would be done by the regulator. Should the trustees fail without reasonable excuse to comply with the improvement notice, they are liable to a civil penalty under Section 10 of the Pensions Act 1995. If in this case, as in any case where a Section 10 penalty could be imposed, the regulator believed the circumstances were such as to warrant such a sanction, at that point it could present its evidence to the Determinations Panel. The regulatory arm of the regulator would then consider whether the case represented an immediate risk, which might produce special procedures. If no such risk arose, the regulator could issue a warning notice to the trustees.
    Having been alerted to the case because the regulator is sufficiently concerned and is minded to impose a Section 10 penalty, the Determinations Panel would consider the case put before it by the regulatory arm alongside any representations from those affected, which would be made in person, and other evidence presented. The decision of the Determinations Panel could be that the Section 10 penalty is appropriate, and it would notify everyone concerned. If the trustees were unhappy, they could apply to the Pensions Regulator tribunal, at which point the decision to impose the penalty would be suspended for the period. The tribunal would then consider the case afresh and consider any further evidence. The tribunal could confirm the regulator's determination, could direct the regulator to vary or revoke it or could substitute a different determination. Any party may refer the tribunal's decision on a point of law only to the Court of Appeal or, in Scotland, the Court of Session.
    That is a fairly minor breach which may or may not conceal a major breach. The point at which you go beyond the powers available in Schedule 1 to the regulator and powers that would impose a sanction is when the case goes through to the Determinations Panel, which would hear the evidence from the regulator and any other evidence to decide whether it is appropriate. If that is not satisfactory, it then goes through to the pensions tribunal and, if necessary on a point of law, into the court system.

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    That is the procedure. The evidence we have is that that happens very rarely. The evidence from OPRA shows that two to three people are needed for that function in the current OPRA proceedings. The time scale is 20 days part-time per member involved in that function. Obviously, that may expand—I am not saying that that is where it will necessarily end—but that gives us some indication of what is involved. Even now, with the relatively limited powers that OPRA has, the matter seldom gets into the heavy end. Given the more effective range of powers that the regulator now has, I would hope that fewer cases would end up in the determinations field. I would hope that the measure will be neither onerous nor oppressive.
    3.45 p.m.
    Lord SkelmersdaleThe Minister did not refer to the very helpful point made by the noble Lord, Lord Borrie. Clause 10(1) states:
    "The Regulator must establish and maintain a committee consisting of—".
    Why cannot he establish a panel and then we would all know where we were? Perhaps the noble Baroness would like to take that away and consider it.
    The noble Baroness referred to freezing orders, but they would constitute a very rare duty on the part of the Determinations Panel because the regulator, or the board of the regulator—whatever one likes to call it—will deal with that. We shall discuss that in a later clause. However, such a situation can arise. I refer to paragraph 20(6) of Schedule 1 on page 238 of the Bill—that is another reason why my noble friend wanted to separate out from Schedule 1 the parts referring to the Determinations Panel—which states:
    "The Regulator may also authorise the Determinations Panel, in such circumstances as the Regulator may determine, to exercise on behalf of the Regulator such functions (other than those mentioned in sub-paragraph (2)(a) to (c)) as the Regulator considers necessary for the effective exercise by the Panel",
    and so on. So there is practically nothing that the Determinations Panel cannot do if the regulator wants it to do it, so far as I can see. That is what makes the matter so confusing for me.
    Baroness Hollis of HeighamI am not sure that that is problematic. The delegation constitutes one way only of dealing with the matter; namely, that the regulator may delegate some of his functions to the Determinations Panel. However, the Determinations Panel cannot do that the other way round, which is surely what we would want to see. Obviously, one wants the Determinations Panel to get involved when one is beginning to move into a quasi-judicial process and one therefore wants to give all parties the benefit of the doubt.
    I absolutely take the points made about the terms that are used. The terms are decided by parliamentary counsel whose advice we must take. My understanding is that they decided on the term "board". I take the point that that could lead to confusion with the board
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    of the PPF. We are dealing with the regulator, a panel and a board. That way, at least we have distinctive terminology.
    Lord SkelmersdaleWith the greatest respect, we do not. Clause 10 has the heading, "The Determinations Panel" but in the next line refers to "a committee". I do not think that that is helpful in the slightest. I am reminded of a comment made by one of my private secretaries when I was in the predecessor department to that of the noble Baroness, Lady Hollis, who said, "You'll be having the draftsman spitting blood". I do not mind if he spits blood, but let us get the legislation right.
    Clause 10 agreed to.
    Clause 11 [Functions exercisable by the Determinations Panel]:
    Baroness Hollis of Heighammoved Amendment No. 37:
    Page 6, line 19, at end insert—
    "() section (Pension liberation: restraining orders)(10) (application to permit payments out of an account that is subject to a restraining order);"
    The noble Baroness said: The main purpose of Amendments Nos. 37, 40, 41, 42, 49, 50, 51, 52 and 171 is to introduce new clauses that are, I believe, a welcome and useful addition to the Bill.
    Their purpose is to arm the Pensions Regulator with the necessary powers successfully to combat the illegal activities of those who establish and run pension liberation schemes. If we are talking about language, the one thing I object to is calling something that I regard as offensive and illegal "liberation". It is not a word that I would choose.
    As these are new clauses on a new topic, I have sent letters to members of the Committee, and it may be worth spending a moment to say exactly what we mean by "pension liberation" and why it is a problem that has to be tackled.
    "Liberation" schemes—the Committee will notice heavy, sarcastic quotation marks around "liberation" whenever the word is mentioned in this context—are scams that offer to convert the accrued rights—which has the normal everyday meaning of rights in occupational and personal stakeholder schemes—of members of bona fide pension schemes into an immediate tax-free lump sum. The organisers of liberation schemes use adverts to attract people who urgently need cash. The adverts offer to turn pension benefits into a tax-free lump sum. However, the people offering the service usually charge high commissions, ranging from 20 per cent to 30 per cent of the individual's total fund.
    Transactions are often arranged using offshore companies and bank accounts. Typically, the individual's existing pension scheme will receive a request from the pensions liberator to transfer their pension money to a scheme in the name of a fictitious new employer created solely for the purpose of trust busting. The trustees of the ceding scheme will not be aware that the scheme to which it transfers the accrued rights is in fact a so-called liberation scheme. As well as paying up to 30 per cent of their pension rights in commission to the liberators, an individual could end up paying as much as 40 per cent tax on the total amount, making a total of 70 per cent.

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    Pensions liberation poses a great risk to the security of pension scheme members' benefits. It also serves to frustrate the purpose for which Parliament has granted generous tax relief to approved pension schemes. However, it is important to note that pension liberation is not the same as pension unlocking. It offers a legitimate, although potentially risky, way for people over the age of 50 to take early retirement and release their pension benefits from an occupational or personal pension. Pension liberation, on the other hand, poses a serious and ongoing threat to the financial security in retirement of many members of occupational and personal pension schemes.
    The question is how best to combat this threat. At present, OPRA is aware of a number pension liberation schemes. It believes that the money passing through those schemes is significant, possibly beyond the region of £50 million. OPRA has taken action in respect of these cases. In February 2003, the Inland Revenue, based on information passed to it by OPRA, secured a conviction against two men at Oxford Crown Court for offences relating to pensions liberation. Between them, they received five and a half years in gaol. If anybody is interested in that case, I can write to them with details. It was a real scam, and the judge took it very seriously.
    The effectiveness of OPRA's action has been severely restricted by the inadequate powers it has to confront this type of abuse—a form of abuse that was not recognised when the Pensions Act 1995 was drafted. I asked whether we could tackle the problem of laundering money through the Proceeds of Crime Act 2002, but not even that Act can be relied on to recover moneys paid out of pension schemes in breach of trust. That is because not all actions in breach of trust are criminal offences. The Proceeds of Crime Act can be used only in cases where a criminal offence or something that would be a criminal offence if it happened in the UK has been committed. Sometimes it would be appropriate to use the Act to recover money, but not always.
    That is why we believe that we should equip the Pensions Regulator with the necessary powers to act swiftly and decisively against the perpetrators of a particularly damaging scam. That is why we have introduced these new clauses.
    I could go on to explain how the individual amendments will work, but I am aware that the Committee has a heavy agenda. However, I am entirely in its hands. I wonder whether I have given the Committee enough information about why we are doing this for it to accept the amendments. If not, I am very happy to continue to explain them in considerably more detail. I beg to move.
    Lord Oakeshott of Seagrove BayWe generally support the clauses, both the thrust of them and the way that they are likely to work. I just have two brief detailed questions. The first is on Amendment No. 50. Why is only the regulator able to apply for a restitution order? Why should not "liberated" members be able to
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    do that if they find that they have been deceived by the managers of the liberator—supposing that they have been promised 100 per cent of their rights but got only 50 per cent? Why cannot an individual make that application?
    The other question is on Amendment No. 51. Is it justified or proportional that a restraining order can freeze all the assets in a bank account, even if only some of them consist of money liberated from a pension scheme?
    Lord SkelmersdaleI must admit that the same questions that the noble Lord, Lord Oakeshott, has just asked occurred to me. Pension liberation schemes, especially where charges are high—the Minister's helpful explanation says that they can be as high as 20 or 30 per cent of the value of the money taken out, which seems to be astronomical—are, in the words of 1066 And All That, "a Bad Thing"; in fact, I would go further and say that they were a very bad thing. Therefore, I am pleased that the Government are taking action to deal with that.
    As the Minister points out, the tax allowances are given for a particular and peculiar purpose. They are not quite as generous as they were, thanks to the Chancellor of the Exchequer's activities over the past six years—but I will let that pass. The high-interest arrangements are of course happening in other walks of financial life, such as with store cards and credit cards. I should be interested to know whether the Government have plans for dealing with organisations that provide money for loan at a very high rate of interest.
    I am not sure whether my next question is applicable to clause stand part, but there is a distinct relationship between subsection (6) and Schedule 2. It is somewhat repetitive, and one wonders why the draftsman decided that it was necessary. Amendments Nos. 49 and 50 seem, at first blush, to be a sensible way of dealing with a very bad practice. However, if the court, as it assuredly will, sends the money back to the pension fund or to the individual, does the Minister anticipate that it will send the full amount, or will the "liberator" keep some of it? If the liberator keeps some of it, the practice of liberation will not be stamped out.
    I am surprised that the amendments do not refer to Clause 17 either instead or as well. After all, that is where we find the details—scrappy as they are—of restitution by the courts.
    Baroness Turner of CamdenI thank my noble friend the Minister for the letters that we received and for the fact that we had the text of the amendments in advance. I found that useful.
    I was not aware that pension liberation was going on on such a scale or that it was such a racket. The Government are to be congratulated on attempting to deal with that racket and attempting to protect the interests of very vulnerable people. I support the amendments.
    4 p.m.
    Baroness Hollis of HeighamI shall try to deal with all the questions that have been raised, but if I forget to answer one, perhaps noble Lords will come back to me.
    The noble Lord, Lord Oakeshott, asked whether individuals could make personal representations. Yes, they can do so, if that is what they would prefer.
    I turn to the point about the moneys, and I shall explain what Clauses 8 and 18, along with Amendment No. 52, seek to do. Restitution of the moneys owed may not happen if part of the money has been spent. We have tried to ring-fence the pension money, but if it is less than is stolen it cannot be made good. That is part of the problem, but it is also the case that the person perpetrating the scam may very well have mixed their personal money with that of the pension scam money, and there is not as yet any way of disentangling those. The person we believe to be the scam perpetrator may apply to the courts to access some funds to use for living expenses. That is what would be done here until the whole affair could be unscrambled and, as far as possible, restoration made to the victim.
    This would also depend on how much money had been spent, how much had been laundered out of existence and so forth. However, the powers in these clauses would allow us to go after not only the money, but if it has been spent in bad faith on a property as opposed to a property further down the line in good faith, we could pursue that as well.
    The power to freeze the entire account and then to allow an application for reasonable living expenses to be paid to an individual is apparently the same as that applied when a court freezes an individual's bank account under court procedure rules. It is a common occurrence because, as I have said, there can be mixed moneys.
    Those are the reasons for these slightly elaborate provisions. I do not know whether my explanation answers the questions raised.
    Lord Oakeshott of Seagrove BayI welcome the assurance given by the noble Baroness that an individual can apply for a restitution order, but is that what the Bill states? If not, will she amend it to give effect to what she has just said?
    Baroness Hollis of HeighamMy understanding is that this does not have to be in the Bill, it is a basic right that pre-exists this legislation and will continue after it. However, I am happy to ensure that such issues, which are absolutely appropriate, are covered in codes of guidance and so forth. The array of rights afforded the individual will be set out in guidance, and not only the responsibilities of the Determinations Panel, the Pensions Regulator and the tribunal.
    Lord Oakeshott of Seagrove BayIt has now been recorded in Hansard.
    Lord SkelmersdaleI am grateful to the Minister for that full explanation and for answering the questions put both by myself and the noble Lord, Lord Oakeshott. However, I have a sneaking suspicion that the noble Baroness has been a little gung-ho on this. In a few years' time I think that we shall have to revisit it because I am not entirely sure that it is going to work. That is a personal view.
    Baroness Hollis of HeighamMy only comment on all this is that we face a dilemma that no doubt we shall debate again on other clauses. Many of us were involved in the discussions on the 1995 Act, at which time we acted in good faith. However, we have found that ingenious people, like those involved in pension liberation schemes, sometimes got around it because the powers that we bestowed on OPRA were too carefully detailed and too tightly drawn.
    There is a real dilemma here. On the one hand, I share the view of noble Lords that they want to see provisions made specific in the Bill and do not like what I would call vague, prescribed powers. But the tighter something is drawn, the more it is possible for the ingenious and the extremely highly paid to get around it. We are trying to strike the right balance between being transparent and accountable in our intention, but leaving sufficient reserve power for the regulator or the Determinations Panel to address issues of scamming, cheating and fraud—the noble Lord is quite right to say that they certainly will emerge. The bodies will have the powers to do so without having to come back and ask for another piece of legislation.
    As we go through this Committee stage, I shall repeatedly be asking noble Lords to bear in mind that need to maintain that balance because the more tightly drawn and explicit we are in the Bill, the more we run the risk of encountering the very problems that the noble Lord, Lord Skelmersdale, has rightly identified.
    Lord BorrieI understood the Minister, in response to the noble Lord, Lord Oakeshott, to say that the court's power to order restitution could apply whether it is on the regulator's application or an individual's. Indeed, the words are generalised enough to suggest that. But subsection (4) of the new Clause 50, towards the top of page 5 in the Marshalled List, states:
    "The court, on the application of the Regulator, may make such order as the court thinks just and convenient",
    and so on, for ensuring that the proceeds are transferred towards a pension scheme or an annuity or to the liberated member. Unfortunately, I wonder whether the phrase,
    "on the application of the Regulator",
    limits the court's powers if the regulator does not apply, but the individual does.
    Baroness Hollis of HeighamI shall check that, but my understanding is that these powers are complimentary to the Crown Proceedings Act which gives those powers to the individual. These clauses give power to the regulator and that is why they specify

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    powers for the regulator. The individual powers run parallel and pre-exist by virtue of the Crown Proceedings Act.
    Lord BorrieAnd so would the court's powers be parallel?
    Baroness Hollis of HeighamAbsolutely.
    On Question, amendment agreed to.
    Baroness Hollis of Heighammoved Amendment No. 38:
    Page 6, line 21, at end insert—
    "() section 38(6A) (application for the issue of a revised contribution notice under section 38(6C));"
    The noble Baroness said: In moving Amendment No. 38 I shall speak also to Amendments Nos. 39, 43, 44, 113 to 115 and 132 to 134. Clause 11 contains the functions of the regulator that are reserved to the Determinations Panel. Where the Bill grants a person a statutory right to make an application to the regulator—for example, to appoint a trustee or to revoke a prohibition order—the Determinations Panel will deal with the application.
    This trespasses on a territory which is more fully addressed under Clauses 35 onwards. I suggest that I do not go into that territory now as we do not want to have two debates on the matter. Currently, there are provisions contained in Clauses 38(6) and 45(6) to reduce any outstanding Section 75 debt due to the trustees or managers of an occupational pension scheme or to the board of the pension protection fund, as the case may be, when a contribution notice or a non-compliance contribution notice is issued and complied with. We are saying that when they pay some money it is docked off the debt. That seems to me to be entirely sensible and I hope that the Committee agrees. I beg to move.
    Lord SkelmersdaleI do not object to the first substantive amendment. I suspect that the Government are right that there would be occasions when it would be right to reduce, or even write off, an outstanding Clause 45 debt. Clearly, firms will be delighted. I wonder whether the PPF will have the same reaction. Perhaps we can leave that until we get to it.
    I have another drafting point. Why is it necessary to duplicate the Clause 11 amendment in Clause 45? I should be very happy if the noble Baroness writes to me about that and does not take up the time of the Committee.
    On Question, amendment agreed to.
    Baroness Hollis of Heighammoved Amendment No. 39:
    Page 6, line 21, at end insert—
    "() section 45(7) (application for the issue of a revised contribution notice under section 45(9));"
    On Question, amendment agreed to.
    Clause 11, as amended, agreed to.
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    Schedule 2 [The reserved regulatory functions]:
    Baroness Hollis of Heigham
    Page 244, line 34, at end insert—
    "The power to make or extend a restraining order under section (Pension liberation: restraining orders)."
    Page 244, line 34, at end insert—
    "The power to make an order under section (Pension liberation: restraining orders)(10) permitting payments out of an account that is subject to a restraining order."
    Page 244, line 34, at end insert—
    "The power to make a repatriation order under section (Pension liberation: repatriation orders)."
    Page 245, line 9, at end insert—
    "The power to issue a revised contribution notice under section 38(6C)."
    Page 245, line 13, at end insert—
    "The power to issue a revised contribution notice under section 45(9)."
    On Question, amendments agreed to.
    Schedule 2, as amended, agreed to.
    Clause 12 agreed to.
    Clause 13 [Provision of information, education and assistance]:
    Lord Skelmersdalemoved Amendment No. 45:
    Page 7, line 23, leave out ", education"
    The noble Lord said: I did not want to burden the Marshalled List by tabling amendments every time the word "education" appeared throughout the Bill, and therefore I decided to put down an amendment to the title of Clause 13. The question is very simple. I can understand assistance being given to employers, to persons involved in advising employers and to persons upon whom duties are imposed by virtue of Clause 228. I can understand the need for information and assistance, but why is education included? What, over and above information and assistance, does education provide and why is it necessary? I beg to move.
    Lord BorrieI should be sorry if the word were to disappear. Any regulator—I was one once—rather likes to have one or two positive roles in addition to the harsh and negative ones. Perhaps what I am saying is similar to what I said at an earlier stage in our deliberations on the Bill when similar opposition was mounted to a provision in an earlier clause.
    Surely, the more information, education and assistance there is from the regulator, the less likely it is that people will get into trouble and do the things that they should not do. An educational role is positive and helpful to those who run pension schemes. No doubt it would be carried out in an indirect form, with information being made available for those whose job it was to run the schemes. But if the word "education" were excluded, it might send out a message that the regulator was to have a purely negative "policeman" role.
    Lord Oakeshott of Seagrove BayAs the noble Lord, Lord Borrie, said, this is to some extent a reprise of the discussions that we had on the previous occasion. I support the noble Lord, Lord Skelmersdale, on this

