Sitting of 24 March 2004

Preamble
The House met at half past Eleven o'clock
PRAYERS
[Mr. Speaker in the Chair][Mr. Speaker in the Chair]
Oral Answers to Questions
  WALES
  The Secretary of State was asked—

  Affordable Housing
  Mr. Elfyn Llwyd: What representations he has received on the provision of affordable housing in Wales; and what discussions he has had on this with the First Secretary of the National Assembly for Wales.
  The Parliamentary Under-Secretary of State for Wales: My right hon. Friend the Secretary of State for Wales and I receive representations from time to time on this subject. It and other matters are discussed regularly with Ministers in the National Assembly.
  Mr. Llwyd: I thank the Minister for that less than illuminating reply. He will know that in the debate in the Welsh Grand Committee this morning there was considerable consensus on the problems of affordable housing in Wales. Is he prepared to meet colleagues and me, as well as Members from other political parties, to discuss that important issue and see whether we can come up with answers to this serious problem?
  Mr. Touhig: I welcome the comments that the hon. Gentleman made to me in the Welsh Grand Committee and, I believe, his support for what the Government are trying to do as a result of the Barker report, which was published last week. The Government have already introduced an exemption from stamp duty on property transactions under £150,000 in designated areas, which benefits 363 disadvantaged areas in Wales. The Planning and Compulsory Purchase Bill, when enacted, will require local planning authorities to take on board community views when they prepare local development plans. A number of initiatives are in the pipeline, but it would be beneficial to have a widespread discussion about how to overcome that difficulty in Wales.
  Mr. Huw Edwards: Does my hon. Friend appreciate the fact that in a constituency such as mine the cost of housing is high, and every effort should be made to encourage housing associations to help people who do not necessarily want to rent to part-rent,
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  part-buy. Such initiatives by, for example, the Gwerin housing association are most welcome. Can my hon. Friend speak with the First Minister to see how such schemes can be encouraged?
  Mr. Touhig: I welcome the point that my hon. Friend makes, and commend the homebuy scheme produced by the National Assembly. There is no limit on the proportion of resources that local authorities can spend on homebuy schemes, and rural authorities have allocated £2.6 million to them this year. Such initiatives are important, because we must try to make sure that more people can access affordable housing; and I believe that they will be beneficial.

  Special Constables
  Mr. David Amess: What discussions he has had with the Home Secretary on the number of special constables in Wales.
  The Parliamentary Under-Secretary of State for Wales: My right hon. Friend the Secretary of State and I have regular discussions with ministerial colleagues about matters affecting Wales. Together with police officers and community safety officers, special constables play an important part in modern-day policing, and the Government have recently announced plans to increase their numbers.
  Mr. Amess: The Minister will know that there is great concern among the public about the lack of visibility of those responsible for law enforcement in this country. In view of that, and the fact that the number of Welsh special constables has been cut by 50 per cent. since 1997, is the Minister content? If he is not, what are he and his Department doing about it?
  Mr. Touhig: The Government have launched a national television campaign to recruit extra specials, but in Wales we have a record number of police constables, and we also have 126 community support officers. We are pushing forward with a recruitment drive for specials, as I said, but it ill behoves an Opposition Member to comment on police numbers, because when the leader of his party was Home Secretary, police numbers declined by 1,000.
  Mrs. Betty Williams: Representing a Welsh constituency, and knowing what goes on in Wales, may I ask whether my hon. Friend is aware of the successful launch of an initiative by North Wales police to recruit more special constables? Its target is 25 new recruits a year, and is he aware that it is on target to meet that figure?
  Mr. Touhig: Yes, I am aware of the efforts made by North Wales police. Specials play a key role in representing their local communities in the police service, gathering important community intelligence to tackle crime and antisocial behaviour. In addition to 588 specials, we now have 7,366 police officers in Wales, together with 125 community safety officers, which is a record.
  Mr. Bill Wiggin: There are only 588 special constables in the whole of Wales, and I was disappointed by the Minister's rather complacent answer. Is he still prepared to maintain that nobody in his Department did anything to prompt the letter from the chief constable to me from which he quoted last time we had Welsh questions—nobody?
  Mr. Touhig: That is a grave and serious allegation, and there is no basis at all for it. I made the point to the hon. Gentleman in the last Welsh questions that my right hon. Friend had nothing to do with the letter from the chief constable, and I reiterate that that letter had nothing to do with the Wales Office. I urge him to withdraw that remark immediately.
  Mr. Wiggin: Can I withdraw a question, Mr. Speaker? The Minister for Crime Reduction, Policing and Community Safety admitted that the views of the chief constable of North Wales were contrary to Government policy. The wife of the deputy chief constable of North Wales has called for a Home Office inquiry into the way in which the chief constable handled allegations against her husband that may have led to his suicide attempt. Will the Minister support her call—
  Mr. Speaker: Order. That has nothing to do with the question before us.
  Huw Irranca-Davies: The issue of special constables was raised by a very able young constituent of mine called Alistair during a recent visit by Baroness Scotland to Pencoed school, as part of the big conversation. While I applaud the work that is now going on to recruit special constables, will my hon. Friend join me in stressing the element of partnership? It is not only special constables but community support officers, the increasing numbers of police and the community who have a role in making the sort of communities that we all want.
  Mr. Touhig: As I have travelled around Wales, I have been greatly encouraged by community activities involving the police service and other organisations, community groups in particular, aimed at building stronger and better communities and overcoming some of the types of antisocial behaviour that many of our communities face. I pay tribute to the police service for the important part they play in that.
  Mr. Roger Williams: Special constables in my area are aware of the greater burden being put on them with very little reward. That is not surprising, considering the appalling financial settlement that Dyfed-Powys police received in the latest police financial settlement. Will the Minister comment on that?
  Mr. Touhig: I do not believe that Dyfed-Powys had a bad settlement at all. Funding for the police properly remains a top priority for the Government, and there has been an increase of £403 million, or 4.2 per cent. in cash terms, for 2004–05. The police service faces considerable demands on its work force in terms of the responsibilities they carry out, but the Government,
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  working in partnership with our colleagues in the Assembly and with local authorities, have made sure that the police service is well funded.

  Renewable Energy
  Ian Lucas: If he will discuss with the Secretary of State for Trade and Industry the establishment in north Wales of a research centre for the manufacture of renewable energy products.
  The Secretary of State for Wales: I will certainly raise that with ministerial colleagues, because the Government are committed to their target of producing a far greater proportion of the UK's energy supply from renewable sources, with north Wales making a key contribution to that goal.
  Ian Lucas: In the past fortnight my right hon. Friend visited the Sharp manufacturing plant in my constituency, where photovoltaic cells for the whole of Europe are to be produced. Is he aware that in Germany more than 130,000 jobs in the manufacture of photovoltaic cells have been created in the past five years? As we are looking forward to more house-building projects in the UK, is not the time right for seizing the initiative on photovoltaic cells, developing research and providing the infrastructure to make sure that when new houses are built, they are supplied with renewable energy sources constructed in Wales?
  Mr. Hain: I agree with my hon. Friend. May I say how impressed I was with Sharp's new investment, creating 90 jobs, to build photovoltaic cells in Wrexham, when I visited the plant with him? It is a path-breaking initiative which, I hope, will create a centre of excellence in north Wales of the kind that he describes. He is right that we should find a way—this was raised in the energy White Paper of last year—of designing into new-build housing projects photovoltaic solar energy and other renewable energy sources.
  Mr. Simon Thomas: In Germany, a price was set for the sale of renewable energy into the market. That is not the case in this country, and we do not even have net metering to allow householders to generate their own electricity, if necessary, from small-scale embedded renewable energy. As a former Energy Minister, what is the Secretary of State doing in discussions on the Energy Bill, which is shortly to come before the House, to ensure that we have opportunities for job creation in Wales for wind generation, tide and wave generation and the very useful photovoltaic cells being produced?
  Mr. Hain: I welcome the point that the hon. Gentleman makes. I know that he has taken a close and informed interest in these matters. We want Wales to become a centre for green energy. We need to focus on the issues that he raises, which is why the Government have made available nearly £350 million for support for renewable energy projects right across Britain. Wales should claim its share of that.
  The hon. Gentleman mentioned wind power. It is important that there be greater support from local communities and local authorities for planning consent

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  to take forward wind power projects. Wales has a great deal to offer if we are to take a lead in renewable energy in that way.
  Mr. Hugo Swire: Does the Secretary of State recognise the mounting concern that the Government will not meet their own renewable energy targets? Does he share the concern that not enough investment is being made in that industry, and admit that far too great an emphasis is being placed on wind farms to generate electricity, rather than any other form of new technology?
  Mr. Hain: The hon. Gentleman is right to say that complementing wind power are biomass, photovoltaics and solar energy. An exciting new initiative called wave dragon is being developed around Milford Haven, involving a partnership between a Welsh company and a Danish company, which seeks to harness the power around the coasts of Wales using the newest technology. There are many different renewable energy opportunities in which the Government are providing a lead. May I say, in the nicest possible fashion, that the shadow Chancellor plans to cut support for renewable energy and other such programmes in the Department of Trade and Industry?

  Sure Start
  Julie Morgan: What discussions he has had with the (a) National Assembly for Wales Government and (b) Cabinet colleagues on the effects of Sure Start in Wales. [162545]
  The Secretary of State for Wales: I regularly meet Cabinet colleagues and National Assembly Ministers to discuss a range of areas, including programmes such as Sure Start, which are helping to secure better outcomes for children, parents and communities.
  Julie Morgan: Does my right hon. Friend agree that investment in the early years is the key to the future for children? Does he further agree that Cymorth, the umbrella organisation that includes Sure Start in Wales, is doing a really good job of reaching the most deprived children, and, together with Assembly policies such as free breakfasts for school children, is making a significant difference?
  Mr. Hain: I wholeheartedly agree with my hon. Friend. Support for that age group is crucial to opportunities later in life, and that is why the Assembly Government are funding Cymorth to the tune of £42 4 million during the coming year, a figure increased year upon year. It is interesting that, although the Opposition would apparently ring-fence the schools budget, the shadow Chancellor's plans, which I am sure that my hon. Friend will join me in condemning, will result in savage cuts to precisely the programmes, such as Sure Start, that are providing life-chance opportunities for many of our poorer children.
  Adam Price: Why then is the level of Sure Start funding per child in Wales half that in England, even though Wales has a
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  higher rate of child poverty? Does the Secretary of State think that we should match the Chancellor's commitment in England and build a children's centre in each of the most deprived 20 per cent. of wards in Wales?
  Mr. Hain: Clearly, Wales wants to do at least as well as England in every area of policy, and the National Assembly will want to consider the hon. Gentleman's points, but I do not think that he can take away from the Welsh Assembly Government the record investment that has gone into Cymorth in supporting pre-school children, in terms of educational opportunities and in other ways. That programme needs to be taken forward, and it will be, under Labour.

  Air Ambulances
  Hywel Williams: What discussions he has had regarding the provision of air ambulance services in Wales; and if he will make a statement. [162546]
  The Parliamentary Under-Secretary of State for Wales: I regularly meet the Assembly Minister for Health and Social Services to discuss a range of issues.
  Air ambulance services have been provided in Wales since March 2001. Since 1 December 2003 the service has increased its coverage across the whole of Wales to seven days a week.
  Hywel Williams: Should not this vital life-saving and successful service he publicly funded, as is the case in Scotland, or does the Minister agree with the Health Minister in Cardiff, Jane Hutt, who told me in a letter that we should be following
  "the regions of England and depending on charitable giving".
  Mr. Touhig: I am aware of the correspondence that the hon. Gentleman has had with my colleague, the Assembly Health Minister, in Cardiff, but the Scottish ambulance service includes the provision of aeroplanes and helicopters and is centrally funded, as he says; and it has been built up over the last 40 years, recognising the need of island populations that have no health services and where air transport is the only way to get to hospital. It is estimated that some 75 per cent. of all air ambulance missions in Scotland involve patients being air-lifted from islands off the Scottish mainland. The same situation does not apply in Wales.
  As for the operation of the air ambulance service, I could not put it better than the hon. Gentleman did in a recent press release when he said:
  "The air ambulance has been a tremendous success and I pay tribute to the efforts of all those concerned in its operation."
  Lembit Őpik: But would the Minister not accept that there is great rurality in Wales and it is sometimes difficult to get people to hospital in time to save their lives. Had it existed, the air ambulance would probably have been able to save the life of Councillor Hugh Taylor from Welshpool, who died a few years ago. Would he be willing at least to

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  discuss the prospect of greater financial support from the Government to ensure that people do not die simply as a result of lack of access to fast transport to hospital?
  Mr. Touhig: In March 2003, the Assembly announced the provision of £100,000 for the cost of air ambulance staff in Wales in 2003–04, and funding for future years will also come from the national health service. My colleague, the Assembly Minister in Cardiff, has made clear how she will take the issue forward.
  Mr. Bill Wiggin: I pay tribute to the work of the air ambulance, which must come as a great relief to those who are in pain on mountainsides in Wales and other rural areas. Can the Minister examine the point that charitable money is available only to fund the air ambulance and not paramedics? People like to give money to charity, and the point needs a great deal of attention.
  Mr. Touhig: I note the hon. Gentleman's point, but I understand that paramedics are a matter for the Assembly.

  Community Support Officers
  Mr. Wayne David: What assessment he has made of the effectiveness of police community support officers in Wales. [162547]
  The Parliamentary Under-Secretary of State for Wales: CSOs have been warmly welcomed by the communities they serve and the police officers with whom they work. The Government are carrying out an ongoing programme of research into the effectiveness of CSOs throughout England and Wales, and a summary assessment will be published shortly.
  Mr. David: CSOs are doing a great job throughout Wales and a tremendous job in my constituency, and they undoubtedly contribute hugely to cracking down on antisocial behaviour. Has the Minister received representations on what would happen to the police budget in Wales and CSOs if certain plans, which were mentioned earlier, came about?
  Mr. Speaker: Order. If the hon. Gentleman is talking about the policies of Her Majesty's Opposition, it is not for the Minister to reply.
  Mr. Win Griffiths(Lab): In my constituency, CSOs have been a resounding success. There are plans under which communities can make a 50:50 contribution with the police towards CSOs. Will the Minister explore the extension and improvement of that idea so that we get more CSOs, which would be welcome in my village of Cefn Cribwr?
  Mr. Touhig: CSOs provide public reassurance through visible patrols and free up police officers to do the job that they are trained for, and there are currently 126 of them in Wales. It is important to extend the CSO scheme, which was piloted in my local police division, Caerphilly, where it was hugely successful. I will certainly explore my hon. Friend's point. The
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  Government are determined to defend and invest in the police service, and will not allow it to be subjected to the cuts proposed by the Conservative party.

  Primary Legislation
  Gareth Thomas: If he will make a statement on the effectiveness of present arrangements in relation to enacting primary legislation affecting Wales. [162548]
  The Secretary of State for Wales: The arrangements have been working well. The partnership between the Wales Office and the Assembly Government has delivered 24 legislative measures that have given the National Assembly additional powers.
  Gareth Thomas: My right hon. Friend describes the effective partnership between the Government and the National Assembly. Does he agree that good reasons would need to be advanced to overturn the current arrangements, which were endorsed by the people of Wales in a referendum?
  Mr. Hain: I accept my hon. Friend's point that a persuasive case would need to be made, but I am sure that he will join me in saying that if it were made, we would examine it properly and sympathetically. We will all read and digest the Richard report when it is published next week.

  Employment
  Paul Flynn: What percentage of the population are in full-time employment in Wales; and if he will make a statement. [162549]
  The Secretary of State for Wales: During September to November 2003, 74 per cent. of the working population in Wales was employed on a full-time basis. The labour market in Wales continues to perform well, and better than the average for the UK economic regions.
  Paul Flynn: Does the Secretary of State agree that part of the wonderful success story of employment in Wales has been the relocation of civil service jobs from the south-east of England to Newport, where the Patent Office, the UK Passport Service and the Office for National Statistics have all settled happily? The move has also improved efficiency by reducing costs. Does he agree that if jobs are lost in the Newport area as a result of the changes announced in the Budget, they should be replaced by new jobs, as recommended in the Lyons report, which states that the relocation to Newport is a model that should be copied by other areas?
  Mr. Hain: I agree with my hon. Friend. Newport is a centre of employment excellence that offers great opportunities, not only for public sector jobs, of which he described many good ones, but for jobs that may be transferred in future as a result of the Lyons review. It is important that we continue to build up the employment

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  base of areas such as Newport in both the public and private sectors, and that is exactly what the Government are doing.
  Alan Howarth: Has my right hon. Friend noted that between the beginning of 2002 and last autumn, unemployment in Newport fell by nearly 18.5 per cent.? Is it not the case that under this Government we have been seeing the creation not only of higher levels of employment, but of more diversified and sustainable patterns of employment, giving new hope and opportunity to all too many people who in the past saw few prospects for themselves?
  Mr. Hain: Indeed. Our record in Wales on employment and on the economy generally compares extremely favourably with that of our predecessors. At that time, unemployment reached 160,000—now, it is well down to around 40,000. With employment rising all the time, economic inactivity rates coming down and average earnings going up, Wales is a good place in which to invest, to work and to achieve greater prosperity.