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    matter. I think that it is unnecessary to include the word "education" and, as we said previously, it is a question of focus. There are only so many hours in the day and only so much that the regulator can do, and he should be focusing on the main job of regulation. The more that is broadened out into more remote issues, the less time he will have for the real job. Therefore, I think that the word "education" is unnecessary.
    Baroness Hollis of HeighamBefore joining the House, I spent my entire career trying to distinguish between information and education so far as concerned my students. I knew that what mattered was education because, with that, one could find one's way to the information. I am sorry to see that the Committee has such a low opinion of its value.
    It may be helpful if I give an example or two. Clause 13 would allow the regulator, where authorised, to help employers to understand, and comply with, any responsibilities they may have to provide their employees with access to pensions information and advice. As the Committee will know, where employers do not contribute to pension schemes, we are requiring them, should Parliament so agree, to make available pensions advice and assistance. We think that that will be a particular problem, or challenge, for small and medium-sized employers. They may find it extremely helpful to have some sense of what is expected of them in that role. I do not know whether that counts as information or education, but "education" is the process of achieving a culture of compliance and "information" is how one does it. I think that both aspects are needed in the Bill. We are considering e-modules and so on, but I hope that the Committee will accept the concept.
    We are trying to ensure that if, for example, the regulator produces guidance and so on which helps to create that culture of compliance, in the Bill it will not be held to be ultra vires on the grounds that it goes further than a narrow definition of "information". I do not think that there is any doubt about the regulator's key job but, behind it all, he is trying to secure confidence in the pension structure of this country. Part of that is achieving a culture of compliance and understanding on the part of employers, employees and trustee managers.
    Lord SkelmersdaleI doubt it, but I shall let the point go. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 46 not moved.]
    4.15 p.m.
    Lord Skelmersdalemoved Amendment No. 47:
    Page 7, line 27, at end insert—
    "() representing members interests"
    The noble Lord said: I accept this is a badly drafted amendment and probably in the wrong place.
    Lord Oakeshott of Seagrove BayOtherwise it is okay.
    Lord SkelmersdaleOtherwise it is fine. I hope that the noble Baroness and her officials have managed to interpret the thought behind the amendment. The thought is that Part 1 concentrates on the relationship between employers, pension fund managers and the board of the regulator. There is very little about the interests of members, whose interests may on occasion be different from either their current or past employers' or the fund managers', especially when there is a danger of the scheme falling into the clutches of either the PPF or the Clause 274 financial assistance scheme, about which Members of the Committee have had so many representations. Perhaps the noble Baroness could briefly explain why. I beg to move.
    Baroness Turner of CamdenPerhaps the noble Lord, Lord Skelmersdale, would confirm whether in saying that he wishes the regulator to provide information and so on to people representing members' interests he means trade unions. Presumably in this context he does.
    Lord SkelmersdaleOn this rare occasion, I do.
    Baroness Hollis of HeighamIt is a pity that all three amendments were not grouped as they are on the same topic. I do not understand why there is such non-grouping when there is the same debate. This picks up on our debates yesterday on sectional interest. Our presumption is that the regulator's primary responsibility is towards the scheme trustees who are asked and expected to represent the best interests of all scheme members and, where appropriate, also the employer with the assistance of their advisers, scheme managers and administrators.
    A general duty on the regulator to educate all 10 million scheme members in the country—something like 9 million in contracted-out schemes and 1 million in contracted-in schemes and occupational pensions schemes—would have a huge effect on his work. We expect the regulator's prime interface to be with scheme trustees or occasionally with the employer and the scheme professionals. That is why we do not seek to widen the provision in the way suggested.
    Lord SkelmersdaleI think that is a pity. I shall not pursue the point, but we may well decide to return to the matter at a later stage. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    The Deputy Chairman of CommitteesI remind Members of the Committee that we did not meet yesterday; it was the day before yesterday.
    Clause 13 agreed to.
    Clause 14 [Improvement notices]:
    [Amendment No. 48 not moved.]
    Clause 14 agreed to.
    Clauses 15 to 17 agreed to.
    Clause 18 [Power of the Regulator to recover unpaid contributions]:
    On Question, Whether Clause 18 shall stand part of the Bill?
    Lord SkelmersdaleI have heard that that the regulator can use only the powers already in theory available to the trustees. If the trustees fail to extract the money, will not the regulator need extra powers? I am surprised that this clause, again unusually, is so mild in that respect.
    Baroness Hollis of HeighamThis clause allows the regulator to stand in the shoes of the trustees in relation to occupational schemes and the members of personal pension schemes to enforce the debt due from the employer rather than just to punish him. The reason we need the power in this form is not so much to displace the trustees, although that may need to happen on occasion, but because at the moment OPRA lacks these powers.
    OPRA's experience has shown that, unfortunately, some employers deduct contributions from employees' pay but do not forward them to the scheme. Even more commonly, employers do not forward their own contributions. This is a particular problem in personal pensions and defined contribution schemes where there has been no mechanism for ensuring that the employer pays what is owed unless individual employees are prepared to take their employer to court. Noble Lords will appreciate that individual employees are often reluctant to take legal action against their employers unless they are considering leaving their jobs.
    In the year 2002–03, OPRA received over 8,000 reports of late payments and penalties were imposed on 37 employers who had not paid contributions or had paid them very late. However, as was highlighted by the National Audit Office report in October 2002, OPRA has no power to ensure that the contributions due are paid. OPRA can punish the employer, but cannot make good the problem. That is why the clause is drafted in this way.
    The money is due to the scheme and in our view an employer should be required, if other methods have failed and the trustees have failed, to pay what is owed. This power helps to keep intact the pension promise which the employer makes to the employees. That is really very important. We are making good a problem that OPRA has recognised.
    The noble Lord is absolutely right to point out that the regulator will be standing in the shoes of the trustees but, where trustees have failed or have been unable to rectify the problem, the regulator will now have the powers to do so. I hope that, with my explanation, the noble Lord will agree that the clause should stand part of the Bill.
    Lord SkelmersdaleI understand all that, but my real question was: are the powers sufficient? As I read the clause, the regulator can do only what the trustees can do and have already failed to do, which is why they need to bring in the regulator in the first place. Does
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    the regulator need extra powers? Again, if the noble Baroness would like to consider the point, I shall be happy with that.
    Baroness Hollis of HeighamI shall make a final point, one that I meant to make in my original remarks. Obviously it is the case that where you have decent, law-abiding, upright trustees, there may be an issue whereby we need to look at what powers by regulation may be required by the regulator. But the problem we are addressing is one that often arises in smaller companies, where the trustee is the employer himself. You are trying to ask the person whose default you are seeking to remedy to act against their own interest. That is why we need this power.
    If we need to go beyond this point—and the noble Lord may well be right—after the Bill has received parliamentary consent, we shall discuss with industry the powers to be given by regulation. If the noble Lord is right and the powers here do need to be strengthened, I am sure that we shall take his point on board.
    Clause 18 agreed to.
    Baroness Hollis of Heighammoved Amendments Nos. 49 to 52:
    After Clause 18, insert the following new clause—

    PENSION LIBERATION: INTERPRETATIO
    In this section and sections (Pension liberation: court's power to order restitution), (Pension liberation: restraining orders) and (Pension liberation: repatriation orders)—

    "pension scheme" means an occupational pension scheme or a personal pension scheme,

    "deposit-taker" has the meaning given by subsections (8A) and (8B) of section 49 of the Pensions Act 1995 (c. 26), except that, for the purposes of this definition, subsection (8A)(c) of that section has effect with the omission of the words from "or" to the end,

    references to money liberated from a pension scheme are to be read in accordance with subsection (2),

    "liberated member", in relation to money liberated from a pension scheme, means the member of the pension scheme who is referred to in subsection (2)(a), and

    "restraining order" means a restraining order under section (Pension liberation: restraining orders).

    Money is to be taken to have been liberated from a pension scheme if—

    the money directly or indirectly represents an amount that, in respect of accrued rights of a member of a pension scheme, has been transferred out of the scheme in pursuance of—

    a relevant statutory provision, or

    a provision of the applicable rules, other than a relevant statutory provision,

    the trustees or managers of the scheme transferred the amount out of the scheme on the basis that a third party ("the liberator") would secure that the amount was used in an authorised way,

    the amount has not been used in an authorised way, and

    the liberator has not secured, and is not likely to secure, that the amount will be used in an authorised way.

    The following are "relevant statutory provisions" for the purposes of subsection (2)—

    GC 185

    section 94(1)(a), (aa) or (b) of the Pension Schemes Act 1993 (c. 48) (right to cash equivalent under Chapter 4 of Part 4 of that Act);

    section 101AB(1)(a) of that Act (right to cash transfer sum under Chapter 5 of Part 4 of that Act);

    section 101F(1) of that Act (right to cash equivalent of pension credit benefit).

    In subsection (2) "authorised way" means—

    where the amount concerned is transferred out of the scheme in pursuance of a provision mentioned in subsection (3)(a), a way specified in subsection (2) or, as the case may be, subsection (3) of section 95 of the Pension Schemes Act 1993 (c. 48);

    where that amount is transferred out in pursuance of the provision mentioned in subsection (3)(b), a way specified in section 101AE(2) of that Act;

    where that amount is transferred out in pursuance of the provision mentioned in subsection (3)(c), a way specified in subsection (2) or, as the case may be, subsection (3) of section 101F of that Act;

    where that amount is transferred out in pursuance of a provision of the kind mentioned in subsection (2)(a)(ii), a way that is authorised by the applicable rules for amounts transferred out in pursuance of that provision.

    In this section "the applicable rules" has the same meaning as, in the case of the pension scheme concerned, that expression has in section 94 of the Pension Schemes Act 1993 (c. 48)."

    After Clause 18, insert the following new clause—

    PENSION LIBERATION: COURT'S POWER TO ORDER RESTITUTION
    This section applies where money has been liberated from a pension scheme.

    In this section "recoverable property" means (subject to subsection (3))—

    the money or any of it, or

    property (of any kind and wherever situated) that, directly or indirectly, represents any of the money.

    Where a person acquires the beneficial interest in recoverable property in good faith, for value and without notice that the property is, or (as the case may be) represents, money liberated from a pension scheme—

    the property ceases to be recoverable property, and

    no property that subsequently represents it is recoverable property.

    The court, on the application of the Regulator, may make such order as the court thinks just and convenient for the purpose of securing that recoverable property, or money representing its value or proceeds of its sale, is transferred—

    towards a pension scheme,

    towards an annuity or insurance policy, or

    to the liberated member.

    An order under subsection (4) may (in particular) direct a person who holds recoverable property, or has any degree of control over recoverable property, to take steps for the purpose mentioned in that subsection.

    Where the court makes an order under paragraph (a) of subsection (4), it may by order direct the trustees or managers of the scheme referred to in that paragraph—

    to take steps for the purpose mentioned in that subsection;

    to apply the property or money transferred, in such manner as the court may direct, for the purpose of providing benefits under that scheme to or in respect of the liberated member.

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    Regulations may modify any of the provisions of the Pension Schemes Act 1993 (c. 48) as it applies in relation to cases where an order is made under subsection (6).

    The jurisdiction conferred by this section is exercisable by the High Court or the Court of Session.

    The generality of the jurisdiction conferred by section 17 is not to be taken to be prejudiced by this section.

    The generality of the jurisdiction conferred by this section is not to be taken to be prejudiced by section (Pension liberation: repatriation orders)."

    After Clause 18, insert the following new clause—

    PENSION LIBERATION: RESTRAINING ORDERS
    The Regulator may make a restraining order in relation to an account with a deposit taker if—

    it is satisfied that the account contains money which has been liberated from a pension scheme,

    it is satisfied that the account is held by or on behalf of—

    the liberator, or

    a person who has to, or in practice is likely to, ensure that the account is operated in accordance with the liberator's directions, and

    the order is made pending consideration being given to the making of one or more repatriation orders in relation to the account under section (Pension liberation: repatriation orders).

    A restraining order is an order directing that no credit or debit of any amount may be made to the account concerned ("the restrained account") during the period for which the order has effect.

    A restraining order must—

    specify the name of the deposit taker in respect of which it is made,

    identify the account in respect of which it is made, and

    contain such other information as may be prescribed.

    A restraining order—

    takes effect when the deposit taker concerned is notified by the Regulator of the making of the order, and

    (subject to subsection (7)) ceases to have effect through expiry of time at the end of the six months beginning with the day when it is made.

    The Regulator may, at a time when a restraining order has effect, make an order extending (or further extending) the restraining order.

    An order under subsection (5) (an "extension order") takes effect—

    when the deposit taker concerned is notified by the Regulator of the making of the order, but

    only if notification under paragraph (a) occurs at a time when the restraining order concerned has effect.

    Where an extension order takes effect—

    the restraining order concerned does not cease to have effect through expiry of time until the end of the six months beginning with the time when it would have ceased to have effect through expiry of time had it not been extended, but

    for so long as the extension order has effect, no further extension order can take effect before that time in relation to the restraining order.

    A restraining order does not prevent the crediting to the restrained account of an amount representing interest payable by the deposit taker on any amount which is, or has been, in the account.

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    Where a restraining order has effect, the deposit taker must return to the payer any money credited to the restrained account in breach of the order.

    Where a restraining order has effect, the Regulator may, on an application made by or with the consent of the person by whom the restrained account is held, by order permit a payment specified in the order to be made out of the account if the Regulator is satisfied—

    that the payment will be made for the purpose of enabling—

    any individual to meet his reasonable living expenses, or

    any person to carry on a trade, business, profession or occupation,

    that the beneficial interest in the money out of which the payment will be made belongs—

    to the individual, or person, concerned, or

    to a person who consents to the making of the payment, and

    that the money out of which the payment will be made is not money liberated from a pension scheme.

    Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a deposit taker who, without reasonable excuse, fails to comply with any obligation imposed by a restraining order."

    After Clause 18, insert the following new clause—

    PENSION LIBERATION: REPATRIATION ORDERS
    Subsections (2) and (3) apply where—

    a restraining order has effect, and

    the Regulator is satisfied that the restrained account contains an amount of money liberated from a pension scheme.

    The Regulator may by order—

    direct the deposit taker concerned to pay from the account a sum not exceeding that amount—

    towards a pension scheme,

    towards an annuity or insurance policy, or

    to the liberated member, and

    where it makes an order under paragraph (a)(i), direct the trustees or managers of the scheme to apply the sum, in such manner as the Regulator may direct, for the purpose of providing benefits under the scheme to or in respect of the liberated member.

    If it appears to the Regulator, on taking an overall view of transactions taking place before the restraining order was made, that there are two or more individuals each of whom is a person who is or may be the liberated member in relation to some of the money, the Regulator may determine the sums to be paid from the restrained account under subsection (2) on any basis that appears to the Regulator to be just and reasonable.

    Regulations may modify any of the provisions of the Pension Schemes Act 1993 (c. 48) as it applies in relation to cases where an order is made under subsection (2)(b).

    Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a deposit taker who, without reasonable excuse, fails to comply with a direction given to him under subsection (2)(a).

    If the trustees or managers of a pension scheme fail to comply with a direction given to them under subsection (2)(b), that section applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.

    In this section "restrained account" has the meaning given by section (Pension liberation: restraining orders)."

    On Question, amendments agreed to.
    Clause 19 agreed to.
    Clause 20 [Freezing orders]:
    Lord Skelmersdale Lord Skelmersdale moved Amendment No. 53:
    Page 12, line 10, leave out "freezing" and insert "risk"
    The noble Lordsaid: This time I have done a personal naughty, which is to seek to leave out the word "freezing" from as many places as I could find in the next few clauses and to replace it with the word "risk". I do so because I am not sure that these orders really are freezing; that is, locking the situation in ice. I say that because in Clause 21(2), we find that a freezing order does not, to use the draftsman's thinking, lock the scheme in ice at all because it states that a freezing order would not prevent any increase in a benefit from being accrued. The clause also appears to say elsewhere that benefits in payment may continue to be paid.
    The order is an emergency procedure, and I understand why the regulator needs it. However, I would rather it was called something else. I am not particularly stuck on the word "risk"; I could cope with "emergency" or anything else. I am not sure that we can describe it as a "freezing" order. I beg to move.
    Lord BorrieIt is an odd series of amendments. The word "risk" is vital: it is the reason for the order. It is the risk to members' interests that moves the regulator to make a freezing order.
    There is a certain simplification about using a single word. I think that the word "freezing" gives the gist of what the order does, even if it does not cover it entirely, as the noble Lord, Lord Skelmersdale, rightly pointed out. There are one or two uses of "may", rather than "must" and so on, but the term is as near to a convenient, short-form phrase as one could get. I certainly do not think that "risk" is better.
    Lord LucasIf the fund is not quite frozen, we could call it a slush fund.
    Baroness Hollis of HeighamAre there any more offerings? I am sure that they will be gratefully received, reviewed and discarded.
    The clause provides for a power to freeze an occupational pension scheme. Basically, it is a pause button. At the moment, OPRA does not have such a power; all it has is the power to wind up a scheme, which is a draconian measure. Freezing a scheme is a less drastic option, and we hope that, as a result, we will be able to reduce the number of schemes that the regulator has to wind up. There is a power to freeze a scheme for up to six months.
    We think that the name "freezing order" is appropriate, as my noble friend Lord Borrie said. The name "risk order" is not helpful. It does not describe the effect of the order, merely the context in which the order is made. It may suggest that the scheme is at risk and that the order puts the scheme at risk, when the purpose of the order is merely to pause the scheme to ascertain whether it should continue or be wound up. That does not necessarily equate to risk.

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    There are no minimum requirements for a freezing order. The rest are, as the noble Lord, Lord Skelmersdale, said, discretionary powers that the regulator can add as appropriate. There has been widespread support for the proposal as something that will provide a breather so that it can be decided whether it is possible to keep the scheme going without the company toppling over into insolvency or facing some of the dilemmas that go on behind the scenes. We think that the word is appropriate and that everybody will understand what a freeze is; we live in the video era. To use the word "risk" is to confuse—I refer to the debate the day before yesterday—the target with the objective.
    Lord SkelmersdaleI am probably grateful to the Minister. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendments Nos. 54 to 60 not moved.]
    Clause 20 agreed to.
    Clause 21 [Consequences of freezing order]:
    [Amendments Nos. 61 to 65 not moved.]
    Baroness Hollis of Heighammoved Amendment No. 66:
    Page 14, line 35, leave out from "prevent" to end of line 37 and insert"—

    giving effect to a pension sharing order or provision, or

    giving effect to a pension earmarking order in a case where—

    the order requires a payment to be made if a payment in respect of any benefits under the scheme becomes due to a person, and

    a direction under section 20(4)(d) or (e) does not prevent the payment becoming due."

    The noble Baroness said: In moving Amendment No. 66, I shall speak also to Amendment No. 68.
    Clause 21 deals with the consequences of a freezing order on a scheme. Amendment No. 66 is required because pension-sharing orders and earmarking orders work in different ways. I shall explain the difference between a pension-earmarking and a pension-sharing order. With a pension-sharing order, we take the value of the asset. According to how someone decides to apportion that matrimonial property on divorce, it may offer a clean start sum. Earmarking tends to be an attachment at the point of retiring so that a portion of the income flows after retirement. Very broadly speaking, that is the situation.
    It is therefore necessary to make a distinction legally between these two because they come under different pieces of legislation. Indeed, many of my noble friends were involved when we tried to get pension sharing included in the family law legislation. When we could not achieve that, we got family law included in a Pensions Bill. Thanks to Lady Seear and Lady Young we actually succeeded. It was one of the triumphs of the women's network in the Lords against all-comers.
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    We need to make the relevant distinction for freezing purposes. The policy is that freezing orders should not interfere with the trustees' or managers' obligations under a pension-sharing order which has been made by the courts. This does not force the trustees or managers to make a transfer payment in respect of a pension-sharing order—the trustees or managers still have the statutory right to apply to the regulator under the Welfare Reform and Pensions Act 1999 and subsequent legislation to ensure that there is an extension of time in which to pay the pension credit.
    The trustees could apply for such an extension where paying out the pension credit would adversely affect the benefits of the generality of the members. If, for example, there were only four members and two of them were the employer and his spouse and she had been acting as the company secretary and that took out a huge chunk, that might deleteriously affect the other two members of the scheme who might be siblings or whatever.
    Clause 21(5) merely confirms that the freezing order itself does not prevent the trustees complying with the court order. To have a blanket prohibition would be unnecessarily limiting. The money need not be paid out, but if the trustees think that it can be done we should respect the court order and the parallel activity of matrimonial proceedings. With that rather abbreviated explanation, I hope that the Committee will accept what we are seeking to do. I beg to move.
    4.30 p.m.
    Lord SkelmersdaleI have a very quick question. Paragraph (b)(ii) of Amendment No. 66 states that,
    "a direction under section 20(4)(d) or (e) does not prevent the payment becoming due".
    I understand that, but could it prevent the payment being paid, which is rather different?
    Baroness Hollis of HeighamYes. I hope that I said that. It can be paid. In other words, the presumption is that the court order will be respected. However, if in so doing the scheme is heavily top-sliced of its resources so that other members, perhaps of a small family company, would be deleteriously affected, it could come within the framework of a freezing order. One can make the decision that the court order proceeds in the usual way. However, if that has a deleterious effect on other members of the scheme, it is caught in the freezing activity.
    On Question, amendment agreed to.
    [Amendment No. 67 not moved.]
    Baroness Hollis of Heighammoved Amendment No. 68:
    Page 15, line 15, after "20(4)(f)" insert, "(g)"
    On Question, amendment agreed to.
    [Amendments Nos. 69 and 70 not moved.]
    Clause 21 agreed to.
    Clause 22 [Period of effect etc of freezing order]:
    [Amendment No. 71 not moved.]

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    Clause 22 agreed to.
    Clause 23 [Validation of action in contravention of freezing order]:
    [Amendment No. 72 not moved.]
    Clause 23 agreed to.
    Clause 24 [Effect of determination to wind up scheme on freezing order]:
    [Amendments Nos. 73 and 74 not moved.]
    Clause 24 agreed to.
    Clause 25 [Effect of winding up order on freezing order]:
    [Amendments Nos. 75 to 77 not moved.]
    Clause 25 agreed to.
    Clause 26 [Effect of assessment period under Part 2 on freezing order]:
    [Amendment No. 78 not moved]
    Clause 26 agreed to.
    Clause 27 [Power to give a direction where freezing order ceases to have effect]:
    [Amendments Nos. 79 to 83 not moved.]
    Clause 27 agreed to.
    Clause 28 [Notification of trustees, managers, employers and members]:
    [Amendments Nos. 84 to 86 not moved.]
    Lord Lucasmoved Amendment No. 87:
    Page 18, line 25, at end insert "and
    (c) the scheme auditor and scheme actuary,"
    The noble Lord said: I beg to move Amendment No. 87. Why not?
    Baroness Hollis of HeighamThat is a charming way to move an amendment. Giving the noble Lord the benefit of the doubt, I assume that he must think that the measure is so overwhelmingly reasonable that no explanation is needed, in which case I am surprised that he did not seek to persuade me of his case. Alternatively, he is so convinced of the amendment's weakness that he thinks that further exposing it would not benefit his cause. I do not know which of those two it is.
    Lord LucasI did not wish to delay the Committee longer than it ought to be delayed.
    Baroness Hollis of HeighamThe way to do that is not to move the amendment at all rather than moving it and sitting down. I would like to know what concerns the noble Lord. I presumed, in my most courteous style, that I would have a full speech directed at me, and I am happy to give a reply. It may answer the points, and, if not, perhaps we can continue the discussion more conversationally.
    Clause 28 introduces the mechanism whereby the employer, trustees and the members are informed about any order made under the freezing provisions imposed on the scheme. We propose that the regulator informs the trustees or managers of the scheme and the
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    employer as soon as is reasonably practicable of the effect of any orders made under the freezing provisions.
    This requirement is in addition to the obligation on the regulator to inform all directly affected parties of any order it makes under Clauses 90 and 92, whereby the regulator must send out either a warning notice or a determination notice to all directly affected parties.
    The amendment proposes extending the regulator's duty so that it informs the scheme actuary and the scheme auditor of a freezing order, irrespective of whether the order has a direct effect on their work and duties in relation to the scheme. The general duty to keep all advisers, which includes a wider class than auditors and actuaries, such as lawyers and administrators, informed of the circumstances of the scheme, should clearly rest with the trustees of the scheme as they have stewardship and responsibility for the freezing order and the scheme.
    If the freezing order directly affected the work and duties of either the scheme actuary or the scheme auditor, the regulator would already be under an obligation to inform them under Clause 90(2)(a), if the freezing order was made under the standard procedure, or Clause 92(2)(a), if made under the special procedure. We think, therefore, under those circumstances, where it affects their work, they will already be notified under the Bill. We therefore think that it is unnecessary and inappropriate to put this additional duty on the regulator in a more general way. I could go on, but I hope, on that basis, that the noble Lord, Lord Lucas, will feel able to withdraw his amendment.
    Lord HigginsI thought that my noble friend was right in moving this amendment very briefly, since its intention seemed pretty obvious. I did not quite catch the reference which the noble Baroness made to an earlier clause. I think it was Clause 90(2)(a).
    Baroness Hollis of HeighamYes, it was Clauses 90(2)(a) and 92(2)(a), on page 63 of Volume I of the Bill.
    Lord HigginsI think I have it. We are, to some extent, dealing with schemes which are not being properly organised with regard to both the company concerned and the trustees. As the noble Baroness pointed out earlier, in some small schemes, the division between those two sets of responsibilities may be somewhat vague. I see that she is indicating assent. As the regulator has to make these notifications as soon as reasonably practicable, I should have thought that he should also inform the auditor and the actuary, since they both have very important roles to play in the operation of a scheme of the kind which I have just described.
    I should have thought it was advantageous for the auditor and the actuary to be informed by the regulator the moment this kind of thing was being done—otherwise the company or the trustees might not inform them for some while, or not at all. However, as the other clause makes the same

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    provision, as the noble Baroness said, the amendment would not be necessary. That the auditors and the actuary should be informed as soon as practicable seems an admirably simple amendment.
    Baroness Hollis of HeighamCould I suggest that the noble Lords, Lord Higgins and Lord Lucas, look at Clauses 90 and 92, which deal with situations in which the actuary has a need to know and should have a right to know? In those circumstances the auditors and actuaries would be directly affected and therefore notified. The noble Lord's amendment would imply that where they are not directly affected they would still be notified. We simply believe that that is unnecessary.
    If Members opposite feel that on reflection Clause 90—and not Clause 92—does not cover all the circumstances and care to write to me, I shall look at the matter again.
    Lord Oakeshott of Seagrove BayMethinks the noble Lady doth protest too much here. I cannot for the life of me see how it would be inappropriate—her word—to tell the scheme auditor and the scheme actuary that this order was being carried out. Anyone who knows how things work, knows that that is palpable nonsense. It may be unnecessary but why be so pedantic about it? It is a perfectly reasonable thing to ask, and I cannot see any reason not to include it.
    Baroness Hollis of HeighamThe provision is already covered by Clauses 92(2)(a) and 90(2)(a).
    Noble LordsNo, it is not.
    Lord SkelmersdaleWith great respect, Clause 90(2)(a) states that,
    "the giving of notice to such persons as it appears to the Regulator would be directly affected".
    It may not be auditors at all. That is for the regulator's judgment. He might decide something entirely different. So the matter is not covered.
    Baroness Hollis of HeighamI do not want to make heavy weather of the issue.
    Lord Oakeshott of Seagrove BayYou are.
    Baroness Hollis of HeighamHeavy weather seems to consist of refusing or agreeing to an amendment moved by the Opposition. I have heard nothing to tell me that Clauses 90 and 92 will not cover the situation where it is right that the actuary or the auditor should be informed. I invite the noble Lord to write to me with the circumstance where that may be the case. As I said, if there are cases where it is in my view appropriate that they should be informed, which are not covered by Clauses 90 and 92, I shall be very happy to look at the matter again.
    So far no one has produced a single example, despite the noise from the other side, of where that might be the case. There may be a case; I do not know. Noble Lords have not made that point but merely want the words put into the Bill. It is not my job to take in extra
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    words unless they have a weight that strengthens the Bill which would otherwise be missing. That, I would suggest to the Committee, has not yet been established.
    Lord HigginsThere is no need to write to the noble Baroness; we are making the point now. It is even quicker than sending an e-mail.
    Baroness Hollis of HeighamI want an example where Clauses 90 and 92 will not cover the situation.
    Lord HigginsI sought to give an example. The noble Lord, Lord Oakeshott, made the point that in Clause 90(2)(a) and so on, the matter is left to the discretion of the regulator. Surely it should be absolutely clear to the regulator not that he should decide whether or not to tell the auditor and the actuary, but whether he should be obliged to do so. They need to know, and for the reasons I gave by way of example earlier, they may not know or may not know in time. That is why it is more appropriate in this clause because of the term "as soon as reasonably practical" than it is at Clause 90.
    I would hope that the noble Baroness would not need a letter if she would just say that she will look at the issue between now and Report.
    Lord Oakeshott of Seagrove BayI invite the noble Baroness with the full resources she has to write to us to set out a situation where it is inappropriate—her word—to notify the scheme auditor and the scheme actuary.
    Baroness Hollis of HeighamThis applies to a freezing order. Do noble Lords propose that the same should apply to all other clauses exercising this power by the regulator?
    Lord Oakeshott of Seagrove BayWrite to us on this one.
    Baroness Hollis of HeighamThe point is that the freezing order contains an array of powers for the regulator to deal with the trustees. Third party notices, improvement notices and restitution notices were to be inserted into the freezing order. I do not know; is it proposed that the same thing should apply to all of them? In which case, perhaps the Committee will decide under what circumstances that should be proposed.
    At the moment noble Lords have singled out only one power to be exercised by the regulator in which he must notify the scheme auditor and actuary. In a situation of such gravity where the issue is likely to be involved with a freezing order, it seems to me the matter is covered by Clauses 90 and 92. One could even argue that there may be a strong case for exercising powers other than the freezing order where Clauses 90 and 92 may not come into effect. As I say, I invite noble Lords opposite to write to me, and I will be perfectly happy if there seems to be a good case to consider the matter further. I have to say that I have not heard one from the evidence today.
    4.45 p.m.
    Lord Hunt of WirralPerhaps I may intervene as there is an amendment in my name to the same effect. I have sat down with the Society of Turnaround Professionals, R3, which is the Association of Business Recovery Professionals, and with the CBI to talk through the practical effects of what we are debating. The freezing order is a particularly key moment. There is a need for what I would describe, and have had described to me, as key professionals who, particularly in the case of actuaries, are often closely involved in the affairs of a scheme on a regular basis.
    They have made the point to me that this is a practical amendment which they believe is necessary to ensure that those involved in the affairs of a scheme on a regular basis are directly notified in a timely way. If the whole system is to work, certainly the professionals regard this as a very important amendment.
    As I understand the position, those professionals have been to see the Minister's officials to explain matters and to give examples. If the Minister looks at the transcript of the meetings that have been held, I do not think that she will conclude that there is a need for any further written evidence. All that is now required is for her and her colleagues to consider very carefully the points made in this debate and then to respond to them.
    Lord LucasI am very grateful to all those who have spoken. Clearly, we shall have an opportunity to pursue this matter between stages—maybe at the next stage. For now, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 28 agreed to.
    Clause 29 [Sections 20 to 28: supplementary]:
    Baroness Turner of Camdenmoved Amendment No. 89:
    Page 18, line 40, at beginning insert "Subject to subsection (3),"
    The noble Baroness said: In moving Amendment No. 89, I shall speak also to Amendment No. 91. Amendment No. 89 is really a paving amendment for Amendment No. 91.
    We debated freezing orders a little earlier, but there seems no doubt that they will be considered by the regulator only if he is concerned that there is a risk to members' interests. Clause 20 states that a freezing order can be made if the regulator is satisfied that,
    "it is necessary to make the freezing order in order to protect the interests of the generality of the members of the scheme".
    The idea of Amendment No. 91 is to ensure that there are arrangements in the Bill which specify that there must be consultation before the orders are made. Indeed, as we know from our debates on Second Reading, the Government have been quite happy to arrange for consultation in various parts of the Bill—with organisations representing membership interests, and so on—and we applaud that.
    The aim of the amendment is to ensure that if a change of this kind is contemplated by the regulator, there should be an obligation upon the regulator to
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    consult any trade union recognised by the employers in relation to the scheme or, if no trade union is recognised, such other person or organisation whom the regulator believes is representative of the interests of the members and former members of the scheme.
    That seems to me and, I think, to my noble friends to be entirely reasonable. I hope, therefore, that the Minister will feel inclined to accept, if not the wording of the amendment, at least the principle of what we are trying to achieve. I beg to move.
    Lord SkelmersdaleAgain, I shall be very brief. I am sure that it is not right to allow the regulator to issue the freezing order off his own bat without consulting anyone. I certainly agree with the noble Baroness, Lady Turner. Surely it would be far better for the administration of pensions regulation if the regulator came clean and told scheme managers to get their house in order otherwise he will use his emergency powers. It cannot be such an emergency in many cases. I accept that that will sometimes be the case, but surely not always.
    Baroness Hollis of HeighamThe noble Lord, Lord Skelmersdale, has put his finger on the point. To reach the stage of a freezing order, the regulatory system must believe that the scheme is seriously at risk. It is our experience—noble Lords will be aware of this—that when a scheme is at risk there is sometimes a quick winding-up sale by directors who try to extract as much as they can, thus reducing the assets available for other members. Despite what the noble Lord has just said, freezing orders—in particular under the special procedure whereby they can be invoked at great speed; that is, in as little as 24 hours—can be absolutely essential if resources are not be lost by being spirited away to, say, Luxembourg, Lichtenstein or another offshore account. That is why speed is crucial here.
    We believe that freezing orders are very likely to be made under the special procedure set out in Clause 92 because it is often imperative that they are made quickly and can take immediate effect. For the most part they would be needed at the end of a long process rather than something applied to a scheme out of the blue. By that point we would be trying to ensure that the money is not lost to the fund. Where the special procedure is used, the regulator will undertake a compulsory review of the decision to make the order as soon as practicable under Clause 93. All directly affected parties will be able to make representations at that review, and the regulator will be able to vary, amend or revoke any order it has made. Further reference could then be made to the Pensions Regulator Tribunal under Clause 97.
    The freezing order is put in place first because speed is of the essence. Consultation is then undertaken, through to a right to appeal to the Determinations Panel and so forth subsequent to the order. If it is not done that way, and if it concerned a large scheme in which many members had to be notified, key assets could be lost. That is the point of the provision. We are not trying to exclude consultation but to make sure

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    that, I am afraid, in special, emergency situations, consultation should follow rather than precede the freezing order, otherwise the order would lose a lot of its effectiveness.
    Baroness Dean of Thornton-le-FyldeI hear what my noble friend says and it sounds entirely reasonable. Although I have not tabled an amendment, I am somewhat concerned about subsection (3) which states:
    "The Regulator may by order direct the trustees … to notify—

    all the members of the scheme, or

    the members of the scheme specified in the order".

    At the moment there is no specific requirement for the regulator to direct the trustees to tell the members of the scheme. A freezing order could be drawn up without some of the employees knowing what had happened to their own investment, their pension fund. I think that the intention behind Amendment No. 89 was to bridge that gap, although I do not know.
    I understand the point about speed because the instances mentioned by my noble friend are not just hypothetical examples or anecdotal evidence; they are factual. Personally, I accept what my noble friend has said. However, it may be necessary to look again at subsection (3), which we have not done today. Perhaps we can return to it at a later stage.
    Baroness Hollis of HeighamMy noble friend is absolutely right. The question to ask is: what is the point of a freezing order? The order activates a pause button by which we hope to keep a scheme solvent and afloat. But it really is inconceivable that the regulator could turn such a scheme around without consultation with the members, employers and trustees.
    Although the word used is "may"—whether it should be "must" is a point that could be argued—the scenario envisaged by my noble friend seems quite inconceivable. Both she and my other noble friend Lady Turner have recognised that speed is of the essence. There is no attempt to exclude consultation here, but it should follow the freezing order, which could then be revoked or amended as necessary, or a way through found so that the scheme does not wind up and then end up applying to the pension protection fund, but can be refloated, perhaps by considering different accrual rates or whatever may be appropriate. However, none of that can be done without the consent of all parties. Consultation will click in as soon as the order is reviewed.
    I think that this will work well, but if noble Lords want to query the wording, I shall be perfectly happy to look at it again.
    Baroness Turner of CamdenI thank my noble friend for that explanation. Of course, we understand that this is essentially an emergency procedure and that it may be necessary to move very quickly in order to safeguard the assets for members. That, we understand. I also support what my noble friend Lady Dean said about our concern that, in some circumstances, although perhaps not too often, a freezing order could be placed on the scheme
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    without the members knowing that it was happening. Because of that, we want to look at this matter again to see whether it would be a good idea to return with our own wording—perhaps relating to a different part of Clause 28—in order to cover what we see as a lacuna in the Bill. We are concerned to ensure that members know what is going on, particularly if it involves something such as a freezing order, which is desperately important. In the mean time, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Skelmersdalemoved Amendment No. 90:
    Page 18, line 42, leave out "law, or"
    The noble Lord said: Again, I am not sure whether the amendment is correctly drafted, but the whole point is that the draftsman has decided—presumably on the department's policy grounds—that any enactment or rule of law can be ignored for these purposes. That is such a draconian power that I believe the Minister should justify it with examples, and I invite her to do just that. I beg to move.
    Lord BorrieThere must be something wrong with the drafting. Perhaps it was intended to leave out the words "rule of law"; I do not know. But that would not make much sense either because this is a fairly common piece of drafting that is meant to cover any enactment or statutory rules of law, and common law rules or any rule of the scheme. I am sure that the Minister will have examples of precedents in the field, but unfortunately the amendment is not properly drafted and must be rejected on that ground.
    Lord SkelmersdaleI accept that, and of course the amendment will be rejected, whether we all agree with it or not, because we are in Grand Committee and the Minister has rather more power over us than usual. What I intended is clear. I am sure that the noble Baroness got the point because she was poised to answer my question and justify paragraph (a). I might have moved an amendment to leave out paragraph (a) in its entirety, and therefore I do not think that there is a problem. What worries me is that any piece of legislation can be disapplied for these purposes and I want to know why.
    Baroness Hollis of HeighamThat is a perfectly legitimate point. I assure noble Lords that we are not talking about habeas corpus or anything of that kind. As my noble friend Lord Borrie said, when one freezes a scheme and switches on the pause button, one is creating an unusual situation in which trustees or managers may be prevented from carrying out their normal functions and duties, such as paying for benefits, making transfers or accepting contributions in respect of benefit accrual. However, in that situation it is essential that the freezing order can override normal procedural rules and conflicting legislative requirements so that the regulator can act quickly and effectively to protect the scheme members and their benefits. It is an override clause relating to the normal functions of trustees, laid down by statute and case

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    law, with regard to taking in payments and paying out benefits. I suspect that, if we cannot do that, we cannot have a freezing order.
    5 p.m.
    Lord SkelmersdaleI take the point, but the noble Baroness has just been talking about pensions law, not the law in general. It may be that when the draftsman considers this again, he may think, as I do, that it is potentially very wide. The noble Baroness said that we were not talking about habeas corpus, but the Bill does not say so.
    Baroness Hollis of HeighamThat is true.
    Lord SkelmersdaleI beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 91 not moved.]
    Clause 29 agreed to.
    Clauses 30 to 34 agreed to.
    Clause 35 [Contribution notices where avoidance of employer debt]:
    Lord Hunt of Wirralmoved Amendment No. 92:
    Page 23, line 41, at end insert—
    "() A contribution notice may not be served on a person, or parties connected or associated with him who are not otherwise connected with the employer, who is acting as an insolvency practitioner in relation to a company or individual as defined in section 388 of the Insolvency Act 1986 (c. 45) (meaning of "act as insolvency practitioner") without leave of the court."
    The noble Lord said: This is an important part of the Bill and has caused substantial concern in some important organisations. In moving the amendment, I must say that I am not sure why the Committee has decided to hold the debate in a sauna. The talk of a freezing order made me jealous.
    (Lord Carter)I think that I have the authority to allow Members to take off their jackets if they so wish. I am not sure how that applies to the ladies, but I authorise the gentlemen to take off their jacket.
    Lord HigginsIn another place I always objected strongly to Members' taking off their jackets. We were assured that the windows needed to be closed because the air conditioning had been put on and would not work if the windows were open. As the air conditioning is quite clearly not working, there is a strong case for opening the windows—those down at the far end of the room, at any rate.
    The Deputy Chairman of Committees:We shall try that.
    Lord Hunt of Wirral:The noble Lord has a reputation for cooling things down. He never fails.
    The amendment raises the concerns of those involved in rescuing or investing in companies facing some form of difficulty—troubled companies. In particular, R3, which represents licensed insolvency practitioners, whom I mentioned a few moments ago,
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    and the Society of Turnaround Practitioners have warned that the consequences of the clauses will be to reduce the number of company business rescues.
    Although I acknowledge and pay tribute to the Minister for the extent of the consultation that has taken place on most aspects of the Bill, I understand that the bodies I have mentioned, together with some others, have not yet had the opportunity to make their views known on the clauses—hence the importance of the debate.
    The clauses are in direct conflict with the guiding principle behind the Enterprise Act 2002, which the Government enacted in order to promote and encourage business and company rescues. Several noble Lords present today participated in the debates on the Enterprise Bill. We welcomed the ability to try to turn round potentially successful businesses that were in a period of difficulty. My amendment, which is the first in a series, deals with the issue of potential personal liability for insolvency practitioners and turnaround professionals.
    The clauses dealing with contribution notices could, in the view of the professionals, impose large and uncertain liabilities on those who take on insolvency appointments or advise on turnarounds. That will almost certainly deter insolvency professionals from taking up appointments relating to troubled companies, thus depriving those companies of the opportunity to enter a formal rescue through the administration procedure or to undergo restructuring with a turnaround professional.
    The unfortunate and, I am sure, unintended consequence of the clause would be fewer rescues and more company liquidations. As I said, it would be particularly regrettable if the clauses dealing with contribution notices were to undermine the good atmosphere induced by the Enterprise Act 2002.
    This amendment seeks to exclude insolvency practitioners from being landed with a contribution notice. It is surely not right for insolvency practitioners and their associates to be potentially personally liable for actions taken in good faith, pursuant to the aims of the Enterprise Act 2002. I therefore seek to insert, on page 23, line 41, the words:
    "A contribution notice may not be served on a person, or parties connected or associated with him who are not otherwise connected with the employer, who is acting as an insolvency practitioner in relation to a company or individual as defined in section 388 of the Insolvency Act 1986 … (meaning of 'act as insolvency practitioner') without leave of the court".
    I should like to explain further. Effectively, an insolvency practitioner holding office such as that of administrator is comparable to a director. The insolvency practitioner will act in accordance with statute for the insolvency process being undergone. In the course of an administration, the insolvency practitioner's first purpose is to save the company or rescue the business.
    To achieve that goal, an insolvency practitioner may take a number of steps, including the following: selling surplus assets or income-generating assets; selling subsidiaries which may be income-generating; to effect a compromise with some or all creditors; and to

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    request that any scheme be wound up. Each of these may prevent the recovery of the whole or any part of a deficit.
    The effect of this group of clauses on an administration will be to make the rescue of a company in financial difficulties much more difficult. Why do I say that? First, where the troubled company is to be sold, the bidders are likely to discount the sale price for the uncertainty surrounding the contingent liability associated with acquiring the pension scheme, or may simply not bid at all. This drives the insolvency process towards a fire sale of assets which surely conflicts with and undermines the primary purpose of the Enterprise Act.
    Secondly, where a company wishes to enter administration to achieve a restructuring, the insolvency practitioner will be a party to the act of entering administration as he is appointed and must consent to the appointment. However, entering administration will potentially prevent the recovery of part or all of the deficit. There is therefore a contingent risk that the administrator personally will become liable for the deficit. This cannot be the intention of the legislation. I look forward to hearing from the Minister on that point in particular. The effect will be that administration will become less favoured for companies with defined benefit schemes. The alternative will be liquidation, which would result in fewer companies being rescued.
    Turnaround professionals are not quite in the same position of personal liability as insolvency practitioners who take formal appointments as administrators. Nevertheless, they face unwelcome and surely unintended exposure under the Bill. The restructuring process is likely to be affected in the following way: first, the definition of "connected" and "associated" is so wide that the technique of debt-forequity swaps will become more difficult to use as creditors seek to avoid being put in the position where they may become owners of more than one-third of voting equity, at which time they become connected for the purpose of these clauses.
    Secondly, disposal of assets and subsidiaries will become more difficult, as not only will buyers discount their price because of the uncertainty of a contingent pension liability, but also the disposal may be considered to be an act which reduces the recovery to the pension scheme. It is unlikely that this would be the primary purpose of the disposal, but it would be likely to be an inevitable outcome.
    Thirdly, the use of CVAs or Section 425 schemes outside an administration will be less easy because the pension protection fund will not be bound unless it consents, effectively giving it a "super priority" and an advantage over other creditors. It is common, so I am advised, that in restructuring and turnaround scenarios a restructuring practitioner will take appointment as a director in order to drive through the necessary corporate changes.
    As drafted, these clauses would expose turnaround directors to exactly the same likelihood and extent of liability as the pre-existing directors. Therefore, the
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    likely effect of all these factors will be to reduce the desire of insolvency practitioners and restructuring turnaround professionals to serve. That will, in turn, surely discourage corporate rescue both inside and outside an insolvency process, the net result of which will be fewer rescues and more liquidations.
    The imposition, or even the possibility of the imposition, of a substantial liability on professionals who are endeavouring to rescue any company for the benefit of its stakeholders surely will not assist the Minister and her colleagues in government in achieving the stated aim for an entrepreneurial culture. I beg to move.
    Baroness Hollis of HeighamWe have a whole series of amendments. At some point, it may be appropriate to have the bigger debate about what we call the "moral hazard" issues. I may be able to give a very brief response to the noble Lord, Lord Hunt. He may not consider it appropriate to have that debate on this amendment as it is towards the edge of some of the issues. I am in the Committee's hands on that matter.
    As the noble Lord surmised, it is, of course, not our intention to frustrate the purpose of the Enterprise Act. That is why we have worked with the Treasury, the DTI and the Insolvency Service. We have listened, and are continuing to listen, to groups such as R3, which the noble Lord mentioned. It has written to us and we have asked it to be part of the group working with us over the summer. As I say, the DTI and the Insolvency Service have been involved throughout.
    Of course, once an insolvency practitioner is involved, there is likely to be an assessment period for the scheme. That means that the scheme trustees are preparing the scheme for the possibility that the PPF board may be required to take responsibility for it. The board would have assumed the rights and powers of the scheme trustees to act as the creditor of the employer in relation to the debt.
    In the event that the action is by an insolvency practitioner appointed in relation to an associated or connected party to the employer—we may debate that later—the regulator would first have to consider whether the action had as one of its main purposes avoiding any pension liabilities rather than maximising the return for all creditors. The regulator would then have to consider whether it was reasonable to issue a contribution notice.
    I am sympathetic to the amendment. There is a point here with which we wish to engage. It is one of the many areas that we shall be looking at over the summer to see how we can allay the concerns of insolvency practitioners. As the noble Lord, Lord Hunt, said, there was no intention to "collar" them under possible scenarios in the way that he feared. I hope that with that brief reply I can re-engage in the bigger debate on moral hazard on a subsequent amendment.
    Lord HigginsI think that there is a slight dilemma regarding the order of our proceedings. I do not believe there is any doubt at all that the tone, as it were, of our proceedings tends to alter at this particular moment. There has been widespread recognition