  Employment (Private Sector)
  Bob Spink: If he will make a statement on recent employment trends in the private sector in Wales. [162550]
  The Parliamentary Under-Secretary of State for Wales: The latest figures show that 75 per cent. of the employment increase in Wales over the past year was in the private sector.
  Bob Spink: I am rather surprised by that complacent reply, considering that jobs in the manufacturing sector in Wales fell by 3,000 during the past year. Is not that a result of the Government's over-burdensome regulation of businesses in Wales, where 3,990 new regulations were introduced in the past year? That over-regulation is destroying jobs and livelihoods in Wales. When are the Government going to deregulate?
  Mr. Touhig: I can tell the hon. Gentleman that in February 2004 the private sector economy in Wales expanded for the 11 th month in a row. Recent announcements of jobs created in Wales include: 90 at Sharp in Wrexham; 41 at Quotations Software in Holyhead; 100 at Brecon Pharmaceuticals; 700 in construction and 50 permanent at Exxon Mobil in Milford Haven; 40 at Bemis Global in Swansea; 700 at Logica in Bridgend; and 400 in aerospace in Blackwood and Cwmbran. We will take no lessons from the Conservatives, who said that unemployment was a price worth paying. Across the United Kingdom, unemployment under Labour is 3 per cent.; when the hon. Gentleman's party was in government, it was 3 million—not once, but twice.
  Kevin Brennan: While we are on the subject of employment trends in Wales, does my right hon. Friend agree that it is important to remind the House that at one time—when the Leader of the
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  Opposition was Employment Secretary—unemployment in Wales went up from 80,000 to 120,000? Now, it is down to 40,000—a third of that level.
  Mr. Touhig: My hon. Friend makes an important point. Thanks to this Government's efforts and successful management of the economy, investment has progressed, employment has increased, and record numbers of people are in work. There is a determination in Wales not to return to boom and bust and to the destruction that we had in Wales when the Conservative party—some of whose members want to return to their Thatcherite principles—delivered mass unemployment, wrecked much of our industry, put thousands of miners out of work, and destroyed local economies. We will not return to that.

  Dee Estuary
  Mr. Ben Chapman: If he will make a statement on dredging in the Dee estuary. [162551]
  The Secretary of State for Wales: Following completion of the environmental assessment, further discussions are taking place between the regulators and the port of Mostyn to establish whether there are alternative solutions that will meet the needs of Airbus. If none is found, consideration can be given to allowing the dredging to proceed if there is an overriding public interest.
  Mr. Chapman: Does my right hon. Friend agree with the Environment Agency for Wales that misleading reports are abroad about this issue? Although I defer to no one in my recognition of the importance of Airbus, the Dee estuary is a vastly important habitat and ecological site which dredging has the potential to damage. Does my right hon. Friend agree that all aspects of the argument must be taken into consideration when decisions are made, and that those decisions must be based on facts, not misinformation?
  Mr. Hain: Of course I agree that environmental issues must be taken into account, especially in the light of the habitats directive. I am sure that my hon. Friend will accept, however, that Airbus is a vital local manufacturer in his part of the world—and one of the best in Europe—and it must succeed in the future. The wings that it makes, which are transported to Toulouse, are a vital part of the A380 world-beating aeroplane. Airbus will go from strength to strength, and these problems need to be resolved as soon as possible.

  The Prime Minister was asked—

  Engagements
  Steve Webb: If he will list his official engagements for Wednesday 24 March.
  The Deputy Prime Minister: I am delighted to have been asked to reply. As the House will know, my right hon. Friend the Prime Minister is in Madrid today. He is attending the memorial service to pay tribute to all those who lost their lives. As the House will know, I represented this country in Madrid last Friday with other European leaders, to join the Spanish people in their protest against the terrorist outrage. I witnessed their grief and anger, and I expressed our solidarity with them. I am sure that the whole House would wish to do so again today.
  Mr. Webb: I welcome the Government's plans to protect workers who lose their jobs after April next year because their company has gone out of business, leaving them with a pension fund without enough money in it. The Deputy Prime Minister will know, however, that 60,000 workers are already in that position and have few or no pension rights. Does he believe that we should also support the people who lose out before the Government scheme comes in, and will he put pressure on the rest of the Government to ensure that that happens?
  The Deputy Prime Minister: The hon. Gentleman will be aware of the great concern over this matter, which has been discussed in the House. Some of the issues involved are before the courts. We have made it clear that the difficulty in these situations is that we need greater regulatory control, and we have taken action on that. We are also taking steps to improve the protection of workers' pensions in existing funds. In regard to those who have lost out at this stage, discussions are continuing with my right hon. Friends, and we shall take into account the views expressed by the hon. Gentleman.
  Mr. George Howarth: Does my right hon. Friend agree that most people find it difficult to understand what is objectionable about having to prove that they are who they say they are? Given the problems that we have with organised crime and terrorism, is it not time for us to have an identity card scheme, so that many Conservative Members will be able to prove that they are who they say they are?
  The Deputy Prime Minister: I shall avoid the temptation to define who people in the House are. ID cards are a matter of controversy. The idea has caught the attention of the House in debates over a decade or so, and I can assure hon. Members that the controversies and discussions continue. The Government have made it clear that they would work towards a compulsory card system, and we shall be doing that in stages. We shall also give the House every opportunity to vote on the issue. It is clear that ID cards can play a part in our campaign against the acts of terrorism that we must act against.
  Mr. Michael Ancram: We fully appreciate that the Prime Minister cannot be in the House today, and we join him in paying tribute to the people of Spain at this time of great grief. I understand, however, that, astonishingly, he will then go on to visit Colonel Gaddafi. That visit is highly questionable, and its timing even more so. This country has suffered
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  especially from Libya's support for terrorism, in the form of the murder of Yvonne Fletcher, Libya's supply of arms to the IRA and its complicity in the murder of more than 200 people over Lockerbie. Welcome though Libya's commitment to disarmament is, we should never forget the victims of Gaddafi's sponsorship of terrorism. Does the right hon. Gentleman at least agree that, if the Prime Minister meets Gaddafi, he should sup with a very long spoon?
  The Deputy Prime Minister: I note the right hon. and learned Gentleman's comments on that serious issue, but I think that he, like me, recognises that it is right to continue discussions. It was a British initiative that got one country to begin to take steps to renounce weapons of mass destruction, and as I understand it, he welcomes that. All other issues to do with talking with that country are a matter for judgment, and I think that the judgment that we talk to these people is an important one. I note that a representative of the families of those who were killed in the Lockerbie bombing has welcomed the fact that talks are taking place. I might add that the previous Administration began talks with the IRA, which eventually led to a reduction in deaths and terrorist actions. We have to strike a balance, and the Prime Minister has got the balance right.
  Mr. Ancram: As I said, we welcome the move towards disarmament, but that does not mean that we should forget what happened in the past or what is happening now. Can the Deputy Prime Minister guarantee that the Prime Minister will raise Colonel Gaddafi's financial backing for President Mugabe's evil regime in Zimbabwe and make it clear that such support is totally unacceptable?
  The Deputy Prime Minister: Again, I think I understand the concerns that the right hon. and learned Gentleman has expressed, but the original deal on Zimbabwe came from the Lancaster House agreement in the 1980s between Prime Minister Thatcher and Mugabe. That has some connection here. The only point I want to make about that is that it is still absolutely essential to try to secure agreement by talking. Acts of violence do not help, whichever part of the world they might take place in, whether it is Ireland or Libya. We have to keep the peace, talk and talk, and eventually get an agreement. To a certain extent, that has been achieved in Ireland, preventing additions to the kind of horrific death toll that cost 3,000 lives. The answer must be to keep on talking while at the same time maintaining a robust defence against terrorists and their deadly actions.
  Ms Julia Drown: In this year's spending review, will the Government show that they really are at the forefront of tackling global poverty by setting a timetable to achieve the United Nations target of spending 0.7 per cent. of GDP on international aid? If Norway, Sweden, Denmark and the Netherlands have been doing that for 20 years, why cannot we?
  The Deputy Prime Minister: My hon. Friend makes a serious point about how much aid we give to developing countries. We have increased the amount, I understand, from about 0.2 per cent. to 0.4 per cent. That does not

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  reach the target, but it is going in the right direction. We must also take into account the resources and help that we have given in reducing the debt problems of the third world. My right hon. Friend the Chancellor has worked extremely hard to get international agreement on that. While it is right to say, "Keep on pressing", because this is an important responsibility for us, we have to take into account what would be likely to happen to that programme in view of the Tories' announcements on budget spend and cuts. They mean that that programme would take a nosedive, not increase, as it is doing under this Government.
  Sir Menzies Campbell: I believe that the thoughts of us all are with the people of Spain today. On the matter of Libya, we on the Liberal Democrat Benches certainly support the Prime Minister's visit.
  Does the Deputy Prime Minister recall that a year ago, when the House of Commons was persuaded to endorse military action against Iraq, the Government welcomed the publication of the road map and committed themselves actively to work for peace between Israel and the Palestinians. What is his assessment of the prospects for that road map today?
  The Deputy Prime Minister: I thank the right hon. and learned Gentleman for his supportive remarks; I think he is absolutely right. The talks that are to take place in Israel are the only way forward to find agreement, and it is important to get co-operation with our European partners. My right hon. Friend the Foreign Secretary has made it absolutely clear that we deplore the action by the Israeli Government, but let us make it clear that the road map is the only way forward. We have to keep hoping that the parties who are signed up to it will agree to it and begin to implement it. The recent announcement by the Israeli Government that they will remove themselves from the Gaza strip is very welcome, but we need to look at the conditions. It is the only way forward, as indeed I would say the Good Friday agreement is still the only way forward in Northern Ireland—talking and talking.
  Sir Menzies Campbell: The whole House can accept that Israel is entitled to live at peace within secure and recognised borders. But when the Government's view is that settlements and the so-called security fence, when built on Palestinian land, are illegal under international law, and when the Foreign Secretary, in his trenchant opinion of yesterday, asserts that the assassination of Sheikh Yassin was unlawful, unacceptable and unjustified, what concrete steps are they prepared to take to persuade Israel to comply with international law?
  The Deputy Prime Minister: Again, the point is well made by the right hon. and learned Gentleman. That matter has concerned an awful lot of people in the House. The assassination to which he referred has been denounced by my right hon. Friend the Foreign Secretary, who has made it clear that it was an illegal act, which should not have taken place and which will make the situation much worse, as we can see today. The wall itself was a unilateral measure that will not provide lasting security for people in Israel, which we all
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  recognise. At the end of the day, there must be a negotiated settlement, which is always the more difficult way, and acts of violence or such unilateral actions will not help. The situation is escalating from day to day. Talking at the table is still the only solution, and in talking with other leaders in Europe, my right hon. Friend the Foreign Secretary will seek again to try to get discussions and negotiation under way on the road map.
  Mr. Barry Gardiner: Will my right hon. Friend join me in welcoming the 42 per cent. drop in unemployment in my constituency? Does he realise that the most important factor, particularly for those on lower wages, is the rise in the national minimum wage? Can he tell me when that will go up to £5 an hour?
  The Deputy Prime Minister: I am grateful for the remarks about the drop in unemployment, which is sometimes ignored by the general public. I came into politics to reduce unemployment. Under the Tories, it went up to 3 million. We have seen a reduction in that, and connecting that drop to the minimum wage, as my hon. Friend does, reminds us that the current Leader of the Opposition said that introducing the minimum wage would increase unemployment by 1 million. In fact, the opposite happened: we had the minimum wage, millions of people benefited from it, and we increased employment. Throughout the period of Labour Government, we have seen employment increasing by a quarter of a million in every year we have been in office. At the same time, we have increased the minimum wage and have recently announced the new date for the minimum wage increase.
  Mr. Peter Luff: What are the Government planning to do to help the Plain English Campaign celebrate its 25th anniversary later this year? What will the Deputy Prime Minister do personally to help it wage its war on gobbledegook?
  The Deputy Prime Minister: The hon. Gentleman, from time to time, may get his grammar right, but his thinking on politics and his common sense are often missing. And to that we can add the sketch writers as well. But I will not be addressing the conference.
  Dr. Howard Stoate: May I tell my right hon. Friend that 250 young people in my constituency have not been offered a secondary school place owing to failings of administration by Kent county council? That is causing huge problems not only for the young people involved but for their parents, because the county council has not even managed to run its own scheme in an efficient manner. Will he use his good offices with the Secretary of State for Education and Skills to ensure that Kent county council gets its act together for next year, even if it cannot sort out the problems this year, so that young people can be given a decent place, near where they live, at a school they want to go to, so that they can get the education they deserve?
  The Deputy Prime Minister: I am quite shocked to hear that Kent county council is not providing what it has a legal obligation to provide—places for children in

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  its area. It seems to spend more time thinking about the 11-plus than about providing places. The resources provided by this Government for education are unsurpassed, and that is why we are getting better standards and more places, in newer schools. We must face the fact that, even with the £8.5 million that has been promised by the Chancellor, on top of the increase in investment, the Conservative party voted in the Lobby last night against such an increase for education. Perhaps the Tories could explain that to Kent county council.
  Mr. Michael Ancram: Last week the Chancellor of the Exchequer announced that the Government were to cut 40,000 civil servants' jobs. Can the Deputy Prime Minister tell us how many extra civil servants the Government have hired in the last three years?
  The Deputy Prime Minister: I cannot give the answer, quite frankly, but I will write to the right hon. and learned Gentleman as soon as possible. I ask him to bear in mind that changes take place in the work force in a number of areas, which is natural in a growing and thriving economy. As I said earlier, we have increased the number of jobs offered by a quarter of a million each year. That means well over a million—nearly a million and a half—new jobs. The announcement made by my right hon. Friend the Chancellor in the name of efficiency—I thought that the Opposition were calling for efficiency from Government, and an end to waste—should be seen against the background of the growth in jobs that he and this Government have created.
  Mr. Ancram: Like the Prime Minister, the Deputy Prime Minister has not answered the question. The only difference is that the Prime Minister doesn't answer because he won't, while the Deputy Prime Minister doesn't answer because he can't. Let me help him. I asked how many extra civil servants the Government had appointed over the last three years. The answer is 40,000. Now they are cutting 40,000. First they hire them, then they fire thern. That is not exactly competent government.
  Can the Deputy Prime Minister answer this question? What percentage of the Government's spending is being wasted?
  The Deputy Prime Minister: The immediate answer is that we have cut the percentage of GDP that goes into administration. The figures were given by the Chancellor in his Budget statement, and I noticed at the time that there were no comments, cheers or shouts from the Opposition, because my right hon. Friend had shot most of their foxes in the lead-up to the Budget.
  Even the 40,000 figure that the right hon. and learned Gentleman mentioned, which I believe is correct, must be seen against the creation of a quarter of a million jobs each year—something that could not be achieved by the Opposition. Just think of the increase in the number of doctors, nurses and teachers that has taken place under this Government. There is no doubt that all those people face having their jobs cut simply because of the Opposition's commitment to cutting public expenditure
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  by £18 billion in two years. It is just hypocrisy for the right hon. and learned Gentleman to go on about waste, administration and unemployment.
  Mr. Ancram: Let me help the Deputy Prime Minister again. He says it is hypocrisy to talk about waste. Even the Government's own report says that up to £20 billion—almost 5 per cent.—is wasted.
  Let me try asking the Deputy Prime Minister about tax. At least we may get an answer this time. The Government are borrowing more than £140 billion over the next five years. The ITEM Club, the Institute for Fiscal Studies, the Organisation for Economic Cooperation and Development and the International Monetary Fund have all warned of further tax rises under Labour. Does the Deputy Prime Minister agree with them?
  The Deputy Prime Minister: We will take no lectures from the Opposition about borrowing. When they were in government, they borrowed nearly as much in a single year as the amount that the right hon. and learned Gentleman says will be borrowed over five years. The fundamental criticism is that whereas we borrowed to invest, he borrowed to keep people on the dole because of the failure of his economic policies.
  If the right hon. and learned Gentleman wants to see the benefits of what we did, he should look at his own constituency, where long-time unemployment has fallen by 96 per cent. As for education, there is an extra £660 for pupils. Crime has fallen, and there is more than £90 million for the primary care trust. Those are the benefits for the right hon. and learned Gentleman's constituents from this Government's policy. Perhaps he would explain to them why he wants to cut the amounts.
  Mr. Ancram: Once again, the Deputy Prime Minister has not answered the question I put to him. I asked whether expert economists were right in saying that there would be further tax increases under Labour. I cannot understand why the Deputy Prime Minister is being so evasive. The Prime Minister is not watching him. Has he not finally got what he has campaigned for throughout his political life—more taxes, more borrowing, more bureaucrats? After seven years of embarrassingly having to mouth new Labour slogans, why can he not just be happy that he has got what he wanted?
  The Deputy Prime Minister: In fact, there is now less tax, more employment and more investment, and we have reduced the bands of tax, which was never achieved under the Conservative Government. There is no doubt that the argument at the coming election will be whether money should be raised to pay for public services or to pay for tax cuts. We have no promise of cuts from the Opposition—they say that they will look at that, and that they might do it, but they will not commit to it. All that we can be sure of, as promised by the Leader of the Opposition, is that they will cut investment in public services. That is the choice that we will have at the coming election, and the Leader of the Opposition will have to answer for it, just as anyone else would.
  Mr. Stephen Pound: I realise that there are some questions that the Deputy Prime