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    outside and, I think, inside the House that the provisions of Clauses 35 to 45 create very real problems.
    As I said earlier, there is a tendency for the road to hell to be paved with good intentions. We all have good intentions. We are all absolutely convinced that the Bill should help to protect pensioners whose future in retirement would otherwise be at risk. We all want to achieve that objective. However, the clauses that we are now debating raise very real problems. My noble friend Lord Hunt of Wirral dealt with a very specific point. The noble Baroness queried at what stage we should discuss more generally the points that were made at Second Reading about moral hazard.
    I think that the noble Baroness has been reasonably forthcoming in terms of the specific amendment, but it may be that at the beginning of the next amendment we could have a more general debate on the broader issues that are of concern to us all.
    5.15 p.m.
    Baroness Dean of Thornton-le-FyldeBefore we move on, I agree with much of what was said by the noble Lord, Lord Hunt. But as I listened I became somewhat concerned that, within all he has said, we are being asked to consider the possibility of ring-fencing the contributions that have not been handed over and not have them form part of the solvency of the company. If that were part of the intention, I would have difficulties with it.
    I understand the point about personal liability and therefore making the company more attractive in order to be moved on. That is all right, but if the full burden of the debt of pension contributions not handed over is not met, members are left with the pension protection fund. That would be wrong because other companies would be subsidising those which have not paid their contributions. I enter that caveat, but obviously I look forward to the wider debate.
    Lord Oakeshott of Seagrove BayI also agree and I look forward to the general debate that is to be held shortly. However, I have one question to put to the noble Lord, Lord Hunt. I understand many of his points about personal responsibility for insolvency practitioners and so on, but the implication of his amendment is that it is always in the interests of stakeholders, as he puts it, that a company should not be wound up, but should be rescued. However, that is not always the case. I did not hear him mention the interests of the pensioners. Situations arise where very few members of the pension scheme are still actually working in the company, and they too must be taken into account.
    I understand what the noble Lord means by the term "insolvency practitioners", but the term "turnaround directors" is a little more vague. Some of these rescue situations can go on for many years. Indeed, Mr James, the great waste chaser of the Conservative Party, has a long history of being involved in very long-running semi-rescue situations. One known as Eagle
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    Trust went on for around 10 years. One needs to be a little cautious about how long these situations can go on.
    Lord LucasIn briefly adding to this debate, I want to say three things. First, I shall not move my Amendment No. 95A because it has been covered by this debate. Secondly, one of the objectives of people undertaking restructurings is to avoid pension fund liabilities because they are likely to be very large. We shall have to face this matter head on and deal with the way that these liabilities are to be weighed against all the other liabilities of the company. The balance must be struck. To get that set out in a clear and understandable way has to be a key objective, although I agree that that will be a hard debate. Thirdly, will one of the sub-committees of the Institute of Chartered Accountants be part of the consultation to be held over the summer?
    Baroness Hollis of HeighamYes, if it wants to participate, the institute certainly can be part of the consultation. We would be happy to take that on board.
    Lord Hunt of WirralFirst, I should say to the noble Lord, Lord Oakeshott of Seagrove Bay, that I was very careful in my use of words to refer to,
    "those professionals who are endeavouring to rescue any company for the benefit of its stakeholders".
    "Stakeholders" is a very good word, one that has been used on all sides. Everyone understands what it means. It is an inclusive term that includes the interests referred to by the noble Lord as well as the interests of a number of other key individuals.
    Perhaps I may say to the noble Baroness, Lady Dean, that while I take on board the point she made, we have to find some way around this, and I look forward to the debate as we explore it. My amendment seeks to ensure that a contribution notice should not be served,
    "without leave of the court",
    so that, through the whole process, someone, somewhere starts to think about ways in which the rescue can proceed without the liquidation.
    I look forward to the debate. I understand the concerns about ring-fencing. I think that my noble friend Lord Higgins slightly gerrymandered the prose. So, it is the road to heaven that is paved with good intentions. I am not too sure because I thought it was the other place.
    A noble LordThat is hell.
    A noble BaronessIf you find out where you want to go.
    Lord Hunt of WirralIt is the first time I have heard the noble Lord use a four-letter word.
    Lord Oakeshott of Seagrove BayWhat we need is purgatory.
    Lord Hunt of WirralIn fact all we seek to do is to recognise a well founded concern on the part of pensioners. We have to find a way through.

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    I agree with my noble friend Lord Lucas that we should make sure that the composition of this group is as wide as possible. I think that the Institute of Chartered Accountants is a body that could add significantly—
    Lord LucasUs both being members of it.
    Lord Hunt of WirralYes, of course. I certainly agree. The Society of Turnaround Professionals really should be involved although it works very closely with R3. Some way to proceed must be found.
    The Minister conceded a point to me immediately on Second Reading. Indeed, I warmed to her. I regard her as a courageous Minister. I am not sure that she felt that that was a compliment at the time. I think she has been watching too much "Yes Minister". It was not meant in that sense; I just felt it was good.
    I remember when I was a Minister. I always thought, now what is behind this? What is the writing underneath what I am being asked to sign up to? But the noble Baroness did not ask at Second Reading. She immediately gave me the assurance I sought and she has done so again. That is a fine track record. I warmly applaud her for the answers she has given. In those circumstances, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Higginsmoved Amendment No. 93:
    Page 24, line 1, after "was" insert "during the five year period ending on the date when he issues the notice,"
    The noble Lord said: In the discussion a few moments ago I was not clear with the reference to hell or heaven whether the Committee was or was not purgatory; certainly we are being stewed rather than roasted. However, it is no doubt a great deal worse in the Moses Room, so we have that to be thankful for.
    The Minister has implied that perhaps a more general discussion might be appropriate, and especially so since this is one of the few amendments to attract support from all parts of the Committee.
    Clauses 35 to 45 raise very difficult questions. We are all agreed on the intention to protect pensioners' assets and ensure that they are not deprived in their retirement of their reasonable expectations. We have been flooded with a great many representations about the effects of those clauses from highly reputable institutions—the CBI, SBIs and almost every professional body one can think of.
    The list of possible unintended effects of these clauses is formidable. It includes their being likely to deter inward investment into the United Kingdom because overseas companies are not likely to undertake—particularly if they are investing in a UK subsidiary—the kind of dangers implied in some of the provisions of the Bill. As my noble friend Lord Hunt of Wirral has just pointed out, the provision will deter those normally involved in rescuing companies in trouble and enabling such companies to survive with all the implications for employment, economic growth and so on.
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    Moreover, the provision will make some investors, as they currently stand in the Bill, liable in respect of companies over which they do not exert control. That is a real problem. It creates uncertainty about individual and commercial companies' responsibilities; according to many outside, it undermines the concept of limited liability, which is the foundation of many of our business enterprises; and, more particularly, together with the operation of the levy, it deters companies from continuing, and certainly from setting up, defined benefit schemes when I think we would all agree that that is the best form of pension provision if it can be achieved. Therefore, we must try to address all those dangers, but that will not be easy to do while still achieving our own objective.
    Here in Grand Committee we are not going to vote on any of the issues. However, we, together with the outside interests, must all give very careful thought to the way in which we can improve the provisions of the Bill in order to avoid the kind of dangers to which I have referred.
    There are further problems as regards retrospection and human rights provision. That effectively brings me to the main point of the amendments that we are discussing. The basic issue throughout has been one of moral hazard. At Second Reading, we discussed whether, if the pension protection fund is levied on companies with final salary schemes generally, some companies may decide to put the burden of their pension liabilities on the fund rather than pay up themselves. Further problems also arise as to whether the company is solvent or not solvent, and so on—a similar point to the one just made by my noble friend Lord Hunt of Wirral. Therefore, this will be a fairly difficult and challenging task, but I am sure that we all wish to work together to make it work.
    The amendments that we are discussing are basically concerned with retrospection. It is suggested in the amendments that retrospection should not go too far back—that is, the regulator's power to investigate past actions should be limited to acts or failures to act that occurred no more than a stated period of time earlier.
    I understand that a similar concept already exists in relation to insolvency law and the law of limitation. It is suggested, for example, that we should have a maximum look-back period of three years. That would mean that anyone purchasing or investing in a company would be clear about the period over which he had to look back in order to ensure that he knew what he was taking on. He would also know that, after the period had elapsed, his company would be liable to receive a contribution notice only in respect of actions or inactions which occurred in that period as well as in the period during which he was in ownership.
    It has been put to me that the retrospective extent of Clause 35, which we are now debating, is probably in breach of Article 1 of the First Protocol of Part 2 of the European Convention on Human Rights, which concerns the protection of property. The noble Baroness has signed up to say that the Bill is in conformity with the convention. On previous occasions I have sought to establish who advises

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    Ministers on whether legislation is or is not in conformity. Is it the Foreign Office or departmental lawyers or is it based on the Minister's own expertise? We have never really got to the bottom of that.
    The article was considered by the European Court of Human Rights in the case of National and Provincial Building Society and Others v United Kingdom. That case was concerned with the retrospective introduction of legislation to close a loophole. The court found that, on that basis, the applicants had been aware of the Government's intentions.
    The specific problem that then arises—I am sorry that this is such a narrow debate but it is an important point—is whether the Government can show that they have announced their intention to introduce legislation in the form of Clauses 35 to 38 at any time before 27 April 2004. I doubt that they can do so. On that date Mr Wicks suggested that a clear warning was given by Andrew Smith on 11 June 2003. I think that is a very doubtful proposition. In fact, the press release of June 2003 gave no such warning and did not specifically deal with the question of whether people were adequately informed.
    5.30 p.m.
    Clearly, we shall need to take that aspect of the matter carefully into account in deciding how retrospective the legislation is going to be. The Minister herself has assured us that it will not contravene the human rights convention. I shall not go into greater detail. That is essentially the point that I wished to make regarding the leading case to which I referred.
    The Government ought to consider that if they insist upon retrospection to 11 June 2003—1 base that on Mr Andrew Smith's comments—the courts may be forced to construe Clause 35 very narrowly even in relation to future Acts, so the effects of the clause would not be what the Government intend.
    This whole retrospection proposition is a difficult one. When I was a Treasury Minister I was given a brief by my department which stated,
    "This is a drafting amendment".
    The following day I was besieged by lawyers who pointed out that I had criminalised a considerable number of people retrospectively. There is a distinction here between criminal and civil proceedings. I am not clear about that. Perhaps the noble Baroness will clarify whether the clauses with retrospective effect would bite in terms of criminal proceedings. I refer to fraud in that regard. I do not believe that Parliament has ever legislated to criminalise people retrospectively.
    Baroness Hollis of HeighamIt is a civil matter.
    Lord HigginsIt is purely civil. I am reassured by that. We need to be very careful where the line is drawn on this matter. The amendments that we have tabled seek to establish that. We shall be interested to hear the Minister's response regarding how retrospective the provision ought to be. One could simply say that
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    the retrospectivity applies from the date the Bill is enacted, but perhaps that is going too far. As I have said on previous occasions, the television does not show whether officials are nodding. However, we can see that they are not in favour of that proposition. One can almost see a ventriloquist effect appearing, if I can put it that way. However, I am sure that the noble Baroness understands these points extremely well and that their attitudes will be consistent.
    These are difficult issues. I say once again that if we are to implement this Bill and achieve the objectives we want, we shall need to deal with these specific issues very carefully indeed; otherwise, some of the dangers that I enumerated earlier will result in the game not being worth the candle. I am constantly using clichés this evening. I beg to move.
    Lord Oakeshott of Seagrove BayI shall start by discussing the specifics of this amendment and then give a little detail on our general approach to these clauses. First, we are happy to support the amendment of the noble Lord, Lord Higgins. Indeed, we both received the text from the National Association of Pension Funds and tabled the amendment independently. Clearly, we are very happy to co-operate on this topic. Without going into the details of retrospection on which the noble Lord is much more expert than I, it seems to us that a five-year period is a reasonable one in which the measure should apply. It is, as it happens, the period adopted in the United States as regards the Pension Benefit Guaranty Corporation. We believe that a five-year period is fair enough.
    To speak more generally, this is one of the two most critical parts of the Bill. We understand all the concerns that are incorporated in the amendments standing in the names of the noble Lords, Lord Higgins and Lord Skelmersdale. Equally, we have been discussing with the City, the venture capital industry and other relevant people their concerns. We have to strike a fine balance. We believe that we understand these concerns but that the balance has to be a little more towards protecting the pension fund side and a little less towards making life as easy as possible for the venture capitalists in particular.
    The very act of taking quoted companies private has been a big part of the American scene for the past few years. It is also very important in this country, as we see in the current attempt by Mr Green—or Mrs Green, because Mr Green lives in Monaco—to take over Marks & Spencer. It clearly shows the big change in risk that you get for a pension fund if a substantial quoted company with a very strong balance sheet suddenly goes private and is heavily geared.
    There is not just the risk that the company may get into difficulties. By its nature, when a company structure changes and most of the equity is taken out of a big company, the pension fund trustees will automatically have to change their investment policy straightaway. Any normal trustee would have to move to a much more cautious policy. That means straightaway that there is an extra burden on the pension fund.

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    That is why it is perfectly proper, in our view, that the trustees of WH Smith and Marks & Spencer are taking a very robust attitude on that. We need to be very conscious of such risks for pension funds. This is a pensions Bill; it is not simply a Bill to ensure that the City runs smoothly. Of course, as I said on Second Reading, it is vital that the market in small companies' corporate recovery, and so on, does not seize up.
    We believe that it is not right to take directors as far away from liability and as far down the chain of liability as is suggested in the amendments to Clause 35, which we shall discuss in more detail later. We have seen in America and, to some extent, in this country, not asset strippers so much as liability strippers. If you look at the PBGC and the great bulk of the liabilities there, which would be the same in the PPF, they are from airline, steel and chemical companies. People have come in, completely changed the structure, sold off the profitable businesses and left the liabilities—in some cases, the environmental liabilities—in the pot. That is the danger that we would have here, and we are very conscious of it.
    Finally, the venture capital industry told me that because of its concerns, it had what it described as a very encouraging meeting with the Treasury about a fortnight ago. It came away from that meeting with the distinct impression that the Government would be tabling a number of amendments to these provisions, but we have seen no sign of them. That is a great disappointment to the venture capital industry. Wherever we think the balance should be struck, we all agree that it is vital that all the players—the investors, and so on—know exactly where they stand. I am bound to say that they certainly do not know where they stand on this.
    I do not know whether people from the DWP were at the meeting, but we would be very interested to know how that impression was given, and whether, and at what stage, further government amendments may be brought forward. We have tabled some amendments to this part of the Bill but have held off tabling more because we had reason to believe that the Government would be bringing forward their own amendments, which we would be very interested to see. Those are my questions for the Minister.
    Baroness Turner of CamdenI listened with interest to the noble Lord, Lord Higgins, moving the amendment. As we have said on numerous occasions, this is a matter of striking the right balance. One of the problems experienced by most people who have looked after the interests of scheme members is how often it is found that contributions have not been collected and have not been paid. This appears to be an attempt to make it very clear that the regulator will intervene in such situations.
    The clause is absolutely clear. The regulator will intervene only if he is,
    "of the opinion that the person was a party to an act or a deliberate failure to act",
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    and the person in the relevant period was,
    "the employer in relation to the scheme … a person connected with, or an associate of, the employer, and the Regulator is of the opinion that it is reasonable to impose liability on the person to pay the sum specified in the notice".
    That is extremely clear, and certainly more so than the wording used in the amendment before the Grand Committee. The issue of contributions to schemes is touchy and difficult and these are very important clauses in the Bill.
    I am still a member of the council of OPAS. We had people writing to us complaining that contributions had been collected from them, but they were never paid over. That is very important.
    Baroness Hollis of HeighamI am very happy to pause for a moment, in the manner of a freezing order, to discuss some of the broader issues. But before we do so I want to respond to the very interesting speech made by the noble Lord, Lord Oakeshott, about what he referred to as the Treasury meeting with venture capitalists, much of which I agreed with. It was in fact a Department for Work and Pensions meeting chaired by one of the senior officials here today. She assures me that HMT was indeed present and that the department was pressed for amendments. No commitments were given on that front. But obviously, where it seems to me that a case has been well argued, we shall consider it sympathetically and see to what extent our legislation may need clarification to make our intentions clear. I cite, for example, the point about insolvency practitioners. It is completely clear to us that they should not be caught by the provisions, but if it needs to be clarified, we shall be happy to do that.
    That is the context in which I shall respond. However, before I return to the specific amendment concerning the five-year point with which I should like to finish, it may be sensible to spend a moment covering the context in which we are operating here, to which noble Lords have already alluded.
    Clause 35 is the first of four clauses to introduce a power for the Pensions Regulator to issue contribution notices which, together with the power to issue financial support directions, are designed not only to protect scheme members, but also to protect against moral hazard. Over and above collecting contributions, the contribution notice will in fact seek to make good the deficit.
    We all know that "moral hazard" is the risk that because the Pensions Protection Fund will compensate scheme members if the employer has become insolvent and the scheme is underfunded, and because of the new full buy-out debt on wind-up provisions introduced by this Government, employers could deliberately manipulate their affairs so as to slough off the responsibility for full wind-up and instead shift their pension scheme deficits to the PPF. That is the dilemma we all face, and I do not think that there is any dispute about that.

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    In the debate on 11 June 2003, the honourable Member for Havant, Mr David Willetts, most effectively described such as employers as those who,
    "shed their pension responsibilities to a different legal entity like a snake shedding its skin and emerge as a company without pensions".—[Official Report, Commons, 11/6/03; col. 685.]
    The effect of employers avoiding their liabilities in this way would be that other, responsible employers may face higher levy contributions, because they are the companies that will fund the PPF. It also puts members' benefits at risk because, as noble Lords know, under the scheme the PPF provides members with only a 90 per cent level of compensation, capped at £25,000. If we strike the wrong balance, the losers here will be the members of the scheme along with members of other schemes that are well funded and meet their liabilities, but will have to pick up this bill.
    5.45 p.m.
    So it is not just a two-way dialogue between a particular company, wanting for the sake of its entrepreneurial survival to merge with or to acquire another company; a wider stakeholder—an overused word—or a wider constituency is involved here that I am sure we all recognise.
    The protection of pension scheme members and employers who make occupational pension schemes possible has always been recognised by this Government as the nettle that has to be grasped, once the PPF is introduced. These clauses were introduced in Committee. I know that there has been debate about the detail, but the principle has been widely accepted. Mr Willetts again said on 18 May 2004:
    "we do understand the need to protect the PPF from exploitation and abuse"—[Official Report, Commons, 18/5/04; col. 902.]
    Noble Lords may have noted that some people do not believe that the clauses go far enough. Mr Webb considered that the clauses might not cover every eventuality and said in the same debate:
    "ingenious employers, accountants and—dare I say it?—even actuaries"—
    with respect to Members opposite—
    "might think of new ways of circumventing the Government's intentions … However, there should be a presumption that artificial activities, the principal or sole aim of which is to make an unnecessary claim on the PPF should be prohibited in general, rather than being prohibited individually, as there will always be others that we have not thought of".—[Official Report, Commons, 18/5/04; cols. 903 and 904.]
    On 28 May, some of the consulting companies, for example Mercer, generally agreed that the moral hazard clauses are necessary if the PPF levy cost is to be kept anywhere near the Government's target of £300 million. Without these clauses, sponsors of DB schemes could face far higher costs—PriceWaterhouseCoopers and so on.
    There is broad consent that we have to protect the PPF from artificial manipulation by which companies, so to speak, dump the pension liabilities on the weakest company in a group that they may have acquired, in turn, to offload it to the PPF. The question is how we get the balance right and distinguish between the kind of acquisition and merger
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    that takes place in good faith and legitimately so that a company, which may otherwise close, is kept going to everyone's benefit, from those devices that are artificial and seek merely to manipulate in order to dump liabilities while taking the assets on their merry way. That is the issue that we seek to address.
    Section 75 debt falls on the employer in relation to the scheme for the purposes of Section 75 of the Pensions Act 1995, particularly where that employer is part of a company group. There are a number of ways in which that route can ensure that before the scheme is wound up, the sponsoring employer becomes insolvent and a Section 75 debt is triggered. The company that is the employer in relation to the scheme is then put in a position where it cannot afford to pay the debt and eventually it ends up with the PPF. Even if the rest of the company group is fully solvent, the trustees cannot recover the debt from any other companies in the group, and scheme members will be left with what may be a very badly funded scheme.
    The actions that can be taken by company groups could include withdrawing funding for the employer company, selling off its assets, paying a large dividend to strip out any assets in the company, or transferring the employees to another company, such as a service company—we shall come to a specific amendment later on that—which then becomes the employer in relation to the scheme and which has never traded or had any assets to speak of and therefore any capacity to meet the liabilities. Such actions could occur just before the winding up of the scheme or the insolvency of the sponsoring employer, or well in advance, with a view to disguising the purpose of the action.
    I emphasise that we recognise that most company transactions and restructurings take place for perfectly legitimate business reasons, and may well be highly desirable; for example, company rescues. The Government introduced the Enterprise Act 2002 to support those rescues.
    Through the current pensions regulator, OPRA, we know that some company restructures or transactions have a main purpose of avoiding pension liabilities. We are determined to stop that. There are other means for employers to avoid their liabilities with or without the collusion of a scheme's trustees. The employer may take action artificially to increase the assets of the scheme at the time when the debt was to be calculated, so that the debt to be paid is lower. It could include persuading the trustees to buy an asset and place a higher value on it than it was really worth—such as land—or a derivative, designed to increase dramatically in value in the short term but which will fall later.
    These clauses, therefore, give the Pensions Regulator the power to require that a contribution is made into a pension scheme, where there is an act or a deliberate failure to act, the main purpose of which was to prevent the recovery of whole or part of the Section 75 debt that would keep the pension scheme viable. These clauses will be operated and enforced by the Pensions Regulator in the context of meeting his objectives.