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  Minister cannot answer in detail, for obvious reasons of security, but I personally find the prospect of a 30 ft-high concrete wall topped off with razor wire surrounding the Palace of Westminster utterly grotesque, and it would probably be ineffective. What is the Deputy Prime Minister's view?
  The Deputy Prime Minister: That is another piece of speculation that I would put down to press prattle. There is no substance in it.
  Mr. Andrew Rosindell: Will the Deputy Prime Minister personally intervene to ensure that the chaotic mess in our post office system is sorted out? He might not be aware of this, but last week, the main post office in Romford was closed at only four days notice. Coupled with that, a number of local sub-post offices are threatened with closure. When will he restore order to this vital public service?
  The Deputy Prime Minister: There will be a debate on that matter later, but we have discussed it at Question Time and during debates, and the Prime Minister has always made it clear that £400 million has been put in to develop the post office system and to prevent closures. That closures are continuing has been admitted from this Dispatch Box, but that amount of money has been put in to modernise and to help, and it has prevented a lot of closures. That has been going on for a long time. We have made it clear that pension payments can be made through a post office or a bank, and we are trying to find a good way of operating that will keep as many post offices as possible in existence. Many more would have closed had it not been for the financial support that this Government have given.
  Mr. Neil Gerrard: My right hon. Friend will know that even in my constituency, which is in a borough where housing is relatively cheap by London standards, it is becoming virtually impossible for someone on an average income to get into the housing market or to find property to rent. I appreciate the steps that my right hon. Friend has taken this week to help key workers to buy, but does he accept that that does not really address the problem of the overall supply of affordable housing? What does he intend to do to deal with that problem in London?
  The Deputy Prime Minister: I thank my hon. Friend for his comments on the announcement yesterday of the £670 million programme for houses for key workers in London and the south-east. He probably knows that English Partnerships will today announce a further £150 million programme for 2,000 homes for key workers to be built on in-fill brownfield sites in London. I believe that one of those is in my hon. Friend's constituency. He refers to affordable homes, and the Housing Corporation will announce today a £3.3 billion budget for a programme of 67,000 affordable homes in England. That contribution will take housing investment to a level that is double what we inherited in 1997. That contrasts, yet again, with the cuts in housing proposed in recent Opposition plans.
  Mr. Owen Paterson: The Deputy Prime Minister's decision to overrule all the
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  statutory planning authorities, including his own inspector, in their approval of development schemes in Ellesmere has provoked a petition signed by more than 85 per cent. of the town's electorate. Will he agree to meet a delegation of those people?
  The Deputy Prime Minister: The hon. Gentleman knows that everyone with responsibility for planning who stands at this Dispatch Box has to wait until the full planning procedures have been completed, and I am not sure whether they have been in the case that he refers to. Ministers are always available to discuss these matters, but they will reserve their judgment on planning issues. No Minister has ever been in doubt about that. I cannot give a yes or a no in this case, because I do not know what stage planning is at.
  Mr. Paterson: The right hon. Gentleman overruled it.
  The Deputy Prime Minister: Thousands upon thousands of planning decisions are taken, usually in my name. I often pick up a newspaper and find that it tells me—[Interruption.]
  Mr. Speaker: Order. When a Minister answers, I expect hon. Members to be quiet.
  The Deputy Prime Minister: I will consider what the hon. Member for North Shropshire (Mr. Paterson) has said and will write to him about it.
  Tony Lloyd: Does my right hon. Friend agree that it is normally fairly ludicrous when the non-elected Chamber lectures this elected Chamber on democracy, and that it is not merely ludicrous but dangerous and despicable when the official spokespersons of the major Opposition parties deliberately block the planned pilot schemes for postal votes in the European and local elections for the north-west and elsewhere, put party political advantage to the fore and leave a door wide open for the British National party?
  The Deputy Prime Minister: My hon. Friend makes a very serious point, and Lords amendments to the legislation in question will be debated later today. I find it completely unacceptable that the Lords should make judgments on the planning and procedures for the European parliamentary and local elections; it should not be up to unelected people to take such decisions. We have greater moral authority to take decisions on such planning, and we have said that four regions will be involved.
  The Opposition and their spokesperson in the House of Lords implied that they oppose postal ballots because they feel that such a system is a bit too convenient for voters. The Leader of the Opposition was asked in an interview for the Yorkshire Post whether he would accept the result of the referendum if people decided to vote for regional government. He said:
  "We wouldn't necessarily regard ourselves as being bound by that kind of majority."
  I hear a lot of talk about referendums, but the Leader of the Opposition is telling us that they might not accept the judgment of the electorate in this referendum. It has

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  been suggested in this place and in the House of Lords that such ballots might have more to do with the convenience of the electorate than with getting the greater turnout that all-postal ballot pilots have already achieved. Let us have more democracy and participation, and less hypocrisy from the Opposition.
  Mr. Edward Gamier: What are the qualities that the Deputy Prime Minister looks for in a European Commissioner, and does the right hon. Member for Hartlepool (Mr. Mandelson) possess any of them?
  The Deputy Prime Minister: I am sure that my right hon. Friend the Member for Hartlepool (Mr. Mandelson) would be well able to do the job, and the same is true of a lot of other Labour Members. I read in the press that I am backing certain people. The press have got it wrong again, but I do not want to get into personalities. The Labour Benches are so full of talent that the decision will be a difficult one for the Prime Minister.
  Chris Ruane: My right hon. Friend will be aware that the Department of Health has published a very important document today, entitled "Winning The War On Heart Disease." As chairman of the all-party group on heart disease, I welcome that document, but what extra measures can we adopt to ensure that we build on the successes that we have achieved to date?
  The Deputy Prime Minister: I am pleased that my hon. Friend has drawn attention to that document, which
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  points out that we are making some remarkable advances in respect of heart operations. That is welcome news, and to be fair, the Opposition spokesman on the national health service has also welcomed it, saying:
  "No one welcomes those improvements more than I do. It is excellent news that progress has indeed been made".—[Official Report, 22 March 2004; Vol. 419, c. 597.]
  We want to build on that progress, and I should have thought that Members on both sides of the House would take the view that the national health service does a wonderful job and that we want to do all that we can to improve it. We have made our position clear, which is that billions of pounds in resources have to be put into the health service, whereas the Opposition have decided that, basically, they want to reduce resources. That will provide a clear choice. I have often heard it said that there might be some more money for health and education, but I should like to see their proposals.
  I concede that the Opposition have said that they would not subject health and education to the kind of cuts that they are prepared to implement elsewhere, but I shall wait to see exactly what that means. An £18 billion cut in the first two years of a Tory Administration would mean that nearly everyone would he open to such attacks. If the Opposition want to say that the cuts would affect only defence, housing and other such areas, then okay, let them be clear about it. But on health, we have the success story of winning the battle against heart disease. All Members will welcome the fact that death rates are down by 23 per cent., and our target is to deliver 6,000 extra operations one year earlier.

  Court Papers (Wrongful Disclosure)
  12.30 pm
  Mr. Dominic Grieve(Urgent Question): Will the Solicitor-General make a statement on her Department's wrongful disclosure of court papers to the Minister for Children?
  The Solicitor-General: This question relates to the case of Re B, a minor, who was the subject of a care order on the ground that the child had been harmed by the mother, who was suffering from Munchausen's syndrome by proxy. The House will remember that I made a statement on 20 January after the Court of Appeal gave its judgment in the case of Angela Cannings. That was a criminal case where the mother was alleged to have been suffering from Munchausen's syndrome by proxy, but she was freed by the Court of Appeal.
  The House will remember that I announced that we had set up a review to establish whether there were any other cases where the expert evidence had been central to the conviction and that such cases would be reexamined by the Director of Public Prosecutions and, if necessary, by the Criminal Cases Review Commission.
  In answer to questions and expressions of concern about injustices that might have happened, not in the criminal courts but in the family courts, I told the House that the Minister for Children would be responsible for considering the implications of the Cannings case for cases involving care proceedings in the family jurisdiction. That statement in the House received widespread media coverage, which was understood by some to be an announcement that the Minister for Children was herself going to review individual family cases.
  On 23 February, the Minister for Children made a statement to this House explaining that she was issuing guidance about how local authorities should proceed to review care cases where the basis of the evidence was expert testimony that the mother was suffering from Munchausen's syndrome by proxy. After the reporting of my statement to the House, I had a number of discussions with people raising the question of reviewing cases involving care proceedings. That includes, for example, discussions with some hon. Members and with the director of social services for Southwark, in my own constituency.
  I was told by a solicitor, who happened to be my sister, that she was considering what action to take in respect of a client of hers who was seeking to challenge an order of the High Court taking the child into care. Part of the evidence had been that the mother was suffering from Munchausen's syndrome by proxy, about which I had been liaising closely with the Minister for Children. The solicitor in the case of Re B, a minor, sent me a copy of the High Court judgment, which I read. The names had been blanked out, so I did not, and do not, know the name of the child or the family. I simply looked at the court judgment.
  I formed the view, on reading it, that it was likely to form the basis of a ruling by the Court of Appeal that could assist local authorities and others in understanding whether the issues raised in the Cannings case—a criminal case, of course—had any implications
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  for care cases in the family jurisdiction. I thought that the Minister for Children should be aware of the judgment.
  I understand that, subsequently, the Court of Appeal had itself notified the Minister for Children of the judgment in Re B, a minor, and offered to send her a copy of that judgment and all the papers, and invited her to consider whether she wanted to intervene in that case. It gave leave for the judgment and associated papers to be sent to her. Before I sent the judgment—without the names—to the Minister for Children, I sought legal advice from my office. I was advised that there was no prohibition on my doing so because the names had all been blanked out, and subject only to checking with the solicitor that there was no specific ruling in the case that prohibited disclosure. Having checked with the solicitor, I then sent the judgment to the Minister for Children.
  When the local authority responsible for the care proceedings challenged my sending the judgment to the Minister for Children, the lawyer in my office who advised me reconsidered the question and decided that he probably was wrong, and that I should not have sent the judgment to the Minister for Children without a court order.

  However, I can reassure the House that I acted on legal advice. I did not identify the child: I could not do so, in any event, as I did not know the child's identity. Also, in any event, the Court of Appeal subsequently asked the Minister for Children to consider whether she wanted to intervene in the case and gave leave for the disclosure to her of all the papers in this case on 23 February.
  Mr. Grieve: I thank the Solicitor-General for her statement, which has certainly helped to clarify what appeared in the press this morning. Does she agree, however, that it is an extremely unfortunate state of affairs when the Law Officers Department, which after all is supposed to advise the Government on the law, does not know the rules covering contempt of court and the confidentiality of documents? Does she also agree that, in such cases, it is not appropriate for Law Officers to pass responsibility on to those to whom they turn for advice, as their role and function must require them to take responsibility for their own actions in respect of documents that come into their possession? Will the Solicitor-General assure the House that the case is not another example of the gradual erosion of the principle of the confidentiality of documents, or of the Government taking the view that they have a right to anything that comes into their possession? That must be one of the inferences that could be drawn from how the documentation was handled.
  A second question relates to the handling of cases involving Munchausen's syndrome by proxy under civil proceedings. The Solicitor-General will confirm that we were told that the matter would be reviewed by local authorities, according to guidelines set out by the Minister for Children. However, does not this episode highlight the fact that that system does not appear to be working properly? The Solicitor-General has, at least, intervened to pass documents to the Minister for Children that would allow her to intervene against a decision made by a local authority. Can the right hon. and learned Lady reassure the House about how the

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  process is working in practice? Are there other examples of local authorities being unwilling to co-operate or to act according to the guidelines laid down by her and the Minister for Children?
  These are important issues. I hope that the Solicitor-General can provide some proper reassurance.
  The Solicitor-General: I am sure that I can give the hon. Gentleman that reassurance. It is not a question of not knowing the rules. I am very clear that I take responsibility for my actions in the case, and I remind the hon. Gentleman what the rules are. They state that it is a breach of the Children Act 1989 to do anything that identifies, or which would tend to identify, any child involved in any proceedings. I think that I have made it absolutely clear that it was not the case that I breached those rules.
  Under the Administration of Justice Act 1985, a second prohibition prohibits some publications of proceedings in private. The question that arises at that point has to do with what constitutes a publication. The hon. Gentleman will know that that has been the subject of some considerable consideration by the courts. Therefore, this is not an open-and-shut case, in which the only question is whether the action taken was in breach of the rules. It is a question of how far the rules extend, but it is certainly absolutely clear that I was fully aware of the provisions of the Children Act 1989. I did not breach them and I did not identify the child involved.
  One approach that I could have adopted, but did not, was to argue before the court that to send one copy of the judgment to a fellow Minister did not amount to publication within the meaning of the Administration of Justice Act 1985. That was an approach that I could have taken, but I left it. I am happy to accept responsibility, and I hope that I have made that clear.
  The hon. Gentleman's second point concerned any erosion of the principle of confidentiality. There was no erosion of that principle, or of any other principle. The hon. Gentleman also made a wider point and implied that because I had discussions with my right hon. Friend the Minister for Children the system had not worked and that somehow I had intervened. The system did work. I became aware that a judgment by the Court of Appeal was forthcoming. As it happens, I took the same view as the Court of Appeal. It became aware that it was about to make a judgment that would have implications for the review by the Minister for Children. It thought that she should know about the case and it wrote to her. I became aware that the Court of Appeal was about to consider a case that might have implications for the review by the Minister for Children. I thought that she needed to know about it and, having taken legal advice and considered the legal issues myself, I sent her information about that case.
  The hon. Gentleman would have more justification if he had said that on this important issue of the crossover between the civil and criminal jurisdictions, in cases involving Munchausen's syndrome by proxy, the left hand of Government does not know what the right hand
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  is doing. One Minister considered the criminal issues and another considered the family issues. All such cases involve a lack of confidence in and a fresh consideration of Munchausen's syndrome by proxy and, therefore, the primary responsibility for the family jurisdiction lies with my right hon. Friend the Minister for Children. I thought that it was right that she should see the case, and the Court of Appeal thought the same, separately. On that issue, it was a case of great minds thinking alike.
  Mr. David Heath: I am grateful to the Solicitor-General for the clarity of her reply. It is a misfortune that the solicitor in the case in question is her sister, but let us set that aside. Let us also recognise that whatever she may have done in the court system is a matter for the courts, not for the House. We need to consider what the Solicitor-General has done.
  I find it difficult to reconcile what the Solicitor-General has told us today—that the paper passed was an anonymised judgment—and what Mr. Justice Munby is reported as having said, which was that a Department had no right to see a family division file. He said that it needed leave from a judge to do so and found that a contempt had been committed in this case. I do not doubt the good intentions of the Solicitor-General in this important and difficult area of public policy. However, given that her ministerial responsibilities include civil litigation and advice on civil law matters, including charity and family law issues, and that her secretariat is intended to provide high-grade legal advice, it is a matter for concern that matters were got wrong in this instance, because that undermines confidence in her Department.
  Does the Solicitor-General agree that wider issues still need to be resolved? I suggest that one is the quality of advice available to families who have been involved in a case of Munchausen's syndrome by proxy. It should be possible to gather information in a way that does not conflict with court rules to inform Government policy on the issue. She is right to say that we need an effective crossover between civil and criminal practice in that area. Does she accept that, in this instance, she did not choose the right way to go about it?
  The Solicitor-General: The hon. Gentleman is right to say that Mr. Justice Munby says that a Minister has no right to see a family court file, but, of course, I do have the right to see family court files in some cases because I have a responsibility to intervene to assist the courts in family cases.
  David Davis: The right is limited.
  The Solicitor-General: The right hon. Gentleman assists me by saying that the right is limited. Perhaps I can just make it absolutely clear to the House that I want to do my job properly. I want to assist with the administration of justice. I want to abide by the rules. I want to be absolutely clear that that is the case. Obviously, I shall consider how the different Acts of Parliament—the Children Act 1989 and the Administration of Justice Act 1985—and the different jurisdictions with which I have some involvement intersect. I will make the position clear, and perhaps that will assist the House.

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  The quality of the advice that is available to people who challenge care rulings in respect of their families is a matter for the Department for Constitutional Affairs and the Law Society.
  On the point about gathering information, there is an issue about how we can discuss cases in principle and how the law is working in principle when there is an absolute prohibition on discussing the circumstances of individual cases, but that is a wider point about which the House has been concerned.
  Mr. Gwyn Prosser: My right hon. and learned Friend will be more aware than most of the excellent work that Sarah Harman—the solicitor in this case—has done over recent years. She takes on some of the most difficult and, frankly, unpopular cases. She is held in the highest esteem, not just in east Kent but right across the country. However, does my right hon. and learned Friend share my additional concern that Friday's judgment could effectively deny MPs access to papers and documents that could be crucial in their assisting with certain casework? Frankly, some of that casework involves the most difficult and sensitive subjects that ever come to visit us in our surgeries.
  The Solicitor-General: I thank my hon. Friend for his comments about Sarah Harman, and I wish to take up the additional point that he raises, which is important for the whole House. There can be very few hon. Members on either side of the House who have not had a man come into their surgeries saying, "There has been an injustice. I'm not allowed to see my children." That is the background of the case, and it is what the court has said. There can be very few hon. Members who have not experienced a woman coming to their surgeries saying, "The council has got a court order to take my children into care, and this is wrong and an injustice." That happens regularly. There is a question about where the correct response lies because Parliament must perhaps provide an avenue, a safety valve, an opportunity for those who feel that they have suffered an injustice to come to speak to their MP. Perhaps that is the right position; or perhaps the right position is that, because of the laws that we have passed in the House and their interpretation by the judges, we should tell those constituents, "Don't speak to me about this. By speaking to me, you are in contempt. Please go away. I'm not even going to talk to you."
  On the point raised by the hon. Member for Beaconsfield (Mr. Grieve)—I do not know whether he has had the opportunity to see the full judgment—we need to be clear exactly how the situation lies, so that we can protect the interests of children, the administration of justice in the family division and the opportunity for the House to be a safety valve for our constituents who feel that they have suffered an injustice, rather than seeing them dress up as Spiderman and climb up on to a crane.
  Mr. Edward Garnier: Is it not regrettable that the Solicitor-General thought it appropriate to refer us to the internal workings of her Department in mentioning another lawyer's advice? It is her advice as the Solicitor-General that is important, and not the internal advice that she may have received from her lawyers in the Department. She is here as the
  890
  Solicitor-General and is accountable to us in that guise. Surely, the matter is all the more regrettable when one considers her involvement in the law of disclosure. She will remember, 25 years or so ago, the case of Harriet Harman v. the Home Office, which related to improper disclosure of documents. It seems to me that her conduct over the past few days in this matter, although understandable, is regrettable.
  The Solicitor-General: The hon. and learned Gentleman raised the question of the case of Harman v. the Home Office, but what he omitted to say was that it was subsequently decided that I had not acted improperly. Perhaps I could remind the House, for those who cannot remember this case of 25 years ago, that it was decided I had not acted improperly in that case. I should like to set the record straight on that, in case anybody is putting two and two together and making five.
  On the question of the internal workings of the Department, the local authority in question wrote to me and sought information about exactly what had happened prior to my being sent the judgment and after my having been sent the judgment. I responded to it, and copied this into the court. Having written to the local authority and sent a copy to the court, I do not think that it is right to give a partial version to this House. Therefore, I am giving the House the information in as full a form as that in which I gave it to the local authority and the court. It was in that spirit that I gave that information.
  As former Law Officers will know, it is not at all unusual for Law Officers to take a preliminary view and then ask for a lawyer in their Department to give it further consideration. Indeed, leading counsel will often take a preliminary view and ask junior counsel to check it out. I am not resiling from or trying to shed responsibility
  Mr. Garnier: You are.
  The Solicitor-General: No, I am not trying to shed responsibility. I am trying to explain the procedures. I hope that they will lead the House to reflect on and accept the fact that I acted in good faith and with due diligence, and that the interests of the child were not harmed, although there are some further issues that we need to consider in relation to the contempt proceedings and the relationship between Members of this House and our constituents.
  Mr. David Kidney: I am sorry for any personal embarrassment that has been caused to my right hon. and learned Friend, as she does an excellent job in her post, and long may that continue. However, it occurs to me that the review of the criminal cases and the investigations of the decided family cases that are going on at the moment will put a lot of Departments and other organisations into a position of some conflict and doubt about whether to respond to the requests for information for the review and investigation, and about their duties under contempt of court rules. I wonder what the position is in terms of the Government requesting information or somebody else, such as the courts, giving some absolute advice to people so that that can be clear. Beyond that, I wonder whether this is

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  a passing phase to do with the investigations following the Cannings decision or whether, bearing in mind that the Children Bill has just started its progress in the other place, a more general application needs to be considered for inclusion in that Bill before it makes it on to the statute book.
  The Solicitor-General: I thank my hon. Friend for his question. There are more general issues that need reflection and consideration. Whether they need a statutory amendment to children's legislation is not at all clear, but I think that further consideration is needed. He is right that we want to be sure that Ministers in other Departments and, indeed, Members of this House are in no doubt about the position when people come to see them, particularly if they have seen reports of such judgments. We do not want anybody to be in any doubt about whether they can carry out their duties by proceeding to discuss a case, or whether they would be in breach of contempt rules.
  I hope that the House will find it helpful if I offer to consider how we think about clarifying the situation. It is an issue not only for Ministers, but for Members in general. Perhaps, as I am fully respectful of the long years of experience of the shadow Attorney-General, I will offer to consult him, and he can help us to ensure that we have an agreed position that everybody in this House can be clear about, as they should be able to feel certain of their duties to their constituents and their duty to obey the law.
  Mr. Peter Lilley: Does the Solicitor-General accept the traditional doctrine of ministerial responsibility, under which Ministers are responsible for the advice that they take and are therefore obliged and have an incentive to probe, question and validate that advice? Or is she joining the long list of Ministers who seem to be enunciating a new doctrine under which, if the advice proves correct and successful, Ministers take responsibility, but if it does not do so, they invoke an official and point the finger at them?
  The Solicitor-General: I have never been in any doubt—and I think that the Law Officers are in a particular position on this—that responsibility lies not with the adviser, even where that adviser is the Law Officer, but with the person who is taking the decision. In this case, the person who was taking the decision was me, and I take responsibility for it. I simply described to the House, in the way in which I described it to the local authority and the court, what the process was.
  I want to be clear that I take responsibility for the actions that I took. There was nothing improper about the actions that I took. The court has no criticism of me or of the actions that I took, and I do take responsibility for them. I do not want the House to be left with the idea that my explanation of the background to my actions was somehow a denial of responsibility. I accept responsibility, and no harm was done.
  One of the things that I would be very concerned about and would regret would be if the excellent work of the legal secretariat to the Law Officers, which has served Law Officers down the decades excellently and
  892
  with a high degree of professionalism, somehow was criticised as a result of what has happened. The Attorney-General, Lord Goldsmith, and I value most highly the work of the legal secretariat of the Law Officers, which is recognised throughout the profession as providing the highest quality legal advice.
  Vera Baird: Although I am rather late in the day, may I congratulate the Solicitor-General on the blow that she struck 25 years ago by breaking the barrier of contempt of court, which was a real obstacle to freedom of information in those days? I congratulate her on that and I am sorry not to have done so earlier.
  May I also congratulate my right hon. and learned Friend on her wisdom in taking a second opinion and not relying solely on her own legal advice in making the decision? May I deplore the criticism that has been levelled at her when she has asked to come to the House and explain how the decision was taken? If she did not explain that she had taken advice and how it turned out, she would have been heavily criticised for not mentioning it. No doubt, she would also have been belaboured for taking the decision on her own. May I congratulate her, as she did absolutely the right thing?
  May I express very briefly my sympathy with anyone who finds themselves in the complicated, multi-layered depths of contempt of court? It is often very hard to know where the public interest lies in that sector, and frankly that whole area of law needs urgent review.
  Further to the comments of the hon. Member for Somerton and Frome (Mr. Heath), I have certainly seen a letter from the Law Society suggesting that it is considering writing to all its family practitioners inviting them to review their files to see whether there is a case to be brought out and put into this whole area of review. Is my right hon. and learned Friend aware that the Law Society is going to write to all family solicitors inviting them to submit cases for review, and is that being done with the encouragement of her Department or the Minister for Children?
  The Solicitor-General: I thank my hon. and learned Friend for the points that she made. Issues have arisen around the edges of the case that require further review, and I am aware of those that the Solicitors Family Law Association and the Law Society have been looking at.
  Rev. Martin Smyth: The Solicitor-General suggested that we should broaden consideration of the problem, particularly as a reference in the press suggested that a Member of Parliament could be in contempt of court if a constituent brings an issue to him. In reality, as she said, most Members of Parliament will deal with cases, from both men and women, which go on to the family division. I dealt with one case in which fighting had been going on for two years—not with the courts but with the evidence given by social services to the courts. Ultimately, a guardian ad litem was appointed for court proceedings, which confirms that the guidance I was given was correct. It is important that the right of the citizen to see their Member of Parliament as an ombudsman is maintained.
  The Solicitor-General: I am sure that we all want to be reassured that citizens maintain the right to meet their Members of Parliament, tell them what has been going on in a case that affects their life profoundly and, if they want the opportunity, to protest to them and ask for something to be done. Of course, we all want to be absolutely clear that we are sticking to the letter of the law. I suspect that custom and practice operates when a Member writes to social services on behalf of a constituent, as the hon. Gentleman may have done, and asks for background to the case. However, if such information consists of issues that have formed the background to court proceedings that custom and practice may not be within the strict letter of the law. We have to be absolutely sure about that—we do not want to invite social services to break the law in communicating with MPs; we do not want to give comfort to constituents but at the same time breach the law; and we do not want to break the law in anything that we do in the House or debates. We need to discuss the issues of principle and we need to support our constituents. When we discuss those issues, it will assist us to have an understanding of the way in which the courts deal with those issues in practice

  Points of Order
  1.3 pm
  Mr. Jeffrey M. Donaldson: On a point of order, Mr. Speaker. This afternoon, in Prime Minister's questions, the Deputy Prime Minister accused the deputy Leader of the Opposition of hypocrisy. May I draw your attention to column 1603 of the Official Report on 10 March 2004? In a debate on the Justice (Northern Ireland) Bill, one of my hon. Friends was called to order by the Deputy Speaker for accusing another hon. Member of hypocrisy. I know that you wish to protect and uphold the rights of Back Benchers, and would not wish to have two sets of rules in the House for Front Benchers and Back Benchers. Will you therefore give a ruling on whether it is unparliamentary for one hon. Member to accuse another of hypocrisy, regardless of whether they are a Front-Bench or Back-Bench Member of Parliament?
  Mr. Speaker: I always say to the House that temperate language should be used at all times, and it is unfortunate if it is not. Whether Members are Front Benchers or Back Benchers, all are hon. Members and are treated the same. I am sure that the hon. Gentleman knows that I have no fear about whether the Member concerned holds high office—they will abide by the rules of the House.
  Mr. Peter Robinson: Further to that point of order, Mr. Speaker. In that case, the Back-Bench Member was asked to withdraw their comments, but today the Front-Bench Member was not.
  Mr. Speaker: Perhaps the Deputy Speaker was more attentive than I was today, but the hon. Gentleman will know that Prime Minister's Question Time—whether questions are fielded by the Prime Minister or by the Deputy Prime Minister—is a heated time of the week and I have many things to watch out for. I would put it down to that.
  Mr. Stephen McCabe: Further to that point of order, Mr. Speaker. Is there not a distinction between referring directly to an hon. Member and accusing them of being a hypocrite, which you would rightly rule out of order, and making a general criticism that the Opposition's position is hypocritical?
  Mr. Robinson: That is not the case.
  Mr. Speaker: Order. Let me deal with the point made by the hon. Member for Birmingham, Hall Green (Mr. McCabe). I have been able to answer the other points of order. There is a distinction—he is quite right—[Interruption.] Order. I know what hon. Members are asking, and I think that I have given as good an explanation as I can.

  Restricted Byways
  1.5 pm
  Mr. Robert Walter: I beg to move,
  That leave be given to bring in a Bill to make new provision about establishing the existence of byways open to all traffic.

  I want to make it clear at the outset that the Bill is not about banning things but about clarification of the law. Many in the House relish the countryside and its beauty. I have two areas of outstanding natural beauty in my constituency: the Dorset AONB and Cranborne Chase, and West Wiltshire Downs AONB, which also covers the constituency of my hon. Friend the Member for Salisbury (Mr. Key), who is present. My Bill is about co-existence in the countryside. I have been accused of being anti-biker and anti-four-wheel drive, but it is not my intention in the Bill to be anti-anything of that nature. I want to defend the rights of horse-riders, walkers, hikers, and genuine users of the countryside—people who have traditionally used it in certain ways, particularly those who have experienced peaceful enjoyment along green lanes, bridleways and footpaths.
  There is still room in the countryside for people who want to ride their motorbikes and trailbikes, and who want to drive their four-wheel vehicles. Yesterday, I discussed the Bill with someone outside the House who asked, "What about the new souped-up tractors that people are driving in the countryside?" Some of the Bill's provisions will cover that, as it would create a framework for co-existence in the countryside.
  The Government have already issued a consultation document on the subject, "The Use of Mechanically Propelled Vehicles on Rights of Way". I am delighted that the Minister for Rural Affairs and Local Environmental Quality is on the Government Front Bench, because I want to make particular reference to the fourth proposal in the document, which says:
  "We propose to introduce legislation, which will make it no longer possible to establish the existence of a byway open to all traffic by reference to historic (pre-commencement) use by, or other evidence relating to, non-mechanically propelled vehicles"
  probably a horse and cart. However, it also says:
  "We propose to do this by introducing a cut-off date after which (subject to certain exceptions) any unrecorded rights of way for vehicles shall be recorded as restricted byways in the definitive map and statement.
  We propose that the cut-off date should be one year from the commencement of the new legislation."
  The cut-off date is a problem, which is why I am moving the Bill now, rather than waiting.
  In a letter that I received earlier this month from the leader of Dorset county council, Mr. Tim Palmer, he stated that he has forwarded to me a letter that he had written to a committee considering the consultation on opening a byway to all traffic in the county. He writes:
  "You will see that all the evidence allowable under the current law is in favour of a byway"
  open to all traffic. He goes on:
  "Everyone is now looking to your Bill to give them a voice and to add to the clamour for a change in the law. One aspect you may want to cover is the retrospective review of existing byways. This is not allowed for in the Government's consultation paper. Because of this the TRF,"—
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  the Trail Riders Fellowship—
  "4WD clubs etc are rushing to claim more byways before the legislation comes in. In addition we do need to be able to review the status of some ancient byways, national monuments like the Ridgeway and the Oxdrove through this constituency, both currently completely wrecked by swarms of bikes, quads and 4WDs."
  This is not solely a Dorset issue. It has great support across the House. Early-day motion 380 dealing with the use of unsurfaced byways open to all traffic was tabled by the hon. Member for Bassetlaw (John Mann) and signed by 90 other hon. Members. It particularly mentions the Ridgeway. In my constituency, there is a bridleway—bridleway 17—emanating from the village of Cranborne. Last June I had to attend a public meeting in the village. The 300 people who had gathered were very concerned about bikers using the bridleway not local people using it for their enjoyment, but people who had travelled almost 100 miles because it was considered a good place to ride their bike, particularly when it had been raining and the bridleway was rather muddy. There was talk of biking groups that came regularly from Bristol, Southampton and so on.
  I know that my proposal has the support of the British Horse Society, the Ramblers Association and the Green Lanes Environmental Action Movement, but I also want the support of the Trail Riders Fellowship and an organisation of four-wheel drivers in my constituency called—perhaps slightly incorrectly—the Friends of Dorset Rights of Way, who have written to me on several occasions suggesting that we should find a form of co-existence.
  So what will my Bill do? It will state that when a county council or other body responsible for rights of way is considering an application for a green lane, or whatever it is, to be designated as a byway open to all traffic, if the evidence is solely that 100 or 150 years ago the byway was used by a horse and cart, the council will be able to protect the rights of existing users of that byway—the riders and the walkers—as well as look after the access for farmers and for others to open spaces beyond the byway. The council should be able to protect the rights of the disabled, who may well need to use four-wheel drive vehicles to get to the open spaces beyond the byway.
  The Bill would give the county council rights of way committee the powers to designate a byway as a restricted byway, and to consider the rights and responsibilities of those with mechanically propelled vehicles—the trailbikes, the four-wheel drives and so on—and to make sure that those rights are not jeopardised. Laying down specific rights should be a matter of local decision for local people exercised by their local authority. By creating a byway known as a restricted byway, we can balance the needs and rights of all the users of the countryside.
  Question put and agreed to.
  Bill ordered to be brought in by Mr. Robert Walter, Sir George Young, Jeremy Corbyn, Sandra Gidley, Mr. James Gray, Mr. Robert Key, Mr. David Drew, Mr. Anthony Steen and Mr. John Randall.

  RESTRICTED BYWAYS
  Mr. Robert Walteraccordingly presented a Bill to make new provision about establishing the existence of byways open to all traffic: And the same was read the First time; and ordered to be read a Second time on Friday 16 July, and to be printed [Bill 80].
  Opposition Day
  [7th ALLOTTED DAY—FIRST PART]