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    I can specify the reasonable nature of the regulator's powers. He can do so only if it is reasonable. It touches, for example, on good faith issues, which no doubt we shall discuss later. It includes the degree of involvement of that person in the act of failure. There is an emphasis on the relationship that the person has. I could go into all those points in much greater detail, and later it may be right to do so.
    That is the dilemma we face. It is clear that in some cases there is deliberate manipulation—as OPRA reports, it has already started—to avoid doing what we all hope will be respected in a merger and an acquisition, which is that best efforts are made to keep a good scheme afloat and to meet the liabilities consequential on it. How we get that balance will be covered in some of the things that we shall go on to discuss.
    Finally, I turn to the point about the five-year retrospection. As I say, later we shall come to some of the other detailed points about good faith and so on. The amendments to Clause 35 seek to restrict the period within which the regulator can look at actions or failures to act, one of the main purposes of which may have been to avoid pension liabilities and to remove the limited retrospection that the Bill proposes.
    Amendment No. 93 is a backstop to the period of time at which the regulator can look, which is one of the key points that BVCA, the CBI and others have raised with us in recent weeks. It is a point that we are considering carefully for those groups. I suggest to the Committee that we return to this matter on Report and when we can consider more fully whether a time limit—and what time limit—would be appropriately introduced to the clause. I accept that companies need some degree of certainty; I accept that we must also have an eye on the practicability of how far back one can dig.
    I am genuinely open-minded as to whether this is the right way forward. I am perfectly willing to be persuaded by this. As a result, I ask the noble Lord, Lord Higgins, to withdraw the amendment at this stage. Discussions will be ongoing over the summer with the organisations that we have mentioned. We all want to get the balance right. There is no dissent anywhere in this room. On whether we have it precisely right I am open to be persuaded that we may need to make adjustments. That may mean that compensating adjustments need to be made elsewhere to ensure that we protect the situation.
    Let us explore the matter further. We certainly have not come to the end of the discussions yet. In the context of being genuinely open to listening to the arguments and to being persuaded on this matter, I ask the noble Lord, Lord Higgins, to withdraw the amendment and to return to the matter, if appropriate, on Report.
    Lord HigginsI am grateful for that response. Of course, I agree with much of what the noble Baroness has said. I am rather doubtful about her proposition
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    that actuaries come up with new ideas. In my experience, they are typically at least 20 years behind the times. I agree that when they do come up with ideas, it is often extremely dangerous, so we must be aware of that.
    The noble Baroness has been forthcoming. I entirely agree with her that there are real dangers, for example, with overseas companies. Indeed, a famous Japanese bank appears to have been in danger of reneging on its UK pension contributions. We need to take into account the international aspect of this matter.
    The noble Baroness did not reply—I shall not now ask her to reply in detail—to the point I made about the human rights clause. We do not want to legislate on Clause 35 as regards the retrospective effect, and then find that it is overturned by the courts in this country or by the European Court of Human Rights. It seems to be the case that for it not to be overturned, the terms of the statute would have to be clear at the time of the announcement. My understanding is that such clarity did not exist in this instance before 27 April 2004.
    At the moment, it does not matter enormously how far back one goes because eventually the matter shuffles forward and is covered anyway. I agree that there is a real danger of pre-emptive strikes by some companies that wish to renege. In particular, they will find that the provisions under Part 6, which the Government introduced in some panic, are not likely to be as favourable as those under the PPF. Therefore, despite Part 6, they will tend to try to get out now rather than delay and find that they are unable to renege on their responsibilities.
    Between now and Report stage, I hope that the noble Baroness will consider the retrospective angle, despite what I have just said, because we do not want the matter to be overturned by the courts. We are all working together on the broad point that she makes. I hope that before Report stage the Government will come forward on each of the matters that we are discussing with their own amendments. That is important. We shall try to take advice outside. However, the resources of the noble Baroness are rather greater than mine and probably even than those of the noble Lord, Lord Oakeshott, or even those of the noble Baroness, Lady Dean.
    It is appropriate that between now and Report stage the Government take some time—we shall all be working in September, of course—to come up with a clear answer. On that basis, I beg leave to withdraw the amendment. The later amendments that we have degrouped will enable us to focus on particular points that I hope we can deal with relatively quickly.
    Amendment, by leave, withdrawn.
    The Deputy Chairman of CommitteesAm I right in thinking that Amendment No. 94 is still part of the group?
    Lord HigginsYes, Amendments Nos. 93, 94, 96 and 97.
    [Amendment No. 94 not moved.]
    Lord Higginsmoved Amendment N o. 95:
    Page 24, line 7, at end insert—
    "(d) the Regulator has not issued a clearance notice in relation to the act or deliberate failure to act"
    The noble Lord said: Amendment No. 95 is grouped with Amendments Nos. 100 and 169. This is a fairly straightforward amendment compared with some of the others. It suggests that there is a case for the regulator to issue what is called a clearance notice so that a company can say through the regulator, "I am proposing to do this, do you agree that it is okay?" It is set out in very simple terms.
    In the course of earlier debates, the Government indicated that they will look favourably on an amendment to bring in a clearance procedure. At Second Reading, the noble Baroness, on behalf of the Government, said that the regulator would be able to issue a contribution notice under Clause 35 only where an act or failure to act was deliberate and designed to avoid pension liabilities and that the regulator would be able to issue financial support directions only in prescribed circumstances. I shall not burden the Committee with the exact quotation.
    It appears to achieve our objectives and does not undermine the principle of the Bill if the regulator is able to deal with matters in that way. Perhaps there is a clear need for such a clearance procedure in addition to a code of practice, to which reference is made. Taking the two together, I believe that they would ensure that the system worked more smoothly than otherwise. I beg to move.
    Lord Hunt of WirralI strongly support my noble friend Lord Higgins. When the Government first issued the moral hazard clauses, a considerable amount of concern was expressed by a range of organisations that the effect would be that corporate transactions would come to a standstill. There was widespread press comment.
    What worried me more was a comment by some very informed individuals, such as the chief actuary of PricewaterhouseCoopers, Trevor Llanwarne (I have pronounced that both with and without a Welsh accent). He drew attention to something on which my noble friend Lord Higgins may be better informed than me, although I have asked the Library to let me know the procedure that is adopted. Apparently, a green light procedure is undertaken in the United States. It is similar to that proposed by my noble friend. It enables those wishing to undertake transactions to receive some kind of certainty as to whether there will be any problem for them under the moral hazard clauses. It is a kind of green light procedure that ensures that proposed legitimate business transactions will not fall foul of these clauses.
    The chief actuary said that he had a four-point plan, which apparently has been put to the Minister and to her colleagues in the Department for Work and Pensions. First, it is very much along the lines of the amendment moved by my noble friend that a clearance procedure should be introduced; and, secondly, that
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    there should be some changes in the wording of some of the clauses to provide a clearer and more complete framework against which to judge potential abuse.
    I believe that there is agreement on all sides that we want to stop abuse. It is important to have laws that can be readily understood, although I am not sure that simplicity is something known to parliamentary draftsmen who have to operate against a background of complex, existing legislation. If there are some wording changes—I understand that PricewaterhouseCoopers has suggested some—I believe that they should be adopted.
    There is also a request that some examples should be given by the department about the intent of the clauses. That would be enormously helpful. Finally, there is the point, which I have raised already, that insolvency practitioners should be protected. I support my noble friend.
    6 p.m.
    Baroness Hollis of HeighamOn the specifics, PricewaterhouseCoopers has been in contact with us after reading our debate in Hansard and we are indeed working with the company on the issues. The amendments seek to introduce a clearance system. I sympathise entirely with noble Lords' desire to ensure that there is a clearance procedure. We discussed this on 10 June. Those involved in corporate restructuring and transactions will be able to seek clearance from the regulator in advance. In local authority terms, it is like a kind of planning permission. It gets one over the problem of building control, but one still needs planning permission first. I guess, that is the role.
    I can also confirm that the regulator will publish guidance on how the scheme will work. That will ensure that responsible companies will be able to continue to trade and restructure as usual. I will also follow up the suggestion that the department may want to publish further clarification of the intent on this to allay fears. The only difference between us is probably whether it needs to be on the face of the Bill. We do not propose to legislate. By the time we end up with the words necessary for precision we may tie the regulator's hands and restrict the flexibility.
    Given the discussion today and the meetings that we are holding, there is no doubt that there will be a clearance procedure; how it will operate will be published in guidance by the regulator. We are happy to have not only further discussions but also further clarification over the summer. I hope we shall ensure that everyone feels comfortable with the way in which we propose to proceed. I hope that the noble Lord will feel able to withdraw his amendment.
    Lord LucasTo encourage the noble Baroness to put the matter on the face of the Bill, I say to her that such matters need to be bomb proof. Any kind of clearance needs to stand up to scrutiny from some very inquiring bankers and lawyers. If it is based on regulations, it will be less powerful than if it were on the face of the Bill.
    Baroness Hollis of HeighamI take the point. I hope to be able to show noble Lords a draft of the

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    procedures by Report stage. On that basis, if Members feel that it is not satisfactory, they can push us harder, but it may be that that will sufficiently allay people's concerns.
    Lord HigginsI believe that we are making progress. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendments Nos. 95A to 97 not moved.]
    Lord Higginsmoved Amendment No. 98:
    Page 24, line 21, at end insert", and
    () the Regulator is of the opinion that the act or deliberate failure to act has increased the likelihood that the Board of the Pension Protection Fund will assume responsibility for the scheme in accordance with Chapter 3"
    The noble Lord said: Amendment No. 98 stands in my name and that of my noble friend. The problem is that there are scenarios in which an employer may deliberately decide to take steps to reduce future Section 75 liability without adversely affecting the security—I stress the word "security"—of the members' interests. An employer may decide, for example, subject to various legal requirements, to reduce benefits for future service or may increase contributions to a scheme to reduce future liability. An employer may decide to arrange for members' benefits to be transferred to a new scheme. The old scheme would be wound up, but the Section 75 debt liability would not be triggered at that stage because of the transfer.
    All those scenarios should not be penalised. At the moment arrangements can be made. We have seen a huge deterioration in the general overall position of pension schemes and, in particular, of defined benefit schemes. If the kind of situation that I have just described were to be ruled out by the clauses of the Bill, the reaction of the company concerned may be, "We had better stop the defined contribution scheme, either for future members or for existing members". That is the underlying dilemma that we face all the way along. We do not want to add to the pressures on companies to close down their schemes. This amendment achieves that.
    I believe that there are cases where particular trustees have given members a choice, either to pay more to maintain their existing benefits, or to reduce their benefits somewhat. "Choice" is the in word at the moment; choice in almost everything seems to be the catchword for all political parties. When such a choice is given, so that members of a scheme can make a decision, depending on their personal circumstances, whether they would prefer to pay more to keep their benefits or to have their benefits reduced, I have found, even in the case of trade unions, that that may be regarded as a better option than closing down the scheme. The amendment achieves that and I hope that the Government feel that it is appropriate. I beg to move.
    Baroness Hollis of HeighamThe clauses are not just about protecting the PPF. Since the Government
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    introduced the full buy-out provisions on wind-up on 11 June 2003, so that members can be assured that a solvent employer will mean that their pensions will be met, regardless of whose decision it is to wind-up the pension scheme, we have introduced the PPF to compensate those workers whose employers become insolvent when the scheme is under funded.
    However, for deferred members, the compensation rate is 90 per cent with a cap of £25,000. Therefore, workers who see their company restructured and their employer become insolvent, even though the parent company continues to make profits, would be rightly aggrieved—that touches the bigger debate that we have just had—towards a government who did nothing to stop that. The result for them would not only be the loss of employment, but a reduction in their pension, effectively, of 10 per cent for every year that they have worked. For a worker whose benefits accrued at one-sixtieth a year, that could mean a loss of nearly four-years' worth of working and saving towards a pension.
    Sadly, we know that some employers take just that tack—legitimate corporate restructuring, which results in the avoidance of pension liabilities. That is not acceptable and with the power to issue contribution notices, the regulator will ensure that when restructuring takes place, the pension liabilities are safeguarded. Introducing restrictions in these clauses would introduce room for employers and those controlling companies to continue to avoid their pension responsibilities.
    I suggest to the noble Lord, Lord Higgins, that in making us all walk this tightrope to keep the balance going, he tips the matter too far the other way. I hope he accepts, in the light of discussions that we have already had and I am sure we shall continue to have, that the amendment does not commend itself to the Government. I ask him to withdraw it.
    Lord HigginsThat is the flattest rejection we have had so far. I am not persuaded by what the noble Baroness has said, but I would like to give further thought to the matter. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Higgins Page 24, line 23, leave out from "failure" to ", and" in line 24 and insert "shall not include—

    any person who does not have knowledge of the purpose of the act or deliberate failure,

    any person who does not assist the act or deliberate failure, or

    any person who does not have legal power to prevent the act or failure,"

    The noble Lord said: The current clause does not appear to expand the class of people who may receive contribution notices—the employer or the person connected or associated employer in Clause 35(3)(b). Therefore, the only effect of the current subsection is that it appears to give the regulator certainty that a

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    person who knowingly assists in an act or a deliberate failure to act falls within the scope of those he may attack. That seems to be so obvious as to be redundant. To help the confusion, it would seem better to exclude those who at present may fall within the scope of his actions, and therefore have to rely on his unproven reasonableness by reference to the factors set out in Clause 35(6), but who would be reasonably excluded at an earlier stage because of lack of knowledge and so on.
    A specific example has been given to me. Suppose a director signs off an agreement, the aim of which would be to avoid a debt to the employer, and his secretary types up the agreement knowing the purpose of it. It seems that she would be liable to action being taken against her by the regulator because she is connected to the employer by virtue of her employment. I gather that a number of settled cases reinforce that view. Of course, she would have had no power to influence the events and it seems unfair that she should fall within the category of people whom the regulator may attack. I beg to move.
    Lord Oakeshott of Seagrove BayWe are walking on egg shells and we may be on a tightrope as well. These amendments are quite tricky. On balance, we do not support this amendment. I have written down "whistleblower" on my copy. To some extent I understand what the noble Lord, Lord Higgins, is saying. If one takes it to the extreme, it does not mean that a notice has to be served on a secretary. However, there may be more substantial people who may not have the legal power to stop an act of failure, but none the less have some influence, or should have known and should have told. In that case I err more on the protective side and I do not support Amendment No. 99.
    Baroness Hollis of HeighamAgain I shall ask the noble Lord, Lord Higgins, to withdraw the amendment. Paragraphs (a)(i) and (a)(ii) have no effect other than to put the test in the negative. The clause as it stands makes it clear that the parties include those who knowingly assist. A person who does not assist cannot knowingly assist. So I believe we are all right on that.
    On the point relating to a secretary, I ask the noble Lord to refer to page 24, subsection (6)(a). The regulator will determine,
    "the degree of involvement of the person in the act or failure to act".
    Frankly, typing a letter is hardly a degree of involvement in the act or failure to act. Then there is reference to the relationship. Paragraph (c) states,
    "any connection or involvement which the person has or has had with the scheme".
    I believe that the example of a secretary being involved is well covered in that scenario. We shall debate some of those provisions in a moment.
    I want to return to paragraph (a)(iii), which is a far more serious limitation as it affects those who have a legal power to prevent the act or failure to act. I thought that the noble Lord, Lord Oakeshott, was absolutely right. What would the paragraph do to the
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    standing or to the duty of those who have the power to stop the act or failure to act, as a statutory whistleblower under Clause 63, which provides for a new statutory obligation on the trustees and managers of pension schemes to report in writing any prescribed event in relation to the scheme to the regulator? These events must be reported as soon as reasonably practicable. The type of events that must be notified will be specified in regulations and will include, for example, corporate restructuring or a significant payment becoming due to an individual scheme member in certain circumstances.
    A code of practice will be issued by the regulator to assist those with duties under this section. More importantly in relation to the amendment, the regulator must take into account whether the act or failure to act was a notifiable event with which the party had a duty to notify that it had complied. Further, there may be those with no legal power but with an actual power to stop the act or failure to act—for example, parent companies.
    For all those reasons, I hope that the noble Lord, Lord Higgins, will feel able to withdraw the amendment. I am sure that subparagraph (iii) proposed in the amendment goes beyond the remit of what he originally intended.
    6.15 p.m.
    Lord HigginsI am grateful for the Minister's reply. Clause 35(6)(a) on page 24 of the Bill places on the regulator the decision as to the degree of involvement of the person concerned. In relation to the secretary, we can agree that he would perhaps reach a decision, but he goes into a continuum and matters are then not at all clear. The person in question may be the personal assistant or some junior person rather than the secretary. I think that a slight problem arises here in giving the regulator such a power.
    We shall no doubt come to Clause 63 in due course. But, again, the problem is that very often whistle-blowers tend to lose their jobs and it is extremely difficult to protect people. We enter a whole wilderness of problems. However, I shall contemplate what the noble Baroness said and, if need be, return to the matter at later stages. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 100 not moved.]
    Lord Hunt of Wirralmoved Amendment No. 101:
    Page 24, line 30, at end insert", and
    () where the employer is in an insolvency procedure (as defined in section 388 of the Insolvency Act 1986 (c. 45) (meaning of "act as insolvency practitioner"), no act or failure to act during that procedure may give rise to a contribution notice on the employer or persons connected or associated with the employer without the leave of the Court."
    The noble Lord said: The amendment would insert into Clause 35(5) the requirement to which I referred in similar terms earlier in our proceedings—namely, the requirement for the leave of the court.

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    I suppose that I should again declare my interest. I am a solicitor, and my interest is in believing that the court is a good place in which to impose some kind of check or balance. But I declare an interest because I am a senior partner of Beachcroft Wansbroughs. We have 750 lawyers, most of whom are in and out of court during most of the week. Therefore, I suppose that I could have an interest in moving this amendment.
    However, I do not move it for that reason; I move it to prevent the personal liability point to which I referred earlier. There could be personal liability on the insolvency practitioner or the turnaround practitioner and their associates. Therefore, the amendment would mean that no act or failure to act during the insolvency procedure could give rise to a contribution notice on the employer or persons connected or associated with the employer without the leave of the court.
    Nevertheless, I want to retain a liability for persons who would be associated with the employer if an insolvency practitioner were not in office. I hope that the Committee will accept that I am seeking to make an important distinction in order to avoid the inadvertent discouragement of company rescues. That is very much the point that I raised previously. I hope that the Minister will understand the reason for it and respond positively. I beg to move.
    Baroness Hollis of HeighamGiven what the noble Lord, Lord Hunt, said in introducing the amendment, I suspect that it goes much further in its practical application than he intended. As it stands, the amendment would frustrate the entire purpose of contribution notices. We are talking not about a freezing period but about an assessment period.
    The PPF has an assessment period in order to consider whether the scheme goes into the PPF. The amendment would ensure that once an assessment period had started, a notice could not be issued without leave of the courts in respect of any acts or failures to act that had, as a main purpose, avoided pension liabilities, even if they had led to the assessment period. Not only would there be the cost of the court action but the question would arise as to why the court would be in a better position than the regulator, with all the information and duties under Clause 94, to consider all parties.
    There is a real issue about speed and effectiveness. I have already explained that the courts can take many months. In the process, one could lose a large quantity of the assets of the scheme which one was seeking to safeguard so that, even if the scheme went into the PPF, it would bring with it as many assets as possible, thus reducing the liability on other people paying the levy. The noble Lord's amendment would affect schemes which were on the point of toppling over into the PPF. For that to stick, one would have to go through a court procedure that would take many months and that could then expose the scheme to people stripping out the assets while leaving the
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    liabilities. I do not think that the noble Lord intends to go that far. I hope that he will feel able to withdraw the amendment.
    Lord Hunt of WirralBefore we conclude the debate, the legal advice that I have received is that the amendment would not go as far as the Minister has suggested. Obviously, she has raised the issue and I will consider it carefully.
    Does the Minister not accept the point about the personal liability of the insolvency practitioner and the turnaround practitioner? We have to find a way through this. As she has nodded, there is no need for any further contribution on her part. A nod is always better than a speech because I can interpret it in my own way. I am very grateful to her for agreeing. In those circumstances, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Higginsmoved Amendment No. 102:
    Page 24, line 47, after "person" insert—
    "() any relevant facts or circumstances that are specific to the employer or the scheme concerned, including industry codes of practice,"
    The noble Lord said: I am slightly worried about my noble friend's last remarks. It used to be said in the City, "Our word is our bond but we would rather have it in writing". What the status of a nod is in this context, I am far from clear. I would rather have an intervention. If it was a wink rather than a nod, that would be even more worrying.
    Baroness Hollis of HeighamI am very happy to make a speech.
    Lord HigginsWe have to brighten the thing up somehow—it is pretty dull!
    Amendment No. 102 is the result of discussions with the National Association of Pension Funds and others. They have suggested that we should insert these words at the end of page 24. They are of the view that there may be relevant circumstances specific to the particular employer or the scheme concerned, including the fact that he is operating within an industry set of codes of practice which will not have statutory effect but which may be relevant when the regulator takes a view on whether what he is doing is appropriate.
    I am hoping that the noble Baroness will not ask me for a specific example because I have had some trouble thinking of one. None the less, perhaps we should take into account the position on codes of practice. I beg to move.
    Baroness Hollis of HeighamThe noble Lord anticipated me on the second point. I have every sympathy with the purpose of the amendment, which is to ensure that the regulator takes into account the circumstances of all directly affected parties. For that reason, Clause 94 is in the Bill. That clause requires the regulator to take into account the interests of the generality of the members of the scheme who will be affected by its actions as well as the interests of other persons whom the regulator considers will be directly

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    affected. In the case of a contribution notice, that will include the employer, scheme members, scheme trustees, other employees and any party the regulator is considering issuing a contribution notice to.
    I am also sympathetic to the regulator considering the relevant codes of practice. We could not think of one but if the noble Lord has identified one, we should like to see it. That would be helpful. It is one of the areas that we are happy to look at. If the words need clarifying, strengthening or whatever, we can revisit the matter to see whether there are any relevant codes. We shall certainly consider that. On that basis I hope that the noble Lord will withdraw his amendment.
    Lord HigginsI shall certainly see whether I can find some specific examples that the National Association of Pension Funds may have in mind. I undertake to consider that matter to see whether we can return to it on Report. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Higginsmoved Amendment No. 103:
    Page 24, line 47, after "person" insert—
    "() whether the imposition of liability under this section on the person will substantially affect the funding of the scheme,
    "() that the purpose of imposition of liability under this section is intended to be curative of the scheme funding, and not punitive of the individual,"
    The noble Lord said: I am not sure whether the noble Lord, Lord Borrie, will investigate me under the monopolies procedures as I also move Amendment No. 103. It is concerned with the rather difficult point of the extent to which the provisions of subsection (6) of Clause 35 are designed to get the relevant money back from the individual concerned or whether they are intended to constitute deterrent or punitive actions. If the latter case applies, it would be more appropriate to spell out the penalties to be imposed on such individuals. If that is not the case, the amendment has merit. I beg to move.
    Baroness Hollis of HeighamThis provision is about scheme funding. It is not intended to be punitive and therefore we do not need to spell it out in the way that the noble Lord described. The provision concerns simply the recovery of the relevant money.
    The amendment would introduce another level of unnecessary complication and another area in which the regulator could be challenged. How does one decide what constitutes a substantial effect on funding? If it would mean £100 more for each member, is that considered a substantial effect? That may constitute 10 per cent of some members' benefits or 2 per cent of other people's benefits. How is the regulator supposed to decide? How is the regulator intended to assess what is punitive?
    The clause already requires the regulator to take into account the financial circumstances of a person. I do not think that the amendment would add anything. The Bill's provisions are certainly not punitive; that is not our
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    intent. I do not think that we need to go beyond that. I hope that the noble Lord will feel able to withdraw his amendment.
    Lord HigginsIt is helpful to have that reply on the record. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Lucas Page 24, line 48, at end insert—
    "(6A) In performing his duties under subsections (3) and (6) the Regulator shall seek contributions from the groups of persons set out in subsection (6B) in the order in which they are set out, and shall not seek contributions from persons in a lower group if, in his opinion, persons in a higher group are together capable of furnishing (and likely to furnish) a sufficient total contribution.
    (6B) The groups referred to in subsection (6A) are—

    companies owned by or owning the employer in a 100% shareholding relationship,

    companies owned by or owning the employer in a 75% to 100% shareholding relationship,

    companies owned by or owning the employer in a 50% to 75% shareholding relationship,

    companies associated with the employer in a 33.3% to 50% shareholding relationship,

    directors of the company at the time the act or failure occurred to the extent that they or their associates have benefited from the act or failure,

    associates of the directors only to the extent that they have benefited from the act or failure."