  Post Office Services
  Mr. Speaker: I inform the House that I have selected the amendment in the name of the Prime Minister.
  Mr. David Willetts: I beg to move,
  That this House believes that all Post Office customers who wish to continue receiving their benefits, pension payments and tax credits through the Post Office should be able to do so through a Post Office Card Account opened at the counter of a Post Office or sub-post office; notes that the Government has encouraged Post Office customers to use their own bank accounts or basic bank accounts, whilst preventing the promotion of the Post Office Card Account; further believes that the Government should use the roll out of Direct Payment to encourage the take-up of all benefits and tax credits; calls on the Government to clarify urgently how housebound, disabled and older people who are not able to cope with the three direct payment options will be able to claim their pensions and benefits after 2005; recognises the significant role played by local post offices in both rural and urban areas; appreciates that ending cash benefit payments will deprive sub-postmasters of an average of 35 per cent. of their income; notes that this will make many post offices commercially unviable and is likely to lead to yet further closures; further calls on the Government to ensure that the urban post office closure programme is conducted systematically and only after consulting all relevant parties including Post Office users; and condemns the Government's failure to deliver benefits and tax credits in a simple, easy to understand manner while at the same time jeopardising the future prosperity of the Post Office.
  The motion reflects a widespread belief not just among those on the Opposition Benches but in all parts of the House about the importance of post offices as part of the local community. We have deep concerns about the long-term viability of the post office network under the Government's approach. Those concerns were powerfully expressed by my hon. Friend the Member for Eddisbury (Mr. O'Brien) in the debate in the House on 13 January. That debate focused on the post office network and the importance of sustaining it and investing in it. Today I shall consider the post office network from the point of view of the people who use it—from the demand side, rather than the supply side. I shall consider the point of view of benefit claimants and the pensioners whom we represent, who wish to have access to a viable post office and to claim their benefits in a way with which they are long familiar and comfortable.
  Although it is always good to see the Secretary of State in the Chamber, it is a great pity that she was not present for the debate on 13 January, which was about her responsibilities for support for post offices. Today, even though we are talking about services for benefit claimants, the Secretary of State for Work and Pensions is not present. I regret that, because I want to consider the crisis in our post offices from the point of view of those claiming benefits, many of whom are very unhappy with the Government's approach.
  Mr. Patrick McLoughlin: May I tell my hon. Friend about Belper? Under the reinvention programme, which seems to be more like a programme of mass destruction, of the five post offices that were opened in Belper, four were closed. We were
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  assured that the one remaining post office would be able to cope, but last week there was absolute chaos in it. When the Government made a commitment to allow people to collect their benefits, they did not say that they would make it impossible for them to do so—but that is just what they have done.
  Mr. Willetts: My hon. Friend reflects the views of many constituents across the country who face practical problems that give the lie to some of the complacent assurances that we received from Ministers. The Trade and Industry Committee report "People, Pensions and Post Offices" contains powerful evidence about the scale of the problem that our post offices face and confirms why we are right to press for the right of people to choose how they receive their benefits. Paragraph 12 of the report states that the "old" system—the so-called old system
  "offered the choice between a bank or building society account or an order book for use at a post office to collect benefits and pensions. Direct Payment essentially offers the choice between a bank or building society account which may or may not be usable at a post office, or the Post Office card account, but not the order book. It is difficult to see that customer choice has, in practice, been extended significantly. Offering the full range of customer choice would entail allowing those who wish to persist with the order book system to do so."
  The Opposition are committed to the order book system as an option not because we are retro or old-fashioned, but because we believe in choice. If there are millions of people in Britain, including many pensioners, whose choice it is to use such a system, why should the Government try to deprive them of the choice that they reasonably wish to exercise?
  People are right to be wary of some of the options that are in front of them instead. I shall quote the experience of a constituent of mine—Mrs. Mortain, who lives in Havant—whose case I have heard about literally in the last few days; I have her permission to do so. She has been receiving her pension via her bank account, in exactly the way that Ministers are trying to encourage, but she has not received a bank payment for the past five weeks. They have suddenly ceased. She got on to the Pension Service and it told her that it is currently experiencing what it called
  "a glitch in the system",
  and that hundreds of others are affected.
  The Secretary of State for Trade and Industry may not be able to respond to this, but I hope that in the winding-up speech of the Under-Secretary of State for Work and Pensions, the hon. Member for Gravesham (Mr. Pond), we will learn whether he is aware of problems in delivering pension payments into bank accounts, and whether my constituent is not alone and there is a glitch in the system affecting many others. It has reached the stage where the Pension Service is saying, "The only way we can get you the money is to issue you with a giro cheque that you can cash at your local post office." That will be the fallback when computerised payments to bank accounts have not worked. Is that not why so many pensioners do not trust the Government's assurances on payment in other ways?
  Mr. Crispin Blunt: That news will be of great concern to old people in Reigate, where three post offices have been closed—in fact, the latest one is closing on Saturday—and they are left with the main post office in Reigate, which is hosted by Safeway. Morrisons, which is taking over Safeway, has been quite unable to provide me with any reassurance that the post office will stay open. Meanwhile, the Post Office is pressing ahead with closing the branch in Holmesdale road. It is a dreadful state of affairs if it cannot guarantee to pay people their money. The reinvention programme should be stopped immediately until the matter can be sorted out.
  Mr. Willetts: My hon. Friend is absolutely right. He rightly draws my attention to the fact that, given all the changes in the world of supermarkets at the moment—in my constituency, Tesco has just taken over our local one-stop shop—many of the established arrangements for post offices in such shops are in question. That is another source of uncertainty and instability. I hope again that we will hear from the Secretary of State about what steps she is taking given that significant communities—towns—face the uncertainty that my hon. Friend describes.
  Gregory Barker: Does my hon. Friend accept that a great deal of insult seems to be added to injury when post offices are closed in the circumstances that he has just articulated, because of the mechanistic and formulaic way in which the Post Office goes about closing them? In Bexhill, three post offices have closed, yet when I have tried to make representations, I have received only a computer-manufactured letter, and even when errors in the reply have been pointed out, I have merely received a further computer-generated letter.
  Mr. Willetts: My hon. Friend is quite right. One problem with the so-called consultation is that it is not real. Instead, we have something of which the Government have made rather a speciality: bogus consultation during which one never gets the sense that one is receiving a genuine, individual letter or that any response will be properly assessed by an individual. The Opposition wish to respect the views of the people whom we represent—the pensioners and the many people claiming benefits. We are in favour of choice and in favour of the customer. That is the philosophy that underpins our approach to the Post Office.
  There is further evidence in the direct-payment statistics produced by the Department for Work and Pensions about what people prefer. They show the responses that it has had when it has invited benefit claimants to convert to the new payment systems. We see from the latest statistics that it has so far approached approximately 2.5 million pensioners, of whom 1.9 million have responded. Of those 1.9 million responses, only about 750,000 have said, "Here are my bank account details; of course you can pay my money into my bank account." Some 1.2 million people have said that they want a Post Office card account. Similarly, with regard to Jobcentre Plus, 2.5 million letters have been sent out, eliciting 1.3 million responses. Of those,
  900
  about 800,000 have said, "Here are my bank account details", and 600,000 have asked for a Post Office card account.
  The Department's latest statistics show that we have already had 2.5 million requests for a Post Office card account. The Government's limit was to be 3 million, and they have already received 2.5 million, so does the Secretary of State accept that their statistics are, first, evidence of a widespread preference for a Post Office card account rather than bank account, and secondly, very different from the Government's forecast? In the light of that clear evidence about what real people in the real world prefer, what is her new forecast for the use of the Post Office card account?
  The evidence about people's preferences is even more powerful in the light of the clear bias at every stage in the system against people having a Post Office card account. Those people have expressed their preferences for Post Office card accounts despite every attempt by the system to push them in a very different direction.
  Mr. Michael Weir: Does the hon. Gentleman accept that, even after the initial stages, the procedure for obtaining a card account is complex and difficult for many elderly people?
  Mr. Willetts: The hon. Gentleman is quite correct, and that is a point to which I will turn in a moment.
  The evidence of the bias in the system that I was about to cite is from a report in The Sunday Telegraph of 7 March, in which a member of the DWP staff quoted an instruction received from head office, which is devastating evidence that the Government have not stood by their assurances that there will be equity and fairness in the system. The instruction states:
  "We need to pay most of these customers into bank accounts which cost 1p rather than into Post Office card accounts which cost up to 30 times more. You should be aiming to get 9 out of 10 new claimants (to use) bank accounts, with a small proportion paid through Post Office card accounts."
  That was the aim set for benefit claimants. I hope that either the Secretary of State or the Under-Secretary will say whether that is an accurate record of instructions sent out by the Department.
  The Parliamentary Under-Secretary of State for Work and Pensions: Is the hon. Gentleman being disingenuous? Does he understand that people who seek work need to be job-ready, and that the Post Office card account, although it has many favourable characteristics, does not allow the payment of wages into it? Does he not, therefore, understand that it would be quite irresponsible for Jobcentre Plus to advise people to take out a Post Office card account, which would not leave them job-ready? May I underline the fact that the 3 million figure is not a limit on the number of Post Office card accounts? We have never said that there is a limit. If people want the Post Office card account, they can have it.
  Mr. Willetts: Was the 3 million figure a forecast then? The Government themselves put that figure into circulation, so if it is no longer accurate, what is their forecast? Not only the Opposition but many people working for the Post Office would wish to know where

  901
  the Government think things now stand. Of course I accept the Minister's point about wishing people to be job-ready, but assurances have been given that the system will not be biased. Nevertheless, the evidence is that it is biased, and the Minister has just cited a reason why it should be so. That is a very different position from the one that they have taken so far.
  Mr. Pond: The system is not biased. It is a matter of choice for the customer. Customers must know their full range of choices, and that is what we provide. It is not for the Government or the Opposition to tell people whether they should have a Post Office card account, a current account, a basic account or a building society account. It is for the customer to decide and it is our responsibility to ensure that they fully understand their options.
  Mr. Willetts: It is, of course, for the customer to decide, and that is what we believe. Contrary to the claim made by the Under-Secretary of State for Work and Pensions, the hon. Member for Gravesham (Mr. Pond), that the Government allow the customer to decide, we all know that they are trying to push customers in one direction rather than the other. All we are asking him to do is to ensure that the Department of Trade and Industry and the Department for Work and Pensions stand by their assurances that all they are doing is extending choice. Conservative Members want to see fair and open choice, which is not available at the moment.
  Mr. Owen Paterson: Does my hon. Friend agree that the Minister is talking nonsense? I visited 28 post offices last summer, and I shall briefly quote three postmasters. The first said:
  "The Benefits Agency is bullying people to change. The Government has not been fair."
  The second said:
  "The Benefits Agency has been very difficult. The forms are designed not to help."
  The third said:
  "The initial letters give a clear idea that customers must go direct. They are misleading. The bank section is deliberately put before the card section."
  The Minister should apologise.
  Mr. Willetts: My hon. Friend is absolutely right. His point is repeated by Labour Back Benchers in early-day motion 648, which was tabled by the hon. Member for Falkirk, East (Mr. Connarty). Many hon. Members support early-day motion 648, which recognises the problem—we can all see the problem, our constituents experience it and people who run post offices are concerned about it. It is not good enough for the Minister to come to the House and say that the system is fair and even—it is not, and that is the nature of the problem.
  Mr. Nick Hawkins: One of the things that most concerns pensioners in my constituency, where Ash Vale Station and Mytchett post offices have closed, is that if they even inquire about the system, as a result of Government instructions, their inquiry is treated as a request for automatic payment.
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  That is part of the Government's dishonesty. Does my hon. Friend recognise that one of the problems is that the Government are not putting any pressure on the many banks and financial institutions that will not allow cheques to be cashed at post office counters? Only three of the banks currently allow their cheques to be cashed in that way. Does my hon. Friend agree that all banks should allow cheques to be cashed at all post office counters, which would reintroduce footfall into post offices and help sub-post offices to survive?
  Mr. Willetts: Both my hon. Friend's points are absolutely right. First, we are all concerned about the insidious process whereby people are pushed towards the bank account option rather than the Post Office card account at every stage. Secondly, Conservative Members do not want to subsidise post offices; all we want is people to enter post offices because that is the service they want to use. We seek increased footfall, which is the best way to ensure that as many post offices as possible are viable in the future.
  Andrew Selous: Is my hon. Friend aware that the Work and Pensions Committee visited the telephone call centre for the Pension Service last year? We were shown the script that the call centre operators use when new pensioners request a pension. The script made it clear that the Post Office card account is the last option. Does my hon. Friend think that it would be useful if the Minister were to ensure that a copy of that script is placed in the Library?
  Mr. Willetts: Yes. I recall that that important point came up in the Select Committee, where my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) does sterling work. Yet again, the evidence that the system is biased is building up. All we are asking for is fairness for the millions of people who want their benefit to continue to be paid at the post office, which is not too much to ask of the Minister.
  Mr. Pond: The House will have noted the hon. Gentleman's statement that the Opposition do not want to subsidise post offices. Are the Opposition confirming their opposition to the Government's £2 billion investment in the post office network? I shall quote Postwatch research—the research was conducted on a small scale, but it was, nevertheless, conducted by Postwatch—to those hon. Members who suggest that the process is biased to encourage people in one way or another. The vast majority of pensioners said that advice from the customer conversion centre
  "was given in a clear and unbiased manner".
  Mr. Willetts: I began my speech by saying how much I regret the absence of the Secretary of State for Work and Pensions to answer on behalf of the benefits system. which is why we called the debate. The junior Work and Pensions Minister has intervened on me three times, but so far we have heard nothing from the Secretary of State for Trade and Industry. The Secretary of State for Trade and Industry did not turn up when we debated the issue from the point of view of the post office network, and now she is silent when we discuss the subject from the point of view of the claimant—instead, it is a Minister who has intervened.
  My response to the Minister's challenge is to examine the seven-stage process to open a Post Office card account, which clearly shows the bias:

  Wait for the letter from the Pension Service or the DWP saying your benefit will in future be paid direct.

  call the helpline number on the letter and say you want a post office card account

  the DWP then will send you a 'Personal Invitation Document' to open an account

  This document must be taken to your local Post Office. They will give you an application form".

  By stage four, one has obtained an application form.

  That application form must be filled in and handed back to the Post Office

  The Post Office will then post you two letters—one containing your PIN, the other called a Pick Up Notice

  The Pick Up Notice must be taken to the local Post Office to collect your card. The account is then activated."

  That is not skilled mass marketing. The system has not been designed to be customer friendly in order to maximise people's opportunities to obtain Post Office card accounts. The process contains a set of bureaucratic hurdles that are designed to put off the millions of people who want to receive their payments at the post office.
  Mr. Weir: The hon. Gentleman missed out a stage. After the form has been taken to the post office, one must obtain information from the post office to fill in on the original letter from the Pension Service, and return that letter to the Pension Service before the account is activated.
  Mr. Willetts: I am happy to be corrected by the hon. Gentleman, and I apologise to the House for having made the system sound simpler than it really is.
  Mr. Alan Reid: The hon. Gentleman is right that it is difficult to open those accounts. I draw his attention to the fact that if an elderly person writes outside the correct box when they fill in the form, the whole form is rejected. As he says, the system is biased against the Post Office card account.
  Mr. Willetts: The problems with the computer recognition system form a whole subject, and there have been many such cases. One gentleman wrote his sevens in the continental style—Conservative Members do not object to the continental method of writing seven—and the computer could not recognise them, so his benefit claim could not be processed, which is not a good way to operate.
  Richard Burden: The hon. Gentleman may know that I am a member of the Select Committee that made some observations about the complexity surrounding the Post Office card account. Given what he said about order books, does he want to improve the Post Office card account or does he want to abolish it?
  Mr. Willetts: I do not want to abolish the Post Office card account—we accept that we are too far down the
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  track for that. We want a user-friendly system that allows people to choose a Post Office card account, which is a way to maximise footfall through the post office. In a moment, I shall turn to the important subject of the exception service, which is needed to supplement the Post Office card account.
  Richard Burden: I want to clarify the Conservative policy. The hon. Gentleman says he wants to improve the Post Office card account system, but he has not said that he wants to return to an order book system.
  Mr. Willetts: The Post Office card account does need to be improved, but I am also talking about the form that the exceptions service should take.
  I intended to cite evidence from a range of charities about the problems involved in opening a Post Office card account, but so many of my hon. Friends have intervened with evidence of their own that I need not detain the House with it, save to quote Age Concern, which says in an appendix to the Select Committee report:
  "We are concerned at the considerable hurdles that seem to be being put in the way of opening a POCA. One cannot simply go to a Post Office and open an account."
  The Secretary of State must tackle that fundamental charge regarding the bias in the system.
  Does the Secretary of State recognise the problems that particular groups face? We have all heard sad stories about the problems that many disabled people have experienced when using the new post office devices. It is a sad irony that the House is finally considering the draft Disability Discrimination Bill at the same time as the Government are introducing a measure that is the most hostile to disabled people, and in respect of which their interests and views have been least well considered, in many years of public policy. The Secretary of State knows about the problems, because the Government have already had to admit that the PIN machine will have to be changed. Some people find it difficult to reach the keypad and others—for example, blind and visually impaired people—find it difficult to manipulate. Will the Secretary of State tell the House where the redesign of the keypad stands and when we will see the user-friendly keypads in our post offices for which many disabled users are crying out?
  The Secretary of State must deal with the problem of multiple users, which arises where, for example, claimants are housebound and receive support from carers and social services. In an ideal world, those people might have one carer or social services support worker who is with them all the time, but, sadly, it is not like that in the real world. Many of our housebound constituents face an ever-changing cast of support workers coming to their houses to assist them, which makes it very difficult for them to access the system that has been designed by Ministers and the Post Office. Citizens Advice says:
  "Direct payment will bring few advantages to claimants who need someone else to collect their benefit for them, or to help them operate an ATM or pinpad. This is a significant issue that needs a solution".
  It believes that in order to resolve such practical problems, the DWP should allow housebound people and those who cannot cope with a PIN to choose the

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  exceptions service as their normal method of payment and that it should be accessible for claimants who do not have a permanent collector.
  I do not blame the DTI for failing to understand this, but I do blame the DWP—after all, it is responsible for delivering benefits and should understand claimants' needs—for failing to put up the Secretary of State to respond to the debate and for failing to ensure that such problems were tackled as the system was being designed. I am afraid that that has done much damage to the Department's reputation for understanding the needs of disabled or housebound people.
  In response, the Government have proposed an exceptions service. I should be grateful if the Secretary of State could give us some reliable information about how that will work. So far, Ministers have failed to inspire confidence when offering us assurances about that. The Minister for Pensions sounded like Corporal Jones from "Dad's Army" when he told the Select Committee on Trade and Industry:
  "The advice to people at the moment is do not panic."
  I am afraid that that is not good enough as a piece of serious ministerial advice on how the new exceptions service will work. The only response to, "'Do not panic', says Minister" is, "Panic!". He advised people to hold on to their pension books and not to worry. He also said that the exceptions service is not being offered as a "fourth option"—in other words, that it is not an option for anyone dissatisfied with the other three options. Will the Secretary of State tell us more about who will be able to access it, on what terms they will access it, and for how long they will have to wait?
  The Select Committee's report is highly condemnatory on this point. It states:
  "It is clear from the evidence presented to us that the failure of the DWP to develop its ideas for the Exceptions Service in advance of the introduction of Direct Payments has led to uncertainty and confusion over the means by which some groups of disabled people will receive their benefits in future. At the very least, the Government should take steps to allay their concerns by making clear that claimants do have the choice of continuing to use order books until 2005 or until such time as the Exceptions Service has been developed."
  There is widespread concern about this issue, and I hope that the Secretary of State will deal with it.
  Standing back from this individual disaster, we see a wider picture of a catalogue of problems and failures going right back to the original decision in 1999 to abandon the Horizon project and go for this option instead. I think we all know what happened then. Ministers thought to themselves, "There is this hidden subsidy coming into the Post Office from the benefits system. We can save money by paying the benefits in a different way and we will remove the hidden subsidy for post offices." That is what they thought they were doing. Instead, they have ended up putting even more money into post offices than they would otherwise have had to, because they have taken away the footfall of benefits claimants, while finding that many benefits claimants are deeply distressed because they have been unable to continue with the reliable system for claiming their benefits. During those five years, the Government have not taken us forward—instead, they have managed to perform the extraordinary double trick of weakening our post offices and leaving many people who wish to claim benefits with a less adequate system than they had before.
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  This is a classic example of a failure of public policy; yet another example of this Government's failure to deliver; and, even more significantly, a failure to understand the needs of millions of people, especially elderly people, who wish to carry on being paid in the same reliable way.[Interruption.] The Under-Secretary of State for Work and Pensions is giggling. I have to tell him that it is no accident that this policy was decided in 1999. If we date it from the geological fault lines of this Labour Government, it is a classic "cool Britannia, modernising Britain" policy, which says, "Let's get rid of the old order books: we're going to have spanking new systems and gleaming new technology." It is a classic example of a policy cooked up by people who had no understanding of the views of disabled people or of pensioners. It comes from the time when the right hon. Member for Hartlepool (Mr. Mandelson) said that what he really thought about pensioners was that there was "no mileage" to be had from them, and when the chairman of the Labour party denounced them as "racist", then, as a final insult, as "predominantly Conservative". That is why they took no account of the interests of the many people using the post office, and that is why it is Conservative Members who are pressing for their interests today.
  1.48 pm
  The Secretary of State for Trade and Industry: I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
  "supports the Government's strategy to modernise the way benefits and pensions are paid, and to provide customers with a choice of accounts; welcomes the fact that with Direct Payment customers will still be able to collect their cash from the Post Office if they wish using a current account or basic bank account with Post Office access or the Post Office Card Account; notes the Government's plans for a cheque payment, cashable at post offices, for people who cannot be paid through an account; recognises that Direct Payment is a more modern, efficient and secure method of payment which will also help increase financial inclusion; welcomes the fact that more customers are now paid through an account than by order book without problems, including nearly six million pensioners; notes the previous government's attempt to introduce a Benefit Payment Card, which wasted millions of pounds of tax-payers' money; notes the fact that the Post Office had not until recently kept up with changes in customer demand and so had seen transaction volumes dropping and losses increasing; recognises the need for change and congratulates the Government for taking decisive action to help turn the business around; welcomes the record £2 billion investment in the Post Office network over a five-year period, including £450 million for the rural network and £210 million to modernise the urban network; and believes that this will help ensure a viable Post Office network that people will want to use."
  I am delighted to join the hon. Member for Havant (Mr. Willetts) in a debate entitled "Post Office Services", and to respond to his opening speech. As Secretary of State, with the privilege of being shareholder on behalf of the public in the Royal Mail and in Post Office Ltd., I regard it as entirely appropriate that I should have this opportunity to respond to his increasingly absurd statements.
  Let me first deal with the issue of benefit payments and the shift to direct payment that is taking place. The hon. Gentleman talks about choice. He appears to have ignored everything that has been happening about customers making their own choices over the past decade and more. For many years, well ahead of the

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  decision by my right hon. Friend the Secretary of State for Work and Pensions to switch to making all payments by direct credit, more than half of benefit recipients were already having their benefits cash paid directly into their bank accounts.
  Let me underline that point by saying that nearly two thirds of recipients of child benefit and nearly six out of 10 new pensioners already get their benefits paid directly into their bank accounts. Those claimants and customers are exercising choice, yet we heard nothing about them from the hon. Member for Havant.
  Gregory Barker: The Secretary of State makes great play of the issue of choice, but where is the choice for my constituents who want to use a post office in their village, but find it closed?
  Ms Hewitt: I shall come to post office closures in a moment, but if the hon. Gentleman will forgive me, I want to start with the issue with which the hon. Member for Havant started—benefits payments and the introduction of the Post Office card account. Let us remember that the Government of whom he was a member introduced their own plan for a benefit payment card. It was supposed to use the latest technology of the time, and it was part of a public-private partnership. When we came into office in 1997, we discovered that their benefit payment card programme was a shambles. It was well overdue, the technology was not working—because the programme was so overdue, that technology was also out of date—and the costs were overrunning.
  We spent a year and a half trying to make that programme work. In the end, however, we decided that there was no point in rescuing that absurd out-of-date Conservative proposition for a benefit payment card. Instead, we invested the best part of £500 million in the Horizon platform—on which I shall elaborate in a moment—which forms the basis for universal banking, which is extending the benefits of banking and financial inclusion to millions of people.
  Mr. Steve Webb: If the right hon. Lady wants to extend universal banking to all people, why cannot the job-ready unemployed have their wages paid into one of those accounts?
  Ms Hewitt: Because the card account was never designed to do the entire job of a bank account. Basic bank accounts and regular cheque accounts are available for people to have their wages paid into; the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Gravesham (Mr. Pond) has already dealt with that point.
  Mr. David Drew: I am sure that I was not the only Member who went to see ICL to talk about the Horizon system, which came out of the ideas of the previous Conservative Government. When I did so, ICL made it clear to me that the system was full of capability but was being underused. It was also made clear that there was a need to invest in it because it was going to be the saviour of the Post Office. Will my right
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  hon. Friend point out to all concerned that that was the clear message? The Opposition do not seem to be able to remember that.
  Ms Hewitt: My hon. Friend is right, and I am grateful to him for making that important point. Thanks to the investment and the decisions that we have made, the Horizon platform and the automation of the post offices have now modernised post offices to enable them to offer new banking services to millions of customers who did not previously use the post office. That is extremely important.
  We are now phasing out the order book system. It is out of date, and it uses systems that, frankly, belong to the era of the ration book. It is inefficient, costly to administer, and open to fraud and abuse. That is why we were right to decide to phase it out and extend benefit claimants' choice, which includes maintaining and strengthening choice for claimants who wish to get their benefits in cash at a post office.
  Mr. Stephen McCabe: As my right hon. Friend said, the order book system is open to fraud and abuse. Will she confirm that 100 pensioners a week have their order books stolen?
  Ms Hewitt: My hon. Friend is right—and that is a disaster for the individual pensioners who are robbed, with all the distress that that entails. It is also enormously costly to the taxpayer, who has to foot the bill for this kind of fraud. I would have expected the hon. Member for Havant, who is so against waste and inefficiency in the public sector, to support rather than oppose our efforts to get rid of a system that makes elderly people and taxpayers vulnerable.
  Our commitment to financial inclusion, universal banking and the introduction of the Post Office card account has been welcomed by Citizens Advice, Mind and Help the Aged. Indeed, Citizens Advice's excellent recent study on financial inclusion stated:
  "The government, the banking industry and the Post Office should be commended for the progress they have made in establishing Universal Banking Services. The ambition to enable all people to own the most basic of financial services—a bank account—is one we share."
  I commend Citizens Advice on the way in which it has helped us to put universal banking in place.
  Mr. Blunt: I am pretty certain that, having seen the post offices at St. John's, Lesbourne road and now Holmesdale road close, and with a threat hanging over the main post office in Reigate, Citizens Advice and Help the Aged would be less than impressed by the accessibility of post office services to the elderly in my constituency. Those closures are happening at exactly the same time as the Government are going through the automation process. The conjunction of those two things, plus the £50,000 incentive to sub-postmasters to take their businesses out of service which places them in an impossible position—is causing a collapse in the availability of services in Reigate and elsewhere. It was the concern about all those issues that generated the petition that was presented to me by hundreds of my constituents this morning.
  Ms Hewitt: I am not surprised that the hon. Gentleman and his party want to go back to the days of

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  the Conservative Government. when post offices were closing in their hundreds and thousands in an entirely unplanned and unmanaged way, partly because, with fewer customers cashing benefit cheques at post offices, it was simply not possible for sub-postmasters to make a decent living. I am not sure whether the hon. Gentleman is suggesting that people should be forced to carry on in businesses that are no longer viable.
  I shall return to the issue of urban reinvention in a moment, but I want to deal first with the series of allegations made by the hon. Member for Havant about the alleged difficulties involved in opening a Post Office card account. He made great play of the difficulty of the process, the seventh and eighth steps and all that nonsense. Let us be clear: there are three steps that individual claimants need to take. First, they ring the customer conversion centre. I looked extremely carefully at the script to be used there before I approved its use, to ensure that it was neutral in its presentation of the options. Secondly, they discuss the options. Thirdly, if they want to open a Post Office card account, they wait for their personal invitation document to arrive and they take it to the post office branch, where they get and complete their application form. They then send those account details back to the Department for Work and Pensions.
  Andrew Selous: It is my recollection—and that of the Chairman of the Select Committee—that, when the Committee visited the new pension call centre, we found that the script was not neutral on that matter, and that the Post Office card account was very much the last option. Would the right hon. Lady agree to place that script in the Library of the House?
  Ms Hewitt: I do not agree with the criticisms of the script that have been made by members of the Select Committee, but I should be happy to place it in the Library. I shall do so in the knowledge that Postwatch, which conducted some small-scale research with actual customers, has reported that almost all the pensioners to whom it spoke felt that the advice given by the customer conversion centre
  "was given in a clear and unbiased manner".
  Most of them described the DWP customer information material as being of "good quality", and most of the people ringing the centre had their questions answered satisfactorily. Most of those who had rung the centre to open a card account felt that the information that they had been given was "clear and unbiased", and most did not feel that staff were seeking to persuade them to choose one option over any of the others.
  Mr. Paterson: I am amazed. Has the Secretary of State talked directly to any postmasters? As I said in an earlier intervention, I have visited 28, and every one said how difficult it is for people to apply for cards. I can tell my hon. Friend the Member for Havant (Mr. Willetts) that the National Federation of Sub-Postmasters would say that he underestimates his case. It says that there are 22 steps in the process of getting a card. When I visited the Minister for Energy, E-Commerce and Postal Services, taking a delegation of postmasters along, it was explained clearly to him that those who manage to get through that thicket of measures do so only with the
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  specific help of the postmaster himself. I urge the Secretary of State to come to North Shropshire to visit some postmasters.
  Ms Hewitt: The position of Conservative Members becomes more and more absurd as they keep inflating the number of steps that supposedly need to be taken. Let me stress to the hon. Gentleman that about 2 million Post Office card accounts have already been opened. That scarcely bears out the absurd allegations being made about how we are biasing the system, driving people away from the Post Office card account and making it impossible for anyone to open one. That is complete nonsense.
  Mr. Willetts: The Secretary of State calls those claims absurd, but all Opposition Members know how true they are. Is she saying that the National Association of Citizens Advice Bureaux is absurd when it reports that
  "clients who want to open a Post Office card account feel that there are obstacles placed in their way … We consider that this process acts as a barrier to opening a card account, particularly for vulnerable people"?
  That is what NACAB is saying, and that is what we all know to be the case. Why does the Secretary of State continue to deny what everybody knows to be true?
  Ms Hewitt: I am going by what customers have told Postwatch and, more importantly, by the fact that about 2 million people have opened a Post Office card account. The eventual number of card accounts is expected to exceed the original operating assumption of 3 million; none of that is evidence that people are finding it hard to open an account.
  The hon. Member for Havant also raised a number of important issues involving people with disabilities. The first to be raised, quite properly, was the problems that people who are blind or have difficulty in seeing have in using personal identification number pads. That issue has been recognised by the Post Office, which has already improved the PIN pad by putting a key guard over it to make it easier to use, and adding a dot to the No. 5 key. The Post Office is working with the Royal National Institute of the Blind to make further changes to the PIN pad to make it easier for that group of customers to use the system.
  Mr. McLoughlin: Why was it necessary to make those changes? Why were those things not thought of in the first place?
  Ms Hewitt: I agree that it would have been better if the original PIN pad had been designed with full regard to the needs of people with different disabilities. The technology is still developing, and was not available at the right price and at the right time when the service was introduced. It is being introduced now, and I pay tribute to the RNIB, which not only raised the issue, but has helped the Post Office to resolve those problems in a practical way, as we readily acknowledge.
  The hon. Member for Havant also asked about people who are housebound. I think that he accepts that there is no problem for those with a regular carer who use a Post Office card account, because they will have their own PIN number. However, housebound people may have different people caring for them in different

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  weeks. Of course that is a problem: under the existing system, the claimants can simply sign an order book counterfoil, which provides great flexibility, but I am afraid that that practice is wide open to fraud and abuse. We are saying that where claimants need people to collect their money for them, they will, for the time being, simply continue to use their order book while we work with the various organisations to design the exceptions service.
  The exceptions service will be based on a cheque system, which will be much more secure than the order book system. It will be introduced and available from October this year, in plenty of time for the ending of the order book system in May next year. I am delighted to say that, exactly as we would expect, my right hon. and hon. Friends at the Department for Work and Pensions and their officials have been working extremely closely with Citizens Advice, Help the Aged and many other groups representing vulnerable customers to ensure that there is full understanding of the needs of different vulnerable groups that cannot have their benefits paid directly into an account. That new system of payment by cheque will all be in place to ensure that there is no trouble in getting benefits for those vulnerable claimants.
  Mr. Drew: Does my right hon. Friend agree that it would be useful to give Members a full briefing, given that people are likely to question us on how the system will work? Before the system goes live, will she arrange for us to see how it will operate?
  Ms Hewitt: That is an excellent suggestion, and my right hon. Friend the Secretary of State for Work and Pensions and I will ensure that such a briefing is provided.
  The successful introduction of the Post Office card account is only part of a much bigger—[Laughter.] They are very slow over there this afternoon.[Interruption.] The card is extremely successful—about 2 million people have already opened a Post Office card account, because they have decided that that is what they want. However, that account, which many Opposition Members said would never see the light of day—let me remind them of that—is part of a much bigger programme of universal banking. Thanks to the £500 million investment in the Horizon platform, the Post Office can become the high street bank for millions of other bank customers.
  The Post Office is providing banking services on behalf of the Alliance & Leicester, Barclays, the Cooperative bank, First Direct in Scotland, Lloyds TSB and two internet banks—Smile and Cahoot. Customers of all those banks, with their ordinary bank accounts such as cheque accounts so on, can get cash at post offices free of charge.
  Mr. Alan Reid: The Secretary of State knows that she has not mentioned any of the three main Scottish banks, which means that pensioners and benefit recipients in Scotland do not have the same choice as those in other
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  parts of the country. What progress is she making in negotiations with the three main Scottish banks to reach agreement with them?
  Ms Hewitt: I am happy to say that the Scottish clearing banks and other major financial institutions, as well as those I mentioned, already provide access at post offices. Those services—for instance, access to a basic bank account—were launched on schedule on 1 April last year. Access to the other current accounts—the cheque accounts—is a matter for commercial negotiations between the Post Office and the various banks.
  My point is that because of our investment in it, the Post Office can offer that service to all the commercial banks, and therefore to all their customers. It is involved in those negotiations at the moment. I have repeatedly urged all banks to provide all their customers with access to their various accounts through the post offices, but obviously that is a commercial decision for the individual banks.
  The result of that programme of investment and universal banking is that there are 20 million current account customers—not Post Office card account customers, but current account customers—who can use the new electronic systems and undertake banking transactions at Post Office branches. The result of that is that since April last year there have been nearly 25 million banking transactions at post offices. That is a huge success story, which the hon. Member for Havant completely ignored. That is why Citizens Advice welcomed this expansion of banking at post offices. It is a significant step forward in financial inclusion. Above all, from the point of view of this debate, it brings more people into post offices and gives sub-postmasters a new source of revenue.
  Mr. Paterson: How much income has the Post Office lost through the changes in the card payment system and how much income will be replaced by the new banking arrangements on which the Secretary of State and her colleagues—as was repeated to me when I saw the Minister for Energy, E-Commerce and Postal Services—are hanging so much?
  Ms Hewitt: Sub-postmasters have seen a reduction in their income from benefit payments over the last 10 years and more, for the reasons that I set out earlier, as customers have moved away from that. The choice to which the hon. Gentleman is not willing to face up was to enable the process of customer choice and seize the opportunity to have a much more efficient and fraud-proof system of paying benefits, and to make post offices attractive to customers through expanding their range of products, such as financial services and so on. Alongside the decline in income from benefit claimants, we are seeing an increase, which will continue, in income from other sources, such as home insurance, travel insurance, travel exchange products and so on. All of those are hugely popular with sub-postmasters, and all provide the prospect of continuing increases in new sources of income.
  Mr. Weir: The Secretary of State's vision of an integrated post office and banking system is impressive, but does she accept that there is a problem in many rural

  913
  areas, because over the last two decades many banks have pulled out of rural areas and closed small branches? I cite the case of Friockheim in my constituency, where the last bank closed a few years ago. The post office has now closed, so there is neither a bank nor a post office to enable people to use any of those services.
  Ms Hewitt: The hon. Gentleman makes an important point. It is perfectly true that many of our rural communities no longer have a retail outlet, bank or post office, because none was commercially viable. I shall refer in a moment to the investment that the Department has been making to prevent all avoidable closures of rural post offices and our work with the Department for Environment, Food and Rural Affairs to try to expand in new ways the availability of services for people in rural communities.
  Mr. Paterson: Will the Secretary of State give way?
  Ms Hewitt: No, I want to make progress.
  I want to underline the point that there is still a view, which I regret that some sub-postmasters share, that the only way to keep post offices viable is somehow to force customers to use them by maintaining an out-of-date order book system that gives those customers no choice at all about where they get their cash. That is not the way forward for our sub-post offices. I am glad that, in its evidence to the Select Committee, Age Concern said:

  "Although we are aware that a number of organisations"—

  it may have been referring to the Conservative party—

  "and individual sub post masters are promoting the POCA on the basis that this is the way to save the post office network, Age Concern does not subscribe to this view."