    The noble Lord said: I had better explain the amendment as, looking at it, I think that I have been rather confused in my drafting of it. I hope that the noble Baroness will not pay too much attention to that. However, there are a number of strands that I hope to draw out.
    Referring to the part of Clause 35 printed at the top of page 24, it seems that to be bitten by this provision a person has to be a "party to an act". What will be the situation if a transaction results in a substantial sum of money going offshore to another subsidiary of the foreign company which is the holding company for the UK company, then wandering back and then, by deed of that foreign holding company, moving on to some other part of the group? That would seem to take it out of the orbit of those people who can be taxed to give the money back. But if there is another big UK subsidiary of this same overseas holding company, it seems not to come within the orbit of those people who can be got at unless we are looking at an arrangement in definitions in this clause which can reach overseas and declare that the liability will in some way flow through the overseas holding company because that company was a party to it.
    I want to be sure that we are looking at all members of the group and that nothing in the clause, because of the way it is drawn, would restrict the action to the bit of the overseas company which is the particular subsidiary that has done the wrong thing and we cannot go back through the overseas link to get at the other assets in the UK.

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    6.30 p.m.
    I am also concerned that the provision feels like something that seeks to go after the people who have actually done the deed—and that reflects what my noble friend sought in his last amendment—rather than a place where the money is within the group to rectify the damage which has been done. This is probably a question of balance between subsections (6)(a) and (6)(e), and how that is going to work out. Presumably a regulation or a form of guidance will be produced to provide for whether the first port of call is to be the man who actually signed the deed—he is to be pursued for his last penny before the regulator moves on for someone else—or whether, first, the most convenient corporate entity will be approached, thus only turning to the individual last.
    I would appreciate a better understanding of how this is to work in practice. I beg to move.
    Lord Oakeshott of Seagrove BayI am sorry to have to disappoint my old friend the noble Lord, Lord Lucas. To be honest, I did not think that his speech bore an awfully close relationship to what is written here. I am bound to say that I think these clauses are much too restrictive. Circumstances arise where, to be frank, you do have to hit directors where it hurts: in the pocket. It cannot all be set out in order. This amendment would fetter the regulator far too much.
    Lord HigginsPerhaps I may intervene for a moment because this raises possible concepts which I had not taken into account. The problem is that groups will move money around in order to avoid their liabilities in a particular part of the group. One then has to place the burden on individual elements of it. Perhaps it is something to which we should give a little more thought.
    The noble Lord referred to offshore groups, but I think he meant overseas concerns. "Offshore" is a rather different concept. However, there is certainly a problem with overseas companies. The case of the Japanese bank was quoted earlier. It is not clear at all whether this Bill covers that problem as well as it should. But giving too much thought to it would mean imposing penalties on overseas companies which would then seek to invest somewhere else. It is a difficult area.
    Baroness Hollis of HeighamI accept that. I should like to write to the noble Lord, Lord Lucas, on the detailed example of an offshore or overseas group. We need to work through some of the permutations of the scenario he has described.
    This amendment seeks to ensure that the regulator divides liability for the sum due between parties based on their ownership of the employer. There is already provision to take into account what I would call the degree of connection; that is, the relationship the person has with the employer.
    However, I would suggest—this is the whole point of subsection (6)—that other factors may be important. Is the noble Lord suggesting that the degree of involvement or, if you like, of culpability in the act or failure is irrelevant? As the noble Lord, Lord Oakeshott, said, what if a director of the company is the main player in
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    the act? Is it right that the company should bear the brunt of the cost, particularly if the director has the financial resources to do so himself?
    What about the person's relationship with the scheme? More important, what about the financial circumstances of each person? It does not necessarily follow that a company with a higher stake in the employer is in a better financial situation than other employers with a lower stake.
    However, if noble Lords are saying that this is what industry wants, although I would be very surprised indeed to learn that this is what it wants, then we will consider the matter further. As I have said, we are trying to build into this proposed legislation as much consensus and staying power as possible. I would ask noble Lords opposite whether they really want us to pursue this because I did not sense a very high degree of support for the amendment. None the less, I shall be perfectly happy to pursue it with industry if it does reflect the position of the Official Opposition.
    In the light of those remarks, if for the moment the noble Lord, Lord Lucas, would withdraw his amendment, we will write to him on the detailed case. Perhaps Members opposite will come back to me if they are serious in their wish to pursue this. However, I am not sure that they are on to a winner.
    Lord LucasI would never pretend to be part of a Front Bench team on this. I confess that I find it hard to remember what I was thinking of when I wrote out the amendment. I believe that I sought to extend an idea that fits rather better with a later amendment which is similarly drafted. However, at some stage we shall want to know the order in which people are going to be hit. But we shall come to it again later. At that point, I am confident about why I shall want to see something in the Bill.
    For the moment, I am very grateful to the noble Baroness for saying that she will write on the overseas point, which may well be a deficiency in my understanding. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Higgins Page 25, line 1, leave out subsections (7) to (10) and insert—
    "() In the case of a contingent debt, the reference in subsection (4)(a)(ii) to preventing a debt becoming due is to be read as including a reference to preventing the occurrence of any of the events specified in section 75(4B)(a) or (b) of that Act upon which the debt is contingent.
    () For the purposes of subsection (4)(a)(ii), a person shall be treated as having acted in good faith if—

    he considered at the time of the act or failure to act that it was justifiable in terms of members' interests, or

    the circumstances were such that he could reasonably have formed that view,

    but these are not the only instances where a person shall be treated as having acted in good faith."
    The noble Lord said: The amendment seeks to expand on the meaning of "good faith". I am not sure that that is possible, but it raises a specific point which is important. An example of the kind of situation is where it is necessary for a company to keep the prospect of any

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    buy-out debt to a minimum in order to maintain financial support for its operations and so stay afloat. If the bank withdraws its support the company will be at risk of insolvency, which is likely to do more harm to the scheme's funding position than other actions that might be taken.
    What is suggested here is almost to define what is meant by "good faith"; that is, the individual or corporate body,
    "considered at the time of the act or failure to act that it was justifiable in terms of members' interests, or the circumstances were such that he could reasonably have formed that view".
    The amendment is phrased in terms of good faith, but what it really seeks to say is that if the individual believes that it would be in the members' interests or had come to the conclusion that it was in their interests, that should be something that the regulator can accept as reasonable. I beg to move.
    Lord Oakeshott of Seagrove BayIs it acceptable if, in speaking to this amendment, I speak also to Amendment No. 105A tabled in my name and that of my noble friend Lady Barker, which is a broadly alternative version of the same thing?
    I am sympathetic to the amendment moved by the noble Lord, Lord Higgins, which was proposed by the National Association of Pension Funds. The association says that,
    "the current reference to 'good faith' on its own is far too vague to enable companies and their directors to feel able to take decisions of this sort with confidence".
    We sought to go further in our amendment by setting out in greater detail the three main constituencies. Perhaps the noble Baroness can clarify what "members" means.
    When people take these decisions, acting in good faith, it is important to set out that one is talking about both existing employees who are members of the scheme, deferred members who have moved on and, indeed, people with pensions in payment. I give an example, one with which I have been quite closely involved; namely, the appalling situation that the pensioners of the Mayflower Group and, in particular, the Dennis group pension scheme in Guildford find themselves in. There is a very serious deficit. People not yet drawing their pensions will only receive 40 per cent of what they are entitled to. When looking at the figures in detail one sees that the number of people who are still employees is relatively small. It is important to state that the different interests of the three categories of members of the scheme should be taken into account in the definition of good faith.
    Baroness Hollis of HeighamIf I have followed the noble Lord, Lord Higgins, correctly, the first part of his amendment is a technical question about Section 75 debt and contingent debts. I should like to write to him on it because we were not absolutely clear when we read the amendment where the push was going. He has now helpfully explained it. I think I should like to follow the matter up.
    I turn to the second part, which is what I call the "good-faith" issue. The amendment inserts a new subsection which seeks to ensure that a person will be
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    considered to be acting in good faith if he considered the act or failure to act was justifiable in the members' interests, employee's interest, or that he could have reasonably formed that view. I should say that we envisage scheme members to include all categories of pensioner—existing, deferred and employees.
    The test of good faith is well known in law. I am advised that there are over 700 references to "good faith" in UK legislation. I have a couple from the Human Rights Act—judicial rights and so on. There are many hundreds more examples in case law. I do not really want to try to define good faith here because it would encompass the belief that a person was acting in the best interests of members, whichever class of member they may be. Equally, it would encompass the belief that a person was acting in the best interests of employees. Of course, a person's belief—what they consider to be the state of affairs—will be relevant when the regulator or tribunal considers whether that person is acting in good faith.
    So I think that there is no difference between us. However, I wonder whether it would help the noble Lord, Lord Higgins, or the noble Lord, Lord Oakeshott, and meet any worries if we insert the phrase "in good faith", which is currently at Clause 35(4)(a)(ii), into paragraph (a)(i). Perhaps the opposition would reflect on that. If it feels that that would be helpful, we might progress down that line. If it feels that that would still not address the issue, then obviously we must have a fuller debate on Report.
    The issue of good faith is pivotal. All we fail to do is to define the phrase conventionally on the face of the Bill. But guidance will be given. There will be a clearance procedure and anyone concerned about the act and whether someone is acting in good faith can contact the regulator for clearance on it. In other words, I would be surprised if this turns out to be the problem that noble Lords suspect it is. If my suggestion is helpful we will pursue it; if it is not, then obviously parliamentary draftsmen will no doubt be delighted.
    Lord HigginsThat is a very forthcoming reply. We will need to consider it further. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendments Nos. 105 to 105A not moved.]
    Clause 35 agreed to.
    6.45 p.m.
    Clause 36 [The sum specified in a section 35 contribution notice]:
    Lord Higginsmoved Amendment No. 106:
    Page 25, line 18, at beginning insert "Subsection to subsection (5),"
    The noble Lord said: In moving Amendment No. 106, I should like to speak to Amendments Nos. 107, 108, 109, 110 and 111.
    The amendments are really to establish matters with regard to making them more certain. There is no reason for the regulator to have the degree of discretion afforded in the Bill for these types of circumstances. The background to this is the Occupational Pension Schemes

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    (Winding Up and Deficiency on Winding Up etc.) (Amendment) Regulations 2004, which created the employers' full buy-out debt on winding up.
    The Government announced on 11 June that the full buy-out calculation would apply only in cases where the employer had chosen to wind up, but unfortunately the 2004 regulations do not reflect that point and would cover every winding up, even if the trustees were to wind up against the employer's wishes, and the employer is keen to continue funding the scheme on an ongoing basis.
    There are real problems, sometimes, between trustees and companies with regard to particular matters, especially with regard to winding up. I can recall from practical experience that this is sometimes the case, particularly if there have been mergers at an earlier stage in the company's history and where the terms of winding up may favour one group rather than another. There would seem to be a case for clarifying the situation as far as this is concerned.
    I gather that there has been consultation on this and that there may be some confusion about exactly what the 2004 regulations do in practice, particularly with regard to full buy-out costs in cases where the employer has chosen to wind up. There are very real difficulties in full buy-out costs as against an operation being ongoing. We need to examine these issues further. More generally, we need to be clear on precisely what is meant by "an ongoing basis".
    Finally—because if I understand the Government Whip's views correctly, we are about to conclude our proceedings today—I have a point about regulations in general. The noble Baroness has always been extremely helpful when dealing with previous legislation in providing draft regulations. Perhaps she could bring us up to date as far as the provision of those on this Bill is concerned. Are we likely to receive them before the end of the Committee stage, or not until later? I believe that she has expressed a view, but it would be helpful to have it on the record again. I beg to move.
    Baroness BarkerWe have some sympathy with what the noble Lord, Lord Higgins, is trying to do in this group of amendments. It seems helpful to all concerned that there should be some guidance on the calculation of the sums in a contribution notice. I have one or two small questions. Who will determine where the onus of proof should lie? Would an individual have to prove that they had not intended to fail—that they had failed unintentionally? That is crucial. Is the failure to the detriment of the pensioner or the PPF? That is another relevant factor.
    Having raised those questions, I think that the noble Lord's attempt to shed some light on the matter is extremely helpful.
    Baroness Hollis of HeighamWith regard to the points raised by the noble Lord, Lord Higgins, I promise that regulations will be introduced as soon as we are in a position to bring them before your Lordships. However, not only are they, in some cases, extremely technical; we have also given an undertaking
    GC 230
    to consult, even at the draft stage, all the players outside, and inevitably that elongates the procedure. I wish that I could give the commitments that the noble Lord seeks.
    Normally in relation to social security, but possibly with the exception of disability issues, almost no one is an outside player. Age Concern or disability organisations may be players, but mostly there are poor individuals out there who may or may not be receiving benefit and no consultation process is involved. There would be such a process in the Department of Health or the Department for Education and Skills, for example, in which there are doctors, teachers and so on. Unusually, in the Department for Work and Pensions, there is a vast number of players, many of whose views we have heard about today—professional associations and organisations and some of the contributors whose points were raised in the debate on Clause 35.
    Secondly—this takes us back to a previous point that I made—we are seeking to use the general powers of regulations in order to ensure that we do not have to return to this issue shortly because everything is drawn too tightly. I think that we need a more extensive consultation procedure than we normally have. I appreciate that I sound defensive but I am trying to be helpful to your Lordships on this matter. We are having to go through extensive consultation and, if your Lordships agree, that consultation will continue after the Bill has gone through both Houses.
    I genuinely do not believe that I can foreshorten the process. For example, today I have already made commitments on behalf of the Government to consider ongoing discussions with relevant organisations on the problem of acquisition and mergers and the implications for pension liabilities. If, as a result, we need the regulations to be clarified or adapted, that can take place afterwards. That will not happen until the autumn. Therefore, we are dealing with a different timescale from that which usually applies to Bills. I shall do my best to be helpful, but I am not very optimistic.
    I turn to the amendment and I hope that I shall be able to cover the points raised by the noble Baroness as well. The sum in the contribution notice as a maximum can be the Section 75 debt which is or would be due and would remove the regulator's discretion in calculating such a sum. I shall deal, first, with the removal of the discretion in Section 36(2)(a)—that is, the discretion to estimate the debt due. That discretion is there because it is possible that the act or failure to act has artificially increased the assets of the scheme or decreased the liabilities. Therefore, the Section 75 debt due would, in real terms, be incorrect, and the provision is necessary to allow for that.
    Turning to subsection (3), the discretion here allows the regulator to reduce the amount due in the contribution notice. The discretion is provided for by the very line that the noble Lord seeks to remove—that is,
    "by such amount as the Regulator considers appropriate".

    GC 231
    That would allow him to reduce the amount and therefore, presumably, it would be welcomed by industry.
    The regulator will have to consider a number of factors when deciding the appropriate sum, including, as I said, the financial circumstances of the person concerned. He will have to take into account whether the scheme is in wind-up or in an assessment period. But it is irrelevant who decided to wind up the scheme. For it to be otherwise would be to penalise members.
    If the scheme is in wind-up, it is likely that the full Section 75 buy-out debt will be required, provided that it is reasonable to ask the person named to pay the sum. That would ensure that members obtained their benefits and that the PPF did not have to assume responsibility for the scheme unnecessarily. I am sure that your Lordships will agree that that is the case and that it is highly desirable.
    I could continue but I realise that we are pressed for time. However, turning to one or two specific points, the regulations cover every wind-up—a point raised by the noble Lord, Lord Higgins—otherwise, members would be worse off if the trustees or regulator wound up the scheme. The Government are clear that they want the pension promise to be met.
    On the point raised by the noble Baroness, Lady Barker, the onus of proof is on the regulator. I hope that that gives her the assurance that she seeks. I am mindful of the time and I realise that we want to reach the end of Clause 36, if we can, before the guillotine comes down.
    Lord SkelmersdaleThere is no such thing as a guillotine in the House of Lords.
    Baroness Hollis of HeighamI believe there is a convention established that we are due to finish at seven o'clock. I am in the Committee's hands regarding whether we call that a guillotine; I thought that it was the appropriate term. In the light of what I have said, I hope that the noble Lord will feel able to withdraw the amendment.
    Lord HigginsI was slightly puzzled regarding why we began our proceedings at 3.15 p.m. I had assumed that the debate would continue for the usual four hours. I understand that we are all anxious to complete matters. I certainly do not wish to prolong the proceedings.
    It would be helpful to discuss the following amendment and we can perhaps dispose of the next three clause stand part debates without any further discussion. That would constitute reasonable progress.
    I accept what the noble Baroness says. I appreciate the point that she made about regulation. She has always been extremely helpful and I am sure that that will continue to be the case. However, the issues raised on this amendment are fundamental and we shall wish to return to them. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
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    [Amendments Nos. 107 to 111 not moved.]
    Lord Higginsmoved Amendment No. 112:
    Page 26, line 3, leave out subsection (5) and insert—
    "(5) If the person to whom the contribution notice is issued is an individual, the sum specified in it shall not exceed the actual amount of any personal gain that he has acquired to the detriment of the scheme as a direct and intended consequence of the act or failure to act giving rise to the contribution notice."
    The noble Lord said: This is the last amendment that we need to deal with today other than the stand part debates, the substance of which I imagine has already largely been covered.
    Amendment No. 112 concerns an extremely important matter. There is concern outside the House about individual employers and directors being exposed to the possibility of liabilities of the kind suggested by the Government. The threat of such liability will make it extremely difficult for those involved to operate effectively or even perhaps in their members' or the PPF's interests. In any event the individual concerned would probably rarely have sufficient resources to have a material impact on the scheme's funding position. The amendment seeks to limit this kind of liability to cases where there is clear culpability on the part of the individual concerned involving personal gain.
    In moving this amendment I am rather unsure where we ought to stand on this point. It is a difficult matter because there may be a vast difference between the assets of the individuals concerned, particularly if they are worker trustees, for example, and the assets held by the company. On the other hand, given what has been happening regarding some corporate salaries lately, certain individuals may be better able to finance the measure than the company concerned. I refer in particular to rescue situations where new directors are appointed on extremely favourable terms. They may fail to turn the business around but they get the money just the same.
    This is a difficult balance to strike vis-à-vis the extent of the personal wealth of individuals and so on. In all events we need to be a little clearer than we are about the extent to which individuals should be held personally liable, particularly as they may be jointly and severally liable in some cases. I hope that the noble Baroness will indicate her thinking on that point. I beg to move.
    Lord Oakeshott of Seagrove BayI say very gently to the noble Lord, Lord Higgins, that I believe he has the balance tipped too far in favour of protecting private individuals, as I think he implied. It is very difficult to know how much gain someone has made and over what period. I believe that the measure is tipped too far in favour of protecting individuals and too far away from protecting pension funds. Therefore, we do not support the amendment.
    Baroness Hollis of HeighamThe amendment would do two things. First, it would remove the reference to a contingent debt. We think it is vital that the regulator should be able to recover a contingent debt; that is, the sum that would become due should the scheme wind

    GC 233
    up. Otherwise, the only way to get a contribution from those who have avoided a pension liability would be to wind up the scheme. We are surely agreed that an ongoing scheme is in the interests of members. Indeed, I believe that earlier the noble Lord sought to ensure that the debt due should be reduced if a scheme was ongoing.
    The second part of the amendment seeks to limit the amount that can be requested from an individual to the amount the individual has gained as a direct and intended consequence of the act or failure. I am sympathetic to the purpose of the amendment and I see where the noble Lord is coming from. However, I consider that the issue of getting the balance right—this is terribly difficult territory—is adequately covered in the factors the regulator must take into account, in particular the degree of involvement in the act, the degree of culpability and the financial circumstances of the person concerned.
    If the noble Lord, Lord Higgins, thinks that the relevant subsection does not sufficiently cover or address his concerns, I am perfectly happy to look at it again. I am open to persuasion on this, and we can consider it further during the summer. But at the moment, he has not persuaded me that we should move. If he can, I am happy to do so.
    Lord LucasI hope this is something we can look at in a spirit of co-operation over the summer. It will clearly be a difficult position, particularly for non-executive directors, to know whether an Act has this intent or not. The way in which this interfaces with the clearance procedure will be critical. If the clearance procedure is easy and complete and offers a cast-iron solution at the end of it, unlike the sort of clearance one gets from the Inland Revenue, we will find that most of the problems are solved. Any non-executive worth his salt will make sure that the clearance is obtained on anything that has anything to do with the pension fund.
    To go back to one of my noble friend's earlier amendments, a company I know found itself with a pension fund deficit and decided that it would deal with that partly by offering no increase at all on accrued rights pre-1997. They changed the practice of the scheme in a way which reduced the expectations, if not the actual rights, of the scheme members, and reduced the deficit by about £15 million or £20 million. That seems, to my mind, to fall within the sort of acts that come under the Bill. In such circumstances, directors will need to know pretty clearly where they stand. If we have a good clearance method, fine—otherwise, we will need some way of protecting people who are non-executive directors and act in good faith, or the marketing director, for example, who does not understand these sorts of matters but is told what to do by the finance director, the chairman and the chief executive.
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    We have to recognise that assets and liabilities do not necessarily go, and someone may just have some money without having played a crucial part in taking the decision. To leave that to the justice of the regulator, without giving the individual the chance to make their position clear, will be difficult.
    Lord HigginsI had some hesitation on the implications of the amendment which are obviously shared by the noble Lord, Lord Oakeshott. This will be one of the most difficult areas we have to face. It is certainly true for trustees as well as company directors. Very often the trustees of a company are responsible for vastly more money than the directors. We will need to return later to whether trustees should be paid far more than many are at present. Some, indeed, are not paid at all.
    This is a balance that has to be struck, but we can give further thought to it. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 36 agreed to.
    Clause 37 [Content and effect of a section 35 contribution notice]:
    Baroness Hollis of Heighammoved Amendment No. 113:
    Page 27, line 2, after "for" insert "the debt in respect of"
    On Question, amendment agreed to.
    Clause 37, as amended, agreed to.
    Clause 38 [Section 35 contribution notice: relationship with employer debt]:
    Baroness Hollis of Heighammoved Amendments Nos. 114 and 115:
    Page 27, line 8, after "person" insert "("P")"
    Page 27, line 34, at end insert—

    " Where a sum is paid to the trustees or managers of the scheme or, as the case may be, to the Board in respect of the debt due under section 75 of the 1995 Act, P may make an application under this subsection to the Regulator for a reduction in the amount of the sum specified in P's contribution notice.