  Nor do we.
  That brings me to the second set of issues raised by the hon. Member for Havant and other Opposition Members, about the number of local post offices and the restructuring. We want a viable national network.
  Mr. McLoughlin: Will the Secretary of State take this opportunity to apologise to the constituents of those Members who raised cases with the Minister for Energy, E-Commerce and Postal Services the last time that we debated this subject, when we said that the consultation process was a sham? He assured us that it was not. The "Westminster newsletter", which was sent out by the Post Office after he made his announcement on 5 February, referred to new developments, one of which, it said, guaranteed that the Post Office will

  "not make a decision until after the public consultation period"

  The Minister of State's statement included the following provision:

  "No contract binding on Post Office Limited is signed before the public consultation process has ended."—[Official Report, 5 February 2004; Vol. 417, c. SOWS.]

  That meant no binding closure on that particular post office. That proves the point that many of us made before 5 February the whole consultation period was an absolute sham.
  Ms Hewitt: I am not sure whether the hon. Gentleman is complaining that my hon. Friend the Minister responded to the concerns raised in that debate and took full account of all the individual complaints that have been brought to him. As a result of individual complaints, where the process has apparently not been followed as it should have been, he discussed matters with David Mills, the excellent chief executive of Post Office Ltd., and put in place stronger measures to ensure that in every case, and in every part of our country, the consultation process is properly followed and the area plan is finalised only after that consultation has been finished.
  Mr. Stephen O'Brien: To be absolutely clear, is the Secretary of State saying that she is grateful to Her Majesty's official Opposition for the debate on 13 January, which highlighted issues on which we were supported by Members across the House, not one of whom was in favour of the Government? Do not the Opposition therefore deserve thanks for having prompted the Government to take the right decisions, which then came forth in the Minister of State's statement?
  Ms Hewitt: I am congratulating my hon. Friend, who is an excellent Minister, on taking account, as he always does, of constituency issues raised by Members on both sides of the House. I should have thought that the hon. Gentleman would have been less churlish on that point.
  Mrs. Patsy Calton: I thank the Secretary of State for her answer. There is one group with a particular problem—those for whom the network reinvention programme and the so-called consultation and decision-making processes were already under way. It is no comfort to my constituents or those of other hon. Members to find that their consultations were so flawed that matters would be put right in future but that closures would go ahead as was clearly planned from the outset in their constituencies. Why has the Minister failed to put a halt to those processes?
  Ms Hewitt: I am sure that that is a point on which my hon. Friend the Minister of State has had discussions or communication with the hon. Lady. If not, I shall ensure that he does so.
  Let me stress the need for a planned reorganisation of the post office network. In the previous financial year, Post Office Ltd., not the whole of the Royal Mail, made losses of £194 million before exceptional items. In the year before that, it made losses of £163 million, and the half-year results that have just been reported show significant losses again of £91 million. What has been happening over many years is a process of completely unplanned post office closures. Indeed, the Conservative party presided over 3,500 post office closures during its period in office.
  As a result of such unplanned closures, as sub-postmasters gave up the unequal struggle of trying to make a living out of too few customers, we ended up with a pattern of provision that had no basis in rational response to what customers needed. Let me give the House the example of my city, in which one post office branch, in the constituency of my hon. Friend the Member for Leicester, South (Mr. Marshall), has 12

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  other post offices within a one mile radius. Indeed, it has 15 others within a radius of 1.1 miles. That is an impossible situation, in which none of the sub-postmasters can make a decent living, none can afford to invest in their shop or post office to make it more attractive to customers, and all are chasing and competing for a hitherto dwindling band of customers. Before the Post Office began its urban reinvention programme, more than 1,000 urban post offices had at least 10 others within one mile. Either we allow that to continue and let the decline go on—which is what the Conservatives were doing, and presumably would still do today—or we face up to difficult decisions and invest to ensure a planned restructuring of the network.
  The problem is not unique to the United Kingdom. Customers in developed countries all over the world have been changing their patterns of banking, using the internet more and so on. In Germany, the number of post office branches has been reduced from 30,000 to 13,000 as a consequence of changes in customer behaviour.
  Richard Burden: I agree that it is vital for us to plan the changes that are necessary, but does not the way in which Post Office Ltd. is going about a number of the reorganisations fall short of expectations? In south Birmingham, for instance, the closure of 29 out of 90 sub-post offices is being suggested. Is not one of the problems the excessively inflexible view adopted by Post Office Ltd. of the assistance available to Government, which often leads it to maximise its chances of closing post offices and minimise the opportunities to create sustainable businesses? Will my right hon. Friend assure me that in future Post Office Ltd. will be encouraged to look at the opportunities for post office business, and not just the threats?
  Ms Hewitt: My hon. Friend makes an important point. I know that he and other south Birmingham Members have been enormously active in engaging in the current consultation on the area plan with Post Office Ltd. and Postwatch, and representing the views of his and others' constituents on what the restructuring should involve. If necessary, I will convey what he has said to David Mills, the chief executive of Post Office Ltd., whose entire vision for the Post Office is based on maximising opportunities for new products and much better, brighter urban post offices, thanks to the programme of restructuring and investment. We have invested a substantial financial commitment to providing compensation for sub-postmasters who are leaving their businesses, as well as investment for those who are staying, to ensure that the remaining post offices are better and more attractive to customers. That is essential.
  Mr. Nigel Evans: The Secretary of State makes all the changes sound rather exciting. If she were to lose her seat at the next general election, would she consider opening or taking over a post office and running it? I wonder whether she really understands the pressure that some of our postmasters and postmistresses are under. Would she consider being a postmistress?
  Ms Hewitt: I certainly would, given the example of the wonderful Mrs. Patel, who runs an urban post office in a disadvantaged community in my constituency. Like most successful sub-postmasters, she combines it with a retail outlet. She welcomed "Your Guide", but welcomes much more the opportunity to have an automated teller machine in her shop. She has one of several thousand ATMs that have now been installed, thanks to our investment in sub-post offices. That is helping to bring new customers and more business into her post office. Along with many other sub-postmasters and sub-postmistresses, she provides a great example of entrepreneurial commitment—which is what Labour wants to encourage, even if the hon. Gentleman does not.
  Mr. Willetts: I was going to encourage the Secretary of State to consider a job swap. She is clearly keen to be a postmistress, and we would greatly appreciate a Secretary of State who knew something about the business. Would the Secretary of State consider a swap. even just for a week?
  Ms Hewitt: I am grateful for the suggestion.
  Let me end by saying something about our investment in Royal Mail—a total commitment of some £2 billion over several years. It includes £480 million to rescue the Horizon project and ensure that we have a platform for universal banking, £450 million for the rural network to stop avoidable closures, £210 million to support the urban network reinvention, £15 million to keep open post offices in disadvantaged urban areas that would not otherwise be viable, and £750 million to repay historic debt to Royal Mail so that the renewal and restructuring plan can proceed. It is an extremely successful plan that is significantly reducing Royal Mail Group's losses and returning it to the path to profitability.
  That is the commitment—£2 billion over five years that the Government have made to Royal Mail and, in particular, to the post office network. What do we have from the Conservatives? We have a commitment to grow public spending

  "about 1 per cent. more slowly than the Treasury view of the trend rate of nominal GDP growth."

  I am, of course, quoting from the medium-term expenditure strategy document recently published by the shadow Chancellor. What the Conservatives offer us is a freezing of the overall total of public spending for the first two years—in other words, a cut of £18 billion in public spending.
  I understand that, on top of that, the Conservatives are now considering abolishing the Department of Trade and Industry—abolishing the Department that is making the investments that are beginning to turn Royal Mail around, have saved rural post offices from unnecessary closure, and are supporting an absolutely necessary restructuring of urban post offices.
  I hope that when the hon. Member for Eddisbury (Mr. O'Brien) winds up the debate, he will tell us how much of the £2 billion that we have committed to Royal Mail and Post Office Ltd. he intends to cut. If, as appeared to be the case from the speech of the hon. Member for Havant, the Conservatives are saying that they want more money to go into the post office network, perhaps he will tell us how many child care

  917
  centres he will close to pay for that, how many cuts will be made in the transport budget or how many police officers are to be sacked. Where precisely will the cuts fall? If they are to fall on Royal Mail and the post office network, everything we have heard from the Conservatives this afternoon amounts to crocodile tears, hot air, words with no commitment of resources behind them.
  If the Conservatives intend to sustain the investment that we have been making in Royal Mail and post offices, in all honesty, the hon. Gentleman will have to confess to the House that, under his own shadow Chancellor's public spending plans, the cuts will fall somewhere else—on services that, in a different debate, he and his right hon. Friend will be busy defending and crying crocodile tears over.
  Mr. Stephen O'Brien: Will the Secretary of State give way?
  Ms Hewitt: No, I will not. I have reached the end of my speech. I just want to make the point that Labour has faced up to tough decisions as his party was never willing to when it was in government. We have backed those tough decisions with the necessary resources, against the Conservatives' commitment to public spending cuts and decline in our public services.
  2.29 pm
  Mr. Steve Webb: I am glad that the Opposition proposed this subject, because it matters to Members from urban constituencies who have seen a programme of closures, and to those who represent rural and market town constituencies and, over many years, have seen one closure after another taking post offices out of villages and small towns up and down the land.
  This subject is perhaps the most acute example of how those who govern are completely out of touch with those whom they govern. It is the one matter on which, when hon. Members from all parties give case after case of constituents who have received biased information or who have been pressurised or messed around, Ministers just smile benignly and tell us that there is no bias or pressure, but that there is free choice. We wonder sometimes what planet they are living on. Hon. Members from all parties have made those points, but the Government have decided to close their ears.
  What the Liberal Democrat amendment calls for, which in many ways is similar to what the Conservative motion calls for, is respect for people's choices. The statistic that the Secretary of State cited in defence of the Government's position—that six out of 10 new pensioners opt for payment into a bank account—was striking. That is an extraordinarily low figure. One would imagine that of people just arriving at state pension age, eight, nine or nine and a half out of 10 would opt for payment into bank accounts. The fact that four out of 10 new pensioners think that an order book suits them best should tell the Government something: that people like that way of receiving their money.
  If that is the case for four out of 10 people who have just retired, it is even more so for people who have been retired for 20 or 30 years, and who have been receiving
  918
  their pensions in that form very happily. That works for them, so why can their choices not be respected? Every pensioner at any point could have opted for payment into a bank account. The Government have not invented that as a new choice. Pensioners have always had the option of payment into a bank account, so the fact that they have gone on getting money through an order book suggests that that is their positive choice. Why are the Government now telling millions of those people that they do not respect their choice and that they do not think that they have the right to choose the method of payment that suits them best?
  Andrew Selous: The hon. Gentleman may be interested in a briefing from the House of Commons Library last year, which said that two thirds of benefits paid in Britain were paid over a post office counter, which meant that 18 million benefit recipients were using post offices to access their benefits. I am sure that he will agree with that.
  Mr. Webb: The hon. Gentleman is right. The use of order books at post offices is very extensive, and reflects people's positive choice. The Government should respect that.
  This is a classic case of a lack of joined-up government. One can imagine the day on which the Department for Work and Pensions felt the Chancellor leaning on it to save some money and, after sitting down to think about how to do that, came up with the idea of getting money paid into accounts rather than through giros because it was less expensive. I accept that that is less expensive, but let us guess what happened then. The DWP saved £400 million a year and the Department of Trade and Industry had to find hundreds of millions of pounds to deal with the subsequent mess in the post offices. I sometimes think that if Departments talked to each other, we would be saved many difficulties.
  We have many questions to ask about how the system is going to proceed, because millions of pensioners have yet to make a decision and respond to the letters that they have been sent. The Secretary of State has cited customer satisfaction surveys, but I strongly suspect that the pensioners who are most worried about the system do not phone. They receive a letter and are anxious about it because they like the way things work and do not want anything to change, so it is put behind a mantelpiece and not responded to. The people who reply to the customer satisfaction surveys are a biased sample. They are the people who are willing to play the game and respond to the Government, so it is not surprising that they are less likely to be dissatisfied with what they get. We all know, however, of people who are being leaned on. The Government should come clean about that.
  We are told that the infamous Post Office card account has been a great triumph and very successful, but I bring to the House's attention a couple of the cases now building up in my constituency in-tray. I am sure that many other hon. Members have similar examples. One constituent, whom I shall call Mrs. P, has had a card account for five weeks but cannot get her money. One does not ask much of an account, but it would not be a bad idea if it paid out money. The postmaster said that the card had not arrived, so she applied for another. He then said that that had not come, but when the lady

  919
  insisted on checking through, he found both of them. However, the first PIN number was out of date and the second did not work, so she rang the helpline. It told the postmaster to use a blank card from the vault with Mrs. P's PIN number, but that did not work either. She then rang the Pension Service, which said that it would send her something, but that has never arrived.
  That is just one example of the way in which people who have played the game and gone along with the Government have found that the system is not working. All those people wish that they had just kept their giros, because they were never told that their giro did not work, or that a PIN number was needed. They just had their giro and got their money.
  Mrs. P is not alone. Another lady who has had real problems with the Post Office card account said to me:

  "I went to the local Post Office today only to find a notice notifying PO account cardholders that they would be unable to make a withdrawal since the computer had failed."

  She wondered how people were going to get their weekly money, and commented:

  "If they could not get their money, I fear that some would go without essentials."

  If someone has a giro in their hand, they get their money even if a computer is down, but what happens if they have a plastic card and the computer is not working?
  I had a helpful reply on that from the Under-Secretary of State for Work and Pensions, the hon. Member for Gravesham (Mr. Pond), which said that although the matter was not really anything to do with his Department, it had contacted the Post Office,

  "which has confirmed that the branch in question did not follow the correct emergency payment process…because the regular subpostmaster was off duty and the branch was being covered by a relief, who did not fully understand the process."

  However, the post office staff involved had now been contacted and had the correct process explained to them. So what is supposed to happen if computers go down and people cannot get their money? The Minister's reply continued:

  "If the customer needs to access their funds immediately"—

  I presume that people quite like to have their pension—

  "the Post Office may authorise an instant payment of up to £20."

  I know that the pension is not generous under Labour, but allowing people only £20 is pushing it a bit. For how long might the computer be down? Or do those people have to go back the next day for another £20? The letter continued:

  "If the customer requires more money, it is possible to get an emergency payment"

  not from the Post Office, but

  "from the Department. Customers would need to contact the office that normally pays their benefits for this to be arranged."

  I can just imagine the process.
  None of those complications is necessary. This is not a matter of free choice for people. People ring me up to say that they want to keep their giro, but that they have filled the form in anyway because they are afraid that their giro will just be taken away from them and they will not get their pension. People are responding out of
  920
  fear, not because they have a free and positive choice. The Secretary of State has given a misleading impression of a free, open choice.
  Just to give an example of how the system is not working, the Government have said that people can get all their benefits paid into their Post Office card account, but that is not true. People cannot get their housing benefit paid into their Post Office card account. I have a Department for Work and Pensions document here: the riveting publication "Housing Benefit Direct—March 2004". It says:

  "Currently, it is not possible to pay Housing Benefit into a Post Office card account, due to technical and contractual constraints."

  So all the pensioners who have had letters asking them to move over to a Post Office card account, and who have played along with the Government, have then found that they cannot get their housing benefit paid into it. Presumably, they receive a giro for that, and go along to the post office with a giro in one hand to get that payment and a plastic card in the other, with their PIN number, to get another one. We can just see the mess, the bureaucracy and the complications.
  Mr. Pond: I am a little puzzled. I might have missed something, because I have been in this job only since June, but did pensioners previously get their housing benefit paid into their pension book?
  Mr. Webb: No, they did not. What a crushing intervention. However, I presume that the whole point of this new integrated system is to give people a single point of access. It is about bringing benefit recipients into the mainstream; it is financial literacy, a one-stop shop. Instead, we find that people will receive one of the principal benefits, which they use to pay their rent and council tax, in the form of giros, when they have to have a plastic card for other payments. Presumably, the Government want this system to be put in place or they would not be having contractual negotiations. If they think that the scheme is an irrelevant waste of time, why are they having contractual negotiations on it? They cannot have it both ways.
  When the hon. Member for Havant (Mr. Willetts) quoted from an internal memorandum, which he was quite right to do, the Secretary of State responded by saying that the Government were pushing people away from Post Office card accounts to ensure that they were job-ready, which meant that they needed a proper bank account. However, there is no suggestion in the memorandum that that is remotely what has been going on. The memorandum says:

  "In order to meet Business Case requirements"

  not to help to serve clients—

  "we need to move quickly toward getting 9 out of 10 customers who make a new claim onto Direct Payment. Any further delay will"—

  Will what? Undermine claimants? No. It will

  "cause overwhelming backlog in 2004/5, impacting on field performance."