    An application under subsection (6A) must be made as soon as reasonably practicable after the sum is paid to the trustees or managers or, as the case may be, to the Board in respect of the debt due under section 75 of the 1995 Act.

    Where such an application is made to the Regulator, the Regulator may, if it is of the opinion that it is appropriate to do so—

    reduce the amount of the sum specified in P's contribution notice by an amount which it considers reasonable, and

    issue a revised contribution notice specifying the revised sum.

    For the purposes of subsection (6C), the Regulator must have regard to such matters as the Regulator considers relevant including, where relevant, the following matters—

    the amount paid in respect of the debt due under section 75 of the 1995 Act since the contribution notice was issued,

    any amounts paid in respect of the debt due by virtue of that contribution notice,

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    whether contribution notices have been issued to other persons as a result of the same act or failure to act falling within subsection (4) of section 35 as the act or failure as a result of which P's contribution notice was issued,

    where such contribution notices have been issued, the sums specified in each of those notices and any amounts paid in respect of the debt due by virtue of those notices,

    whether P's contribution notice specifies that P is jointly and severally liable for the debt with other persons, and

    such other matters as may be prescribed.

    Where—

    P's contribution notice specifies that P is jointly and severally liable for the debt with other persons, and

    GC 236

    a revised contribution notice is issued to P under subsection (6C) specifying a revised sum,

    the Regulator must also issue revised contribution notices to those other persons specifying the revised sum and their joint and several liability with P for the debt in respect of that sum."
    On Question, amendments agreed to.
    Clause 38, as amended, agreed to.
    The Deputy Speaker (Lord Lyell)The Committee stands adjourned until Tuesday at 3.30 p.m.
    The Committee adjourned at five minutes past seven o'clock.

  Iraq: Service Police Investigations
  Lord Hylton asked Her Majesty's Government:
  Whether they will establish an independent civilian-led investigation into alleged unlawful killings by British Forces in Iraq; and whether they will compensate the families of persons unlawfully killed by members of Her Majesty's Armed Forces. [HL2828]
  The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach): An important role of the Service Police is to investigate alleged offences by members of the UK Armed Forces. Service Police investigations are competent, impartial and effective. Service Police work to Home Office standards, are advised by professional lawyers, and are required by statute to follow civilian police force procedures. It is very difficult to see what added value a civilian body would bring to these investigations. In addition, there would be practical difficulties associated with a civilian body working in a hostile environment. We have every confidence in existing arrangements.
  Claims made by Iraqis for losses that do not arise in connection with combat operations are handled in accordance with the direction of the Coalition Provisional Authority—specifically Section 18 of CPA order number 17.

  Iraq: UK Government Response to ICRC Report
  Lord Lester of Herne Hill asked Her Majesty's Government:
  Which of the following recommendations made by the International Committee of the Red Cross in its report of February 2004 they have accepted and implemented:

  to respect at all times the human dignity, physical integrity and cultural sensitivity of the persons deprived of their liberty held under control;

  to set up a system of notifications of arrest to ensure quick and accurate transmission of information to the families of persons deprived of their liberty;

  to prevent all forms of ill treatment, moral or physical coercion of persons deprived of their liberty in relation to interrogation;

  to set up an internment regime which ensures the respect of the psychological integrity and human dignity of the persons deprived of their liberty;

  WA100

  to ensure that all persons deprived of their liberty are allowed sufficient time every day outside in the sunlight, and that they are allowed to move and exercise in the outside yard;

  to define and apply regulations and sanctions compatible with international humanitarian law and to ensure that persons deprived of their liberty are fully informed about such regulations;

  to investigate thoroughly violations of international humanitarian law in order to determine responsibilities and prosecute those found responsible for violations of international humanitarian law; and

  to ensure that battle group units arresting invidividuals and also staff in charge of internment facilities receive adequate training enabling them to operate in a proper manner and fulfil their responsibilities as arresting authority without resorting to ill treatment or making excessive use of force. [HL2834]

  Lord Bach:
  The International Committee of the Red Cross report of February 2004 was an interim one based on findings from visits made by the ICRC to detention facilities in Iraq between March and November the previous year. By the time the report was submitted the UK's Divisional Temporary Detention Facility had opened and the few concerns relating to UK forces the report raised had been or were being dealt with.

  The UK's commitment to the protocols of the Geneva conventions covers the noble Lord's points at (a), (b), (c), (d), (f) and (g).

  Regarding (e), internees at the DTDF are able to take regular exercise outside, the large majority of whom do so on a daily basis.

  Regarding (h), all UK forces personnel are briefed on the law of armed conflict which includes guidance on basic prisoner handling. Each major unit also has a number of personnel trained to a greater degree in prisoner handling and UK personnel at the Divisional Temporary Detention Facility, which holds UK internees, are given further specific training.

  UK and European Parliaments: Costs
  Viscount Tenby asked Her Majesty's Government: What was the number of sitting days of:
  (a) the House of Commons; (b) the House of Lords; and (c) the European Parliament in (i) parliamentary session 2002– (ii) calendar year; and (iii) financial year 2003–04; and [HL3427]
  What is the annual cost of maintaining each of the European Parliament; the House of Commons; and the House of Lords; broken down as follows:
  (a) salaries, pensions, travelling allowances, secretarial expenses for Members; (b) salaries, allowances and pensions and other costs of supporting staff; (c) accommodation, including rent, operating cost and security; and (d) all other administrative costs such as stationery,

  WA101
  office equipment, publications, payment to parliamentary bodies and other relevant outgoings for 2003–04 and the previous four years; and [HL3464]
  What is the per capita cost per Member of:
  (a) the European Parliament; (b) the House of Commons; and (c) the House of Lords for 2003–04 and the previous four years. [HL3544]
  The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): Precise comparisons between the cost of the European Parliament and the Houses of Parliament are difficult. The requested information is set out below.

  millions

  1999–2000

  2000–01

  2001–02

  2002–03

  2003–04

  European Parliament (1)

  (a) salaries, pensions, travelling allowances, secretarial expenses for Members

  92.2

  96.2

  95.6

  100.1

  102.9

  (b) salaries, allowances and pensions and other costs of supporting staff

  353.9

  370.3

  390.5

  400.0

  437.9

  (c) accommodation, including rent, operating cost and security

  247.2

  296.9

  291.9

  220.1

  192.1

  (d) all other administrative costs such as stationery, office equipment, publications, payment to parliamentary bodies and other relevant outgoings

  224.3

  209.4

  227.8

  257.0

  353.7

  (e) Own resources (3)

  55.3

  -62.8

  -69.4

  -67.3

  -66.3

  Total

  862.3

  910.0

  936.4

  909.9

  1,020.3

  of which cost to UK (4)

  115.8

  143.4

  89.8

  118.9

  128.4

  millions

  1999–2000

  2000–01

  2001–02

  2002–03

  2003–04

  European Parliament (1&2)

  (a) salaries, pensions, travelling allowances, secretarial expenses for Members

  60.7

  58.6

  59.4

  62.9

  71.9

  (b) salaries, allowances and pensions and other costs of supporting staff

  233.0

  225.7

  242.8

  251.5

  305.8

  (c) accommodation, including rent, operating cost and security

  162.7

  180.9

  181.5

  138.4

  134.1

  (d) all other administrative costs such as stationery, office equipment, publications, payment to parliamentary bodies and other relevant outgoings

  147.6

  127.6

  141.6

  161.6

  247.0

  (e) Own resources (3)

  -36.4

  -38.3

  -43.2

  -42.3

  -46.3

  Total

  567.6

  554.5

  582.2

  572.2

  712.5

  of which cost to UK (4)

  76.2

  87.4

  55.8

  74.8

  89.7

  COSTS
  European Parliament
  The figures for the years 1999 to 2002 (WA 146) given in my reply of 19 June 2003 have been amended reflecting changes in methodology.
  Last year's Answer incorporated budget figures (i.e. what the European Parliament budgeted to spend) rather than outturn figures (i.e. what the European Parliament actually spent).
  The European Parliament's own revenue has not been included in the past—this principally arises from levies on salaries, return on investments and pension contributions by staff. These revenues reduce the cost of the European Parliament.
  The House of Commons is accountable for its own expenditure and has provided details of cash costs as follows. The requested breakdown of costs is not readily available.

  £k

  1999–2000

  2000–01

  2001–02

  2002–03

  2003–04

  Administration Estimate

  164.851

  162.538

  134.803

  138.328

  138.269

  Members Estimate

  91.495

  94.417

  118.850

  130.022

  130.960

  Total

  256.346

  256.955

  253.653

  268.350

  269.229

  The Administration Estimate includes the costs of running the House of Commons itself (accommodation, staff, security, equipment, etc). The Members Estimate covers the cost of the salaries, expenses, training and IT support for Members of Parliament and their staff.
  House of Lords
  The House of Lords is accountable for its own expenditure and it has provided details of cash costs as follows. The requested breakdown of costs is not readily available.

  £million

  1999–2000

  45.3

  2000–01

  45.7

  2001–02

  57.4

  2002–03

  57.6

  2003–04

  61.1

  NUMBER OF SITTING DAYS

  sitting Days

  Parliamentary Year 2002–03

  Financial Year 2003–04

  European Parliament (5)

  161

  151

  155.5

  House of Commons

  162

  153

  155

  House of Lords

  174

  166

  165

  PER CAPITA COST PER MEMBER

  —k

  1999–2000

  2000–01

  2001–02

  2002–03

  2003–04

  European Parliament (6)

  907

  886

  930

  914

  1,138

  House of Commons (7)

  389

  390

  385

  407

  409

  House of Lords (8)

  37

  67

  81

  83

  91

  Notes:

  Figures for calendar years 1999, 2000, 2001 and 2003. Outturn figures for 1999, 2000, 2001 and 2002. Adopted budget for 2003.

  Converted at appropriate £ exchange rate for the year.

  Includes deductions from remuneration, revenue accruing from administrative operation and miscellaneous revenue.

  Cost to UK is derived from the UK's financing share after abatement.

  Includes plenary sessions as well as part-plenaries, committee days, political group days in Brussels and constituency days.

  Per capita cost based on 626 seats in the European Parliament.

  Per capita cost based on 659 Members.

  Per capita costs based on the number of Peers eligible to sit in the House of Lords at the beginning of each year. The number of Peers has reduced significantly since the House of Lords Act when 655 hereditary Peers ceased to be Members from November 1999.

  BBC: European Investment Bank Loans
  Lord Stoddart of Swindon asked Her Majesty's Government:
  Whether the BBC has received any loans from the European Investment Bank during the period 2000 to 2004; and, if so, for what purpose. [HL3546]
  Lord McIntosh of Haringey:
  The BBC has not received any loans from the European Investment Bank, although its commercial subsidiaries do borrow from the European Investment Bank for commercial purposes.

  Department of Trade and Industry: Hard Copy Publications
  Baroness Byford asked Her Majesty's Government:
  Whether rural proofing guidelines have been applied to the decision of the Department of Trade and Industry to stop hard copy production of their employment rights books and leaflets. [HL3474]
  The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): No. The department continues to publish a number of employment rights publications including PL716 Individual Rights and has in place arrangements to provide hard copy publications on demand for those unable to access the Internet at home, at work or through the library-based People's Network. Advice and guidance on employment rights is available in hard copy from ACAS.

  GP Referrals: Maximum Wait
  Lord Taylor of Warwick asked Her Majesty's Government:
  What assessment they have made of regional differences in the maximum wait from general practitioner referral to National Health Service hospital treatment. [HL3422]
  The Parliamentary Under-Secretary of State, Department of Health (Lord Warner): Information on the maximum wait from general practitioner referral to National Health Service hospital treatment is not collected centrally. The following table shows the number of outpatient appointments commissioned in each strategic health authority area where patients

  WA105
  were waiting longer than 17 weeks (the current maximum waiting time standard) at the end of March 2004. The figures cover first outpatient appointment following a GP or a general dental practitioner referral to a consultant.

  Strategic Health Authority

  Number of patients waiting over 17 weeks for a first outpatient appointment (end of March 2004)

  Norfolk, Suffolk and Cambridgeshire

  0

  Bedfordshire and Hertfordshire

  1

  Essex

  0

  North West London

  0

  North Central London

  0

  North East London

  0

  South East London

  3

  South West London

  0

  Northumberland, Tyne and Wear

  0

  County Durham and Tees Valley

  0

  North and East Yorkshire and Northern Lincolnshire

  1

  West Yorkshire

  12

  Cumbria and Lancashire

  0

  Greater Manchester

  0

  Cheshire and Merseyside

  128

  Thames Valley

  0

  Hampshire and Isle of Wight

  0

  Kent and Medway

  0

  Surrey and Sussex

  0

  Avon, Gloucestershire and Wiltshire

  12

  South West Peninsula

  2

  Somerset and Dorset

  0

  South Yorkshire

  0

  Trent

  0

  Leicestershire, Northamptonshire & Rutland

  0

  Shropshire and Staffordshire

  148

  Birmingham and the Black Country

  0

  West Midlands South

  0

  Source:
  Department of Health QM08R
  1 These patients are waiting to be seen at Welsh trusts and have been offered alternatives to be seen at an English trust.

  Local Exercise Action Pilot Programme
  Lord Moynihan asked Her Majesty's Government:
  Further to the Written Answer by the Lord Warner on 29 March (WA 137-38), when the 10 local exercise action pilot schemes started; and how long they are due to last. [HL3484]
  Lord Warner:
  The 10 primary care trusts selected to lead the local exercise action pilots were announced in March, 2003. The pilots launched within their local communities between January and June 2004 and will run for two years through until January 2006.

  Lord Moynihan asked Her Majesty's Government:

  Further to the Written Answer by the Lord Warner on 29 March ( WA 137–38), which are the 10 local exercise action pilot schemes selected by the
  WA106
  Government; and which primary care trusts are leading each scheme. [HL3485)

  Lord Warner:
  The local exercise action pilot programme is jointly funded with Sport England and the Countryside Agency. The 10 pilots are led by primary care trusts working within local strategic partnerships to deliver a range of interventions aimed at increasing levels of physical activity both across the community and within specific target groups.

  The following PCT's are leading the pilots:

  Primary Care Trust

  Focus of Pilot

  Ashton, Leigh & Wigan

  The pilot is developing an integrated programme of physical activity opportunities addressing the needs of older people (50 + years).

  Durham Dales

  A preventive pilot programme targeting sedentary 5–16 year-olds within the Durham Dales PCT locality.

  Nottingham City

  The pilot is seeking to increase the number of adults aged 50 years and older who take regular moderate physical activity.

  Great Yarmouth

  The pilot is aiming to integrate innovative physical activity interventions into current primary care systems. The interventions will reach a broad target audience including children and young people, older people, people at high risk of illness.

  North Kirklees

  A community-wide pilot with the aim of improving health, well being and quality of life through the promotion of physical activity. In particular, working with people who are sedentary and moderately active, and with specific identified at-risk groups.

  Wandsworth

  The pilot is developing an integrated physical activity promotion programme to promote moderate physical activity more effectively with sedentary and "at-risk" groups.

  West Cornwall

  The pilot will bring the health and leisure sectors together in partnership to provide information and support for those at risk of developing or recovering from medical conditions.

  Plymouth

  The pilot is targeting young people and developing the exercise referral model using free swimming to increase levels of physical activity.

  Dudley Beacon & Castle

  The pilot is encouraging the use of parks and open spaces by disadvantaged groups for health-enhancing physical activity.

  Hastings & St Leonard's

  The pilot is aiming to increase the number of children and young people living in Hastings taking regular, moderate intensity physical exercise.

  Atkins Medical Information Services
  The Countess of Mar asked Her Majesty's Government:
  Whether officials of the Clinical Governance Support Team of the Department of Health intervened in the arrangements of the forthcoming conference organised by the Nursing Times to

  WA107
  prevent a speaker from Atkins Medical Information Services from being included on the agenda; if so, on what basis; and with whose authority.[HL3497]
  Lord Warner:
  The Essence of Care conference held on 30 June 2004 was organised by EMAPmap Healthcare in association with Professional Nurse and Nursing Times and sponsored by Atkins Medical Information Services.

  Discussions were held with the conference organisers about potential conflicts of interest between some of the speakers and the sponsors. However, no member of the Clinical Governance Support Team intervened with the conference organisers to prevent a speaker from Atkins Medical Information Services from being included on the agenda.

  The CGST fully supported the aims of the event and had always committed two members of its staff to present at it, whatever the circumstances.

  Sports Nutrition Products
  Earl Howe asked Her Majesty's Government:
  What is the purpose of the forthcoming European legislation on sports nutrition products; and [HL3521]
  What steps the Food Standards Agency will be taking to ensure that the interests of the United Kingdom sports nutrition industry are fully protected in the discussions on the forthcoming European sports nutrition legislation; and [HL3522]
  What is the maximum permitted daily dose of creatine intake permitted for sports nutrition products in the United Kingdom; on what basis that level was set; and what levels of creatine use will be proposed under the forthcoming European sports nutrition legislation; and [HL3523]
  What assessment they have made of the impact that the proposed maximum permitted levels for creatine use set out in draft European legislation on sports nutrition products would have upon the United Kingdom specialist sports nutrition industry. [HL3524]
  Lord Warner:
  The purpose of the proposed legislation on sports nutrition products is to protect consumers by ensuring that such foods meet the particular nutritional requirements of people who participate in activities that involve intense muscular effort. In addition, these products need to be adequately labelled in order to allow consumers to make informed choices.

  The Food Standards Agency has sought the views of stakeholders on the European Commission's initial working document for this proposal and met with representatives of the sports nutrition industry to discuss their concerns. It will continue to consult stakeholders as the legislation develops.

  Currently, there is no specified maximum permitted level for creatine in sports foods. However, products on sale in Great Britain must comply with the Food
  WA108
  Safety Act 1990 or similar legislation in Northern Ireland. The Commission's working document proposes that creatine products should bear instructions for use that result in intakes of not more than 3g creatine per day. The impact on the industry of this level, or any other level that is set in the formal proposal from the Commission, will be considered as part of the regulatory impact asessment for the proposal.

  NHS Continuing Care
  Baroness Greengross asked Her Majesty's Government:
  Whether the assessment tools that underpin the criteria for National Health Service continuing care are being applied uniformly across all strategic health authorities; and [HL3525]
  Whether the assessment tools that underpin the criteria for National Health Service continuing care can identify the mental health needs of those being assessed. [HL3526]
  Lord Warner:
  The Department of Health has been clear that an individual's mental health needs are to be considered during continuing care assessments and expects any assessment tools used would do so. The department has not issued or recommended a standard assessment tool for continuing care assessments, the choice of an assessment tool is a matter for strategic health authorities.

  Baroness Greengross asked Her Majesty's Government:

  Why strategic health authorities were asked in September 2003 to review continuing care arrangements using the Department of Health guidance which was criticised by the Health Ombudsman in February 2003. [HL3527]

  Lord Warner:
  Strategic health authorities have used the existing guidance on setting criteria, since the legal position has not changed since 2001. Without a change in the legal position, the Department of Health was not able to reinterpret the guidance. The department required strategic health authorities to review their criteria and provide evidence that their criteria met legal requirements.

  Baroness Greengross asked Her Majesty's Government:

  How strategic health authorities are identifying those continuing care cases where a person may have been incorrectly assessed. [HL3528]

  Lord Warner:
  Strategic health authorities are examining all cases that are presented for investigation or where case finding has indicated a potential need for an investigation. The Department of Health issued a model template for investigating cases where individuals may have been wrongly assessed as ineligible for continuing care. A copy of this template is in the Library.
  WA109
  Baroness Greengross asked Her Majesty's Government:

  Further to the Written Statement on National Health Service continuing care on 24 June (WS 66), what appeal process is in place for those who are turned down for recompense; and how many have (a) appealed or (b) complained to the Health Ombudsman.[HL3529]

  Lord Warner:
  Individuals who are unhappy with the outcome of their recompense review have recourse to the National Health Service complaints procedure. The Department of Health does not hold data on the number of continuing care restitution cases which are undergoing an appeal or have been passed to the ombudsman.

  Skin Cancer
  Lord Henley asked Her Majesty's Government:
  What action they will take to encourage high risk groups to seek advice from health professionals on skin changes and the appearance of lesions. [HL3563]
  Lord Warner:
  Cancer Research UK has been commissioned by the United Kingdom health departments to provide the SunSmart skin cancer prevention campaign for the next three years.

  The importance of seeking advice from health professionals on skin changes and the appearance of lesions is stressed in our key messages of the campaign—the SMART code, which is used in all campaign strategies:

  Stay in the shade between 11-3

  Make sure you never burn

  Always cover up

  Remember to take extra care with children

  Then use factor 15 + sunscreen

  Also report mole changes or unusual skin growths promptly to your doctor.

  These messages are widely seen on our range of posters, leaflets, press and PR activities, and through partnerships with our corporate partners. These materials have been sent in various forms to every nursery, primary and secondary school, health promotion units, primary care and Sure-Start coordinators in the UK. As an indication of the scale of this distribution, in 2004, over 175,000 posters and over 2 million postcard-sized message cards have been printed for active distribution.

  In the first phase of the campaign, we are aiming to raise awareness of our key messages to all people, with particular emphasis on parents and carers of children. At every opportunity we emphasise the increased risk for people with fair skin, many moles, a history of sunburn and/or a history of skin cancer in the family. We will then increase the focus on teenagers who exhibit high-risk sun seeking behaviour.
  WA110
  We are working closely with the Tanning Industry to promote our key messages to at-risk groups of sunbed users, and encouraging people to seek early health professional opinion on any suspect moles.

  Lord Henley asked Her Majesty's Government:

  What action they will take to facilitate early diagnosis of skin cancers among high risk groups. [HL3564]

  Lord Warner:
  The Department of Health has issued Referral Guidelines for Suspected Cancer to assist general practitioners in determining those patients who need to be referred urgently to see a specialist within two weeks. The guidance addresses skin cancers. The referral guidelines are currently being reviewed by the National Institute for Clinical Excellence (NICE) and the updated guidelines are due to be published in March 2005.

  The Department of Health and Welsh Assembly government have also commissioned NICE to produce service guidance for skin tumours including melanoma. This guidance is due for publication in April 2005 and will address areas such as diagnosis, treatment and follow up.

  In addition, United Kingdom health departments have commissioned Cancer Research UK to provide the SunSmart skin cancer prevention campaign for the next three years.

  The SunSmart campaign includes:

  40,000 posters designed to assist general practitioners and practice nurses in the identification of suspicious skin lesions. The poster has now been distributed to all UK doctors' surgeries.

  A series of health information leaflets for surgeries, for distribution to patients. These include Malignant Melanoma—be a mole watcher for life and Skin cancer—how to be SunSmart and reduce your risk.

  Working with health professionals to encourage regional "Mole Watch" clinics where health professionals offer a free screening service in public areas.

  Through these strategies, we are encouraging health professionals to take an opportunistic approach to checking patients' moles when they attend surgery and encouraging the public to check their moles and seek professional opinion for early diagnosis of suspect lesions.

  Heart Health
  Lord Clement-Jones asked Her Majesty's Government:
  What plans they have to increase awareness among the general public of the role diet and lifestyle changes can play in improving heart health. [HL3600]
  Lord Warner:
  The Government have recently conducted a major consultation exercise on improving public health. The consultation covered a range of lifestyle issues that improves heart health, including diet and physical activity. Response to the consultation exercise will involve the development of a Public Health White Paper, due later this year.

  We already have the five-a-day programme, which includes a number of communications initiatives to inform consumers of the benefits of eating a variety of at least five portions of fruit and vegetables a day for heart health as well as other health benefits. Regarding physical activity, a social marketing campaign to increase exercise is being piloted this summer in the north-east of England. Led by Sport England, the campaign will encourage people to include more physical activity in their daily routine.

  The Department of Health also funds a range of non-governmental organisations to increase awareness of the benefits of healthy diet and active lifestyles, including a campaign to make the public aware of the importance of knowing their blood pressure numbers.

  Lord Clement-Jones asked Her Majesty's Government:

  When they intend to publish the Food and Health Action Plan; and what emphasis they place on improving heart health by (a) reducing salt intake; (b) reducing saturated fat intake; and (c) reducing smoking. [HL3601]

  Lord Warner:
  A plan of action for food and health will be launched in the context of the White Paper on public health in the autumn. Reducing population intakes of salt and saturated fat, to improve heart health and bring about health benefits, are a priority for government. One of the three key strands in the NHS implementation plan is to offer a better service for a healthier and fitter population. Details of the public health element of this will be contained in the White Paper. This also builds on the commitment in the NHS Plan to work with the food industry to improve the overall balance of diet including salt, fat and sugar in food, working with the Food Standards Agency.

  We also regard reducing smoking as crucial to improving heart health. We have in place a comprehensive tobacco control strategy, designed to have a measurable impact on reducing smoking prevalence.

  Hazardous Waste Incineration
  Baroness Miller of Chilthorne Domer asked Her Majesty's Government:
  What range of hazardous wastes may be burned in incinerators; and whether they intend to increase that range. [HL3196]
  The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): Any hazardous waste can be burned in incinerators, subject to the incinerator's emissions and operation meeting the requirements of Directive 94/67/EC on the incineration of hazardous waste. This directive will be repealed and replaced by Directive 2000/76/EC on the incineration of waste from 28 December 2005, although the latter directive's requirements already apply to incinerators new or substantially changed since 28 December 2002. The requirements of these directives have been transposed into UK law through regulations and directions.

  Exotic Birds
  Lord Soulsby of Swaffham Prior asked Her Majesty's Government:
  How many exotic birds from third countries not classified under the Convention on International Trade in Endangered Species of Wild Fauna and Flora agreements are quarantined in the United Kingdom each year. [HL3549]
  Lord Whitty:
  Exotic birds must be imported in accordance with the animal health requirements laid down in Commission Decision 2000/666/EC. The decision requires that all exotic birds (birds other than poultry) imported into the United Kingdom are quarantined for at least 30 days.

  According to our records the number of exotic captive birds from third countries that were quarantined in the United Kingdom from 2001 to date are as follows:

  2001—19,720

  2002—115,177

  2003—91,445

  2004 (to 30 June)—44,200

  We are unable to provide the number of exotic birds that were not classified under the Convention on International Trade in Endangered Species (CITES) as our records do not distinguish between CITES and non-CITES birds.

  Lord Soulsby of Swaffham Prior asked Her Majesty's Government:

  What data exist on the number of exotic birds that travel via the United Kingdom and are in the country for less than two months. [HL3550]
  WA113
  Lord Whitty:
  Defra's system for recording animal movements does not record the length of time that imported birds are resident in the United Kingdom before they are exported and therefore we are unable to provide you with any reliable data. According to our records, 1,195 exotic captive birds travelled via the United Kingdom between 1 January 2002 and 30 June 2004.

  Lord Soulsby of Swaffham Prior asked Her Majesty's Government:

  What are the current guidelines concerning the importation of exotic birds from countries outside the European Union not covered under the Convention on International Trade in Endangered Species of Wild Fauna and Flora agreements. [HL3547]

  Lord Whitty:
  All captive birds (birds other than poultry), regardless of whether they are covered by the Convention on International Trade in Endangered Species, are subject to conditions and controls on animal health and welfare in transport laid down by Community law.

  Exotic captive birds must be imported from third countries in accordance with the animal health requirements and veterinary certification as laid down by the European Commission (Commission Decision 2000/666/EC).

  These import conditions ensure that only birds which are officially certified as being free from serious disease can be imported into the European Community. The birds must originate from a member country of the Office International des Epizooties (OIE—World Organisation for Animal Health) and be accompanied by health certification issued by an official veterinarian of that country.

  Captive birds may only be imported into the European Community via an approved border inspection post where they undergo checks by an official veterinarian to ensure that the consignment complies with the import requirements.
  WA114

  Import of Animal Products for Personal Consumption
  Baroness Byford asked Her Majesty's Government:
  How successful they have been in raising public awareness of the rules regarding the import of animal products for personal consumption; and how this success has been measured; and [HL3568]
  What range of activities was used to raise public awareness of the rules regarding the import of animal products for personal consumption; and what was the cost of these activities since the strategy was implemented. [HL3569]
  Lord Whitty:
  Two surveys, the last of which reported in May 2003, indicated that there had been a low level of public awareness of the rules regarding the import of animal products for personal consumption.

  Since then, we have made a significant effort to raise public awareness of the rules. For example, there has been increased enforcement activity by Customs, more prominent posters being displayed at ports and airports and revised leaflets have been produced. Also, many airlines now publicise the rules at check in, by in-flight announcements and their on-board magazines, and 3¼ million travel wallets now carry the "if in doubt, leave it out" message. Customs is producing a number of language and country-specific versions of the leaflets; and these will be made available internationally as well as being used by Customs detection staff at ports and airports. Defra has written again to universities, charities and volunteer organisations. The Central Office of Information has been commissioned to undertake research in the UK about attitudes and sensitivities surrounding the importation of food. The results of this research will be used to inform future publicity campaigns.

  We will undertake further periodic surveys to monitor the success of the various campaigns.

  In addition, we have committed £25 million over the three financial years from 2003–04 to tackle illegal imports of products of animal origin. Detail of the costs of the publicity campaigns is not available as central departmental funds are used for this purpose in addition to the specifically allocated budget.

  Northern Ireland: Justice Oversight Commissioner
  The Lord President of the Council (Baroness Amos): My right honourable friend the Secretary of State for Northern Ireland has made the following Ministerial Statement.
  The Government have received and welcomed the second report from the Justice Oversight Commissioner, Lord Clyde, on the progress achieved in implementing the recommendations of the review of the criminal justice system in Northern Ireland. Consistent with his terms of reference, the report was submitted to the Attorney-General, Lord Filkin, the Minister for the Northern Ireland Court Service, and me in June.
  Lord Clyde concludes that in the period of this report good progress continues to be made in the implementation of the review's recommendations on a number of fronts. While a few delays in progress have been noted, he believes that for the most part the momentum has been maintained and important initiatives have been pursued with vigour. He comments that there is now visible evidence which demonstrates the progress which is being made and provides promise of the eventual implementation of the changes recommended in the criminal justice review. The Government warmly endorse these conclusions.
  Copies of the commissioner's report have been placed in the Library.

  Police Ombudsman for Northern Ireland: Annual Report 2003–04
  Baroness Amos: My right honourable friend the Secretary of State for Northern Ireland has made the following Ministerial Statement.
  The Police Ombudsman for Northern Ireland's annual report for 2003–04 is published today. Copies of the report have been laid in the House.

  Northern Ireland: Public Inquiries
  Baroness Amos: My right honourable friend the Secretary of State for Northern Ireland has made the following Ministerial Statement.
  On 1 April I announced the establishment of three public inquiries, into the deaths of Robert Hamill, Billy Wright and Rosemary Nelson. I will be publishing a report today setting out the principles that will govern these inquiries and the progress made in establishing them. A copy of the report has been placed in the Library of the House.
  These inquiries are being established because it is essential that all people in Northern Ireland can have confidence in the integrity of the state and its institutions. Where there are serious allegations of wrongdoing, it is important that the facts are properly established. The Government will continue to press ahead with the detailed arrangements for the inquiries, including the appointment of chairmen, as quickly as possible.
  As I have said previously, it is also important that we find a way in Northern Ireland of dealing with the past in a way that recognises the pain associated with it without allowing it to destroy all hope of a better future. Throughout the summer, I will be considering the options for doing this, taking on board the views of a range of experts, with a view to wider consultation in the autumn.

  Northern Ireland Regional Development Strategy 2025: Annual Report 2002–03
  Baroness Amos: My right honourable friend the Minister of State for Northern Ireland has made the following Ministerial Statement.
  Earlier today I placed in the Libraries copies of the annual report on the implementation of the regional development strategy for Northern Ireland 2025 (RDS) covering the period 2002–03.
  Annual reporting on the implementation of the RDS involves assessment of progress being made against a number of critical threshold indicators and each of the strategic planning guidelines (SPGs) contained within the strategy. Measuring the relevant outcomes assesses progress against each of the SPGs. To measure these outcomes data are collected from government departments.
  The monitoring section of the annual report covering the period 2002–03 deals with measured outcomes against each of the SPGs for that period. It is my intention however to publish a further report in November 2004 that will bring reporting up-to-date since September 2001. The November report (thereafter published biennially) will comment on measured outcomes up to March 2004, and will deal in more detail with any key trends which have emerged over the three-year period since September 2001. This will be important in the context of the work that the department has commenced on the 2005–06 focussed assessment of the RDS.
  Earlier in the year I committed to a review of the regional housing allocations. A three-month consultation exercise commenced in May 2004. The work is in two stages. First, it will involve an assessment of household formation. The Northern Ireland Statistics and Research Agency on behalf of the department is taking this work forward. This may result in a revised regional housing figure. Consideration will also have to be given to factors such as vacancy, second homes and housing stock loss.
  The second stage will include an assessment of the appropriate level of housing allocation for district councils. This will take account of local factors that impact on housing need and any changed circumstances

  WS41
  since the original figures were prepared. Given the complexity and sensitivity of projecting housing need, consideration will be given to how these figures are used. The outcome from the housing review process will be fed into the focused assessment. It is possible that this review of housing allocation figures will point to the need for a specific adjustment of the RDS rather than action by third parties. The focused assessment process will provide the opportunity for necessary publicity and consultation.
  The focused assessment will require consideration of all strategic guidance within the RDS using up-to-date data in the context of current government policy. However, the focused assessment is not a full review. Any adjustments will be considered in the context of the guiding principles and the strategic direction that is set out in the spatial development strategy. The focused assessment process will also include open and participative engagement with stakeholders and consultation as appropriate.
  The success of the RDS will be determined by the extent to which its policies and actions are implemented. Implementation is, however, a very complex process involving a wide variety of public and private organisations, businesses, voluntary and community organisations and individuals. Many of the policies can be implemented only through individual departments and their strategies. Chapter 13 of the RDS sets out the elements of the delivery mechanism.
  However the department has been heavily engaged in developing the participative approach to implementation by engaging a wide range of stakeholders in the public and private sectors and in the community. During the year 2003–04 the department has facilitated a series of sub-regional seminars for the north-west, the south-east, the rural west and the north-west. Reports of proceedings in these events will be published as a record of the action agenda proposed for each sub-region. The department is now engaged with representatives of the organisations attending the seminars to agree a suitable structure for continuing engagement in tracking RDS progress and local strategic priorities.

  Iraq: Central Criminal Court
  The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach):
  My right honourable friend the Secretary of State for Defence (Mr Geoffrey Hoon) has made the following Written Ministerial Statement.

  Honourable Members will recall the harrowing images broadcast by Al Jazeera television in March last year, which showed the bodies of two British soldiers—Staff Sergeant Simon Cullingworth and Sapper Luke Allsopp. There were indications that one or both of the soldiers may not have died in combat, and as a result we launched a Special Investigation
  WS42
  Branch inquiry. Although it would not be appropriate for me to comment in detail on the evidence collected so far, it continues to point to the possibility that one or both soldiers may have been murdered.

  Honourable Members may also recall the tragic deaths of six RMP soldiers in Al Majarr Al Kabir last June. Against the backdrop of an extremely challenging environment, an SIB investigation into that incident has also been making progress.

  Last year, the Coalition Provisional Authority established the Central Criminal Court of Iraq (CCCI) to exercise jurisdiction over all criminal offences referred to it by the administration in Iraq, which were committed there since 19 March 2003. The CCCI follows the investigative model, prevalent in the rest of Europe, whereby an investigative court directs and oversees the investigation and, where appropriate, refers the matter to a trial court.

  If these cases are to be pursued through the CCCI, then it is important that the concluding phases of the investigations are conducted under the court's direction, to ensure compliance with the rules and procedures of the court. This will have particular impact in respect of the admissibility of evidence. I have therefore agreed that it would be appropriate for the CCCI to be invited to take on these cases. To that end, translations of the cases developed so far have been passed to the CCCI. If the CCCI adopts the cases, we will, of course, support it in any way we can in taking the investigations forward.

  The CCCI represents the best prospect of dealing with such cases in an expeditious and fair manner, as Iraqi law has a bar to extraditing its own nationals to a foreign state, including the UK.

  Whatever the outcome of these cases, I would like to pay tribute to the efforts of the SIB senior investigating officers and their teams for their hard work.

  The families of the eight soldiers are being kept informed of progress with the investigations. Our thoughts and sympathies remain with them.

  Defence Bills Agency: Key Targets 2004–05
  Lord Bach:
  My honourable friend the Minister of State for Defence (Mr Adam Ingram) has made the following Written Ministerial Statement.

  Key targets have been set for the chief executive of the Defence Bills Agency (DBA) for the financial year 2004–05. The targets, which build on the already high standards of service provided by the agency since its formation in 1996, are as follows:

  . To pay 99.9 per cent of correctly presented bills within 11 calendar days of receipt as part of the department's 30-day payment target.

  . To raise 99 per cent of invoices accurately within four days of receipt of a correctly authorised claimable document.

  WS43

  . To ensure that the average percentage of overdue collectable debt due to the department does not exceed 30 per cent of total collectable debt.

  . To deliver 99 per cent of the required accounting and financial information feed to the departmental financial management system portal within one working day.

  . To make a progressive improvement of at least 1 per cent in the overall level of customer satisfaction over a baseline of 77 per cent achieved in 2003–04.

  . To make a progressive reduction in the unit costs for bills of at least 4 per cent by March 2005, over the 2003–04 baseline.

  Healthcare Report
  The Parliamentary Under-Secretary of State, Department of Health (Lord Warner):
  My honourable friend the Minister of State (Ms Rosie Winterton) has made the following Written Ministerial Statement today.

  The report on the state of healthcare, HC820, by the Healthcare Commission (whose statutory name is the Commission for Healthcare Audit and Inspection) was published today. Copies have been placed in the Library.

  Marriage Law
  The Parliamentary Under-Secretary of State, Department for Constitutional Affairs (Lord Filkin):
  On 10 July 2003 the Government published the consultation paper, Civil Registration: Delivering Vital Change. This set out our proposals to reform civil registration in England and Wales using powers in the Regulatory Reform Act 2001. It remains our intention, as the Financial Secretary to the Treasury announced on 29 March this year, to bring forward two orders under the Regulatory Reform Act 2001. One, planned for this Session of Parliament, will amend the current legislation on birth and death registration. The second, on marriage law, has been deferred to enable us to take into account Parliament's wishes on civil partnership legislation.

  Preliminary consideration of the responses to Civil Registration: Delivering Vital Change suggests that there is an issue regarding the proposals for marriage on which there should be further consultation. The issue concerns the absence of any proposal to change the legal requirement for marriage ceremonies to be either civil or religious. Policy in this area of marriage law is the responsibility of the Department for Constitutional Affairs. In the coming months and in consultation with others, we will be working with Treasury Ministers and the General Register Office for England and Wales to determine the scope of any revised proposals.
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  Statistics Commission: Annual Report 2003–04
  The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey):
  My honourable friend the Financial Secretary to the Treasury (Ruth Kelly) has made the following Written Ministerial Statement.

  The Statistics Commission's annual report and accounts, covering the 2003–04 financial year, are being published today, having been laid before both Houses of Parliament. Copies are available in the Vote Office.

  Enemy Property Payment Scheme
  The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville):
  My right honourable friend the Secretary of State for Trade and Industry (Ms Hewitt) has made the following Statement.

  The UK Government scheme to pay compensation to victims of Nazi persecution whose property was confiscated during the Second World War under the trading with the enemy legislation will close on 31 August 2004. Lord Archer of Sandwell, the chairman of the Enemy Property Claims Assessment Panel, has reported to me that the panel is nearing the end of its work and at my request advised on how the scheme should be wound up. After consulting with the various interested parties, he has recommended that 31 August would be an appropriate date to wind up the scheme. He has also recommended that the panel should continue to advise on an ad hoc basis on any claims received after that date. I am pleased to accept all his recommendations, and I have placed a copy of his report in the Libraries of both Houses.

  Under wartime legislation, the Government confiscated all assets in British territory owned by residents of enemy countries. The enemy countries included Nazi Germany and its allies, as well as countries occupied by them. After the war, the assets of the occupied countries were released from British Government control but the assets of the belligerent countries were distributed to British creditors whose assets had been confiscated by the enemy countries. An exception was made for victims of Nazi persecution, and soon after the war Nazi victims or their heirs could claim the return of their assets.

  In Spring 1997, following public concern that there were still many assets belonging to victims that had not been returned, the British Government published research on the history of the administration of enemy property and placed on the Internet at www.enemyproperty.gov.uk a database of the assets seized from residents of belligerent enemy countries. A major problem was that many of the individual files had been destroyed and it was not obvious which of the assets had been returned. However the Government believed that the injustice had to be addressed and asked Lord Archer of Sandwell in June 1998 to advise on the

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  design of a compensation scheme. The Government subsequently accepted Lord Archer's recommendations and the then Secretary of State for Trade and Industry announced in December 1998 a compensation scheme administered by an independent Enemy Property Compensation Advisory Panel (EPCAP).

  EPCAP launched the Enemy Property Payments Scheme in April 1999 under the chairmanship of Lord Archer of Sandwell, sitting with two teams of assessors expert in finance and ethnic minority issues. They have considered nearly 1,100 applications for compensation and 377 claims have been assessed as qualifying for payment and a total of £16.2 million paid to claimants for assets that were confiscated. Claims have been submitted from all parts of the world and oral hearings were convened for those cases that proved difficult to resolve. A separate adjudicator,
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  Sir Christopher Staughton, was appointed to consider appeals against EPCAP's decisions. He considered 52 appeals, and found in favour of 15.

  Some 220,000 assets were confiscated and either sold or returned to the original owners. The only material asset that remains is a gilt bracelet and diamond tie-pin. We know that these belonged to Marck Kellermann, a brush salesman from Bratislava in the former Czechoslovakia. Despite the best efforts of the panel, it remains unclaimed. I am pleased to announce that the Imperial War Museum is in discussions with my officials about the safekeeping of the jewellery until such time as Mr Kellermann's heirs come forward or are found.

  I am very grateful to Lord Archer and his team of assessors and to the appeal adjudicator for their work in resolving a long-running difficult issue that has previously been neglected by successive governments.