  That is nothing to do with serving the public. It is to do with saving money, and the Government should come clean about it.
  My hon. Friend the Member for Argyll and Bute (Mr. Reid) has already said that the situation in Scotland is very different, and that none of the major banks there

  921
  will allow customers to access mainstream bank accounts at post offices. The Secretary of State's rather glib reply was that basic bank accounts in Scotland could be accessed through a post office. That is great. People have to open a different bank account—one with rather limited features—if they want to get their money from a post office. That is totally unsatisfactory.
  When I asked why it is that people will be unable to pay wages into these accounts, I was told that they are not really regarded as proper accounts. But if the point is to support the post office network, these accounts should surely be made as good as, not as limited as, possible. So I hope that the Minister will recognise in his response that people want these accounts to be proper accounts that are accessible at post offices.
  We have heard about the position of people with disabilities, whom the Government seem to have treated as an afterthought. They have rushed out this proposal, and the idea that a PIN pad with nine keys constitutes new technology is astonishing. These issues must have been dealt with before; why were the Government so slow to take them on board?
  We have heard a little about the important issue of the exceptions service, and I hope that the Minister is listening at this point. The service will be available from October 2004, we are told, and so far as we can tell it will provide people with a cheque. From April 2005, when the use of order books ceases, anybody who has not replied will presumably be on the exceptions service, so they will be sent a cheque in the post. Into where can they pay that cheque? Presumably, they will be able to pay it into a post office; otherwise, the system would be absurd. So instead of being sent a giro that specifies their name and the amount, which they take to a post office, they will get a cheque that specifies their name and the amount, which they will take to a post office.
  What is the point in generating an entirely new system when a perfectly good one already exists that people know and trust? I genuinely cannot fathom this one. Spot the difference between a cheque received in the post that specifies one's name and the amount, and an order book that contains the same information. Why is one system better than the other? I really cannot understand the difference. The millions of people who probably have not responded will want to know what their position will be after April 2005.
  The consequence of the Government pushing people into using such accounts and away from post offices is that the latter have suffered. Indeed, 1,000 post offices have closed in the past three years. This is a long-term phenomenon that has existed under Governments of both of the two largest parties. However, even though the rural post office network has supposedly been bolstered, 74 rural post offices have closed in the year to September 2003—a figure that is net of the number that have opened. Indeed, the problem is getting worse. So as has been said, the promise that people's money can be paid into a post office is not worth the paper it is written on if the post offices are not there.
  We have heard about the so-called consultation process. It has been acknowledged that it is a shambles, and I shall cite one example from my own constituency. One of the two post offices in the town of Thornbury came up for closure. All the local residents objected and
  922
  everyone pointed out that the idea would not work, but the Post Office ignored them and shut it. The one remaining post office has people queuing outside the door, and the health and safety people are worried because they cannot fit in the staff needed to deal with all the customers. That does not sound to me like a town that cannot support two post offices, but did the Post Office listen? Of course it did not. I am not convinced that the new, so-called consultation process will be any different from the old one. Frankly, we know what the Government and the Post Office want to achieve, and if an individual post office gets in the way consultation will not make a blind bit of difference. If they are determined to shut it, they will shut it anyway. There has to be an alternative vision, which must be a positive one.
  Andrew Selous: Does the hon. Gentleman share Postwatch's concern that some senior Post Office managers are on commission in terms of the number of post offices that are closed in their areas? Is he aware of that development?
  Mr. Webb: If that is so it is truly shocking, because it rather suggests that a careful, case-by-case assessment of the merits of individual post offices is not the issue. No one is suggesting that the entire system should be set in stone, but the idea that managers should be rewarded for closing as many post offices as possible as fast as possible is totally unacceptable. It makes a mockery of the suggestion that serious attention is being paid to consulting the public.
  There can be, and has to be, a positive future for the post office network, but the key point is that it needs time to adjust. The Government are denying it that time by forcing the pace of transferral to payment into bank accounts. We recognise that people's views change and that, over time, there will be a gradual increase in the number who use bank accounts, with fewer using giros. If that gradual process were allowed to continue, post offices would have time to adjust to taking on the new services about which the Secretary of State has talked. Post offices could give people access to banking services in any case; there is no need to introduce direct payment, or to take away pensioners' right to payment by giro. The two elements are quite separate. We need to boost the post office network, to respect people's choices and to have genuine consultation. So far, the Government have failed to deliver on any of those fronts.
  2.45 pm
  Richard Burden: At the end of February, Post Office Ltd. announced the proposed closure of 29 of the 90 sub-post offices in the south Birmingham area. Five of the 14 post offices in Birmingham, Northfield were among those slated for closure—in other words, 35 per cent. of all the local post offices in my constituency.
  I do not dispute the fact that we need to recognise that Post Office Ltd. is going through a period of change. Its trade and the pressures to which it is subjected are massively different from those that existed 20 years ago. Not all post offices are sustainable, and as Conservative Members know, 3,500 unplanned closures occurred under the previous Government. So the current Government are right to require Post Office Ltd. to plan for the future. It needs to assess what is sustainable and

  923
  to maintain those post offices that are sustainable, but it also needs to consider the available opportunities rather than simply focusing on the threats facing individual post offices.
  Such an assessment is what the urban reinvention programme was supposed to be about, and we members of the Select Committee were certainly assured that the area plans were supposed not only to look at post offices in isolation, but to consider the needs of entire communities and how the post office service should fit into them. I have difficulty in relating that vision to the slating for closure of 29 of the 90 sub-post offices in south Birmingham.
  A number of problems have led to the way in which Post Office Ltd. is currently behaving. It uses a modelling system called Netspec to produce its area plans. Netspec has some strengths, but it is important to put it on the record that Postwatch has said that Netspec has been
  "a useful tool for assessing where customers will migrate once their 'old' post office has closed",
  but says that
  "it cannot be used as the only tool, as there are occasions when other factors—local geographic or social—may not have received due attention, and customers therefore migrate elsewhere or in different proportions than expected."
  I credit Postwatch for the way in which it has represented local views and acted as a watchdog over Post Office Ltd. In doing so, it has cast considerable doubt over the way in which Post Office Ltd. has used its modelling system.
  Post Office Ltd. has got the demographic characteristics of my constituency wrong, and has not checked its facts properly. It said that there was virtually no rented housing in one particular area, but it had looked behind the post office in question because of the ward in which was located, rather than across the road to the houses in front of it—presumably because they are in a different local government ward. That side of the road is stacked to the rafters with high-rise blocks of flats, and it is also a large council estate.
  Under the terms that Post Office Ltd. has agreed with the Government, it is also required to look properly at deprivation. In planning its changes, it is supposed to consider the 10 per cent. most deprived wards in the country, and the 20 per cent. of wards that contain pockets of severe deprivation. I do not believe that it has looked at the issue of deprivation in my area with sufficient rigour, and I have no reason to think that the situation is different anywhere else. It certainly has not considered the issue of pockets of deprivation. Members on both sides of the House will understand that the word "pocket" is something of a misnomer. The pockets of deprivation in each ward in south Birmingham probably consist of thousands of people, because the wards are very big. There is no sign that Post Office Ltd. is looking at the issue of deprivation sufficiently clearly.
  As a result of all this, Post Office Ltd. is not meeting the targets that it is required to meet, at least in the case of south Birmingham. It has promised that more than 95 per cent. of customers should be within a mile of a post office, and that most customers should be within half a mile of one following a closure. The calculation is made
  924
  not on the basis of where the customers are—I recognise that that can, for all sorts of technical reasons, be quite difficult—but on the basis of the distance between the closing post office and the so-called receiving branch. According to the figures, there is no receiving branch within half a mile of the closing branch in my constituency—not one, but most should be within that distance. About 60 per cent. of the receiving branches are a mile or more away from the closing branches. The required targets have simply not been met.
  Mrs. Calton: I should like to draw attention to the report of the performance and innovation unit of 2000. It states:
  "The PIU believes it would be better for the Government to dispense with the idea of numerical access criteria … Distance based access criteria take no account of the ability to reach a post office … The post office should adopt policies which are more closely targeted at achieving its aims in relation to the post office network."
  Richard Burden: The hon. Lady has a point. I presume that she, like me, welcomes the fact that the Government commissioned the PIU to examine the future of the Post Office. The report, which I believe the Liberal Democrats supported, made several important points. I believe that distance-based criteria are overly inflexible. My point is that, even according to those criteria, Post Office Ltd. has not met the targets that it is required to meet.
  Mrs. Calton: Perhaps I did not make my point clearly enough. Everything that flowed from the PIU report was supposed to be carried out, but it is clear that Post Office Ltd. has not followed the guidance that the report offered.
  Richard Burden: It would be fair to say that some of the actions taken by Post Office Ltd. have been consistent with the PIU report, but not others. My point is that, even where the recommendations were followed, there has been severe doubt about the extent to which they have.
  Why does Post Office Ltd. get it wrong? There is not too much fundamentally wrong with what the Government have requested, so why does the organisation seem to get things so wrong? One reason is the consultation procedure. I tabled an early-day motion last year on the subject and the Minister for Energy, E-Commerce and Postal Services guaranteed what Post Office Ltd. would be required to do: to consult local communities throughout the process of change, not just at the end of it. That has not happened.
  Area plans are constructed on the basis of discussion between Post Office Ltd. and local sub-postmasters. Communities and local authorities are not involved in drawing up the plans: they have their say only at the end of the process, when the plan is published. That is a fundamental flaw, because we could avoid many of the problems if we asked the experts—effectively, the people who live in or represent the area—at an early stage. I certainly welcome the fact that the leader of Birmingham city council, Sir Albert Bore, made that point very clearly to the Post Office in his response to the plan to close 29 sub-post offices in the area.

  925
  Another problem is that only the threats not the opportunities for business are considered. It is right for the Government to provide compensation for sub-postmasters where they are losing their business and the post office is simply not viable. However, as I said earlier, the Post Office's approach to the problem is so inflexible that it effectively forces a local sub-postmaster to quit the business and get out, because it makes more financial sense for the sub-postmaster to do that than to sell the business to another business person who might have a sustainable plan to keep it going. I believe that that is not only wrong but uneconomic.
  That position arose in my constituency, and I shall use mythical figures to illustrate the point. If a business is worth about £50,000 on the market, it is possible for the sub-postmaster to be offered £70,000 in compensation to get rid of the business, yet another business person could be willing to take it over on the basis of a viable business plan. In those circumstances, the sub-postmaster would have to be mad to sell to the new business person for £50,000 when he could receive £70,000 for shutting the branch down. The Government should know that that is how the Post Office is operating the plan, which I do not believe conforms to the spirit of what was agreed. I ask the Government to encourage Post Office Ltd. to be more flexible and to examine how it might be possible to save public money and sustain viable businesses on that basis.
  Andrew Selous: To illustrate the hon. Gentleman's very good point further, does he share my upset on learning from Postwatch that the Post Office has been instructed to reject other sources of funds that might have been available to keep a post office going? The concern was that there was a danger of establishing a precedent that might keep post offices in business. Does that not reinforce his point?
  Richard Burden: The problem is the approach of Post Office Ltd., which is not in keeping with the spirit of what was agreed with the Government. A closure of a sub-post office is properly a matter for Government intervention, the use of Government funds and so forth. The improvement of the funds of certain receiving branches may also be relevant. Post Office Ltd. regards someone knowing that a sub-postmaster wants to leave a business but believing that he, instead, can make a go of it as a matter only of a transaction between the sub-postmaster who is getting out and the new business person who wants to come in. It acts in a wholly hands-off way in that respect, which can lead to the crazy position described by the hon. Gentleman, whereby potential sources of funds are effectively ignored by Post Office Ltd.
  Mr. Weir: Is the situation not rather worse? Under the Post Office procedure, no one knows before the closure announcement is made that the business may be up for sale. That might be for good, confidential reasons, but by the time it becomes public knowledge that a post office may be going, it is too late for anyone to make an offer to take over the business.
  Richard Burden: The hon. Gentleman makes a fair point, which underlines the fact that the consultation should be structured differently. If Post Office Ltd.
  926
  recognises the need for change in a particular area because not all the post offices are sustainable, it should be prepared to sit down and work out who wants to stay and who wants to go, and to decide the right pattern of post office provision. Perhaps in one area all the sub-post offices should be closed and another one opened. It is theoretically possible that they are all in the wrong place to serve local people. If there were a willingness properly to plan the needs of an area, those problems could be tackled, but the way in which Post Office Ltd. goes about it means that that does not happen.
  Furthermore the Post Office approach undermines the laudable objectives that the Secretary of State mentioned earlier. She and the Government should be applauded for their searching and ambition to open up new business for the Post Office. They should also be applauded for their investment in making the Horizon project work more effectively. They are right to say that the Post Office should be trying to find new business, provide outlets on the high street for clearing banks, look towards the possibilities for insurance and so forth. All that is right but difficult to reconcile with the strictures that Post Office Ltd. has put on itself in carrying out the urban reinvention programme.
  I therefore ask my right hon. Friends to talk to Mr. Mills and his colleagues again to remind them that they are supposed to be reinventing the network on the basis of a vision, not simply implementing closures. I know that Ministers do not want the latter. They want a reinvented and sustainable network, but I have to say that Post Office Ltd. is not living up to that vision at present. That explains why there is a major campaign in my area of Birmingham against what Post Office Ltd. is proposing. I am pleased to say that the local paper, the Birmingham Evening Mail, is spearheading the campaign very effectively.
  David Cairns: It is why my hon. Friend is making his speech.
  Richard Burden: Indeed; it is why I am speaking in the debate. Some of my right hon. and hon. Friends in the area have tabled an early-day motion to ask Post Office Ltd. to think again. The only Birmingham Labour Member who has not signed the motion is the Minister for the Arts, my right hon. Friend the Member for Birmingham, Yardley (Estelle Morris), who has told me that she supports it and is on record as a supporter of it, but as a Minister is unable to sign it. There is unanimity among Birmingham Labour MPs that Post Office Ltd. should think again.
  Concern about the proposals crosses the political divide in Birmingham, so it is with some regret that I must report that the leader of the Liberal Democrats on the city council has taken the opportunity to spread what I have to call untruths about what I and other Labour Members have been doing. He has alleged that we voted for the closures in south Birmingham, on 13 January this year and on 20 October 2002. However, the calendar shows that the latter date was a Sunday. As far as I know, Parliament does not sit on a Sunday: if that vote took place, I missed it.
  There may be differences of view about the urban reinvention programme, the handling of the Post Office card account and the compensation issue, and it is right

  927
  to debate them, both in the House and elsewhere. However, people are worried about the loss of local post offices and have real fears about what the future holds. They expect local politicians to join together to represent their interests. It is not acceptable, therefore, to spread untrue allegations about members of other parties, when in fact we are all on the same side.
  If the leader of the Liberal Democrats on Birmingham city council acts as he has previously, I expect that a leaflet will be distributed in the next few days saying that, when I vote against the Conservative motion and in favour of the Government amendment tonight, that means that I have once again voted for post office closures. As the House knows, post office closures are not voted on in the House, so no hon. Member of any party can vote either for or against such closures.
  Mr. Stephen O'Brien: I can understand why the hon. Gentleman is frustrated and cross with the Liberal Democrat leader on his local council, but the Opposition motions of 13 January and today have attracted Liberal Democrat support. Moreover, and more importantly, today's debate gives the hon. Gentleman an opportunity to vote in line with his campaign. He may not want to join Opposition Members in the Lobby—although he would be more than welcome to do so, as a way to back up the rhetoric that he has used in his speech—but it is difficult to take his rhetoric at face value when he supports a Government amendment that is both self-congratulatory and uncritical. At the very least, he should consider abstaining.
  Richard Burden: The Opposition have blown it when it comes to the motion. It makes some reasonable points about how Post Office Ltd. has gone about the restructuring programme, but the punchline can be found in the motion's final couple of lines. They state that the House
  "condemns the Government's failure to deliver benefits and tax credits in a simple, easy to understand manner while at the same time jeopardising the future prosperity of the Post Office."
  I understand that the Opposition believe that, but they are wrong. As my right hon. Friend the Secretary of State said earlier, either we face the future by trying to plan for it and by requiring Post Office Ltd. to consult properly, or we opt for the free-for-all evident under the previous Conservative Government, when 3,500 sub-post offices closed.
  Mr. Jim Cunningham: Earlier, my hon. Friend mentioned the Horizon project. Does he recall that it was introduced by the previous Conservative Government, and that its aim of paying pensions and benefits by smartcard caused all sorts of problems? The difficulties faced by post offices stem from the actions of that Government, and Opposition Members will not get away with rewriting history. Does my hon. Friend also accept that the Horizon project cost £500 million, and that £50 million was needed to put it right?
  Richard Burden: My hon. Friend makes a very important point. That is a salutary lesson for Opposition Members. If they want to throw stones, they should realise that they do so from a rather fragile glasshouse.
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  It is important to put on the record the actions of the Liberal Democrat leader on Birmingham city council. Some modes of behaviour are acceptable in politics, and some are not. I believe that he has transgressed the line. Local people do not want politicians to behave like that. It is important for south Birmingham that politicians of all parties band together on this matter. We do not want to mislead people by claiming that every post office in every corner of Birmingham can be saved, but we can say that Post Office Ltd., in drawing up the plan, has fallen short of what the Government's requirements set out. It has identified the threats to local post offices, but not the opportunities open to them. It has also got its facts wrong, in a variety of ways.
  As I said, I am a member of the Select Committee on Trade and Industry, which has announced that it is to undertake another investigation of post offices and the urban reinvention programme. Given that, it would be madness for Post Office Ltd. to go ahead with the planned closure programme for south Birmingham. The plan should be withdrawn, and Post Office Ltd. should think again. It needs to sit down with people from the local communities, elected politicians and others to determine what sort of post offices people in south Birmingham need, and to decide how to plan for the future. Post offices that are not sustainable should be closed, but high-quality services to local people must be maintained. Post offices should be encouraged to take on new business, so that they can provide a much better service for local people in the future.
  3.7 pm
  Mr. Nigel Evans: I have been a Member of Parliament for 12 years, and have taken part in many debates on the importance of post offices. This is a vital subject. The Post Office is a recognised brand, for which people have great affection. I grew up in Swansea, very near to a post office. I used to go in with my mother, and it was probably one of the first shops I ever entered. Even then, I knew the importance of the post office network.
  When Ministers talk about restructuring, they are using an Orwellian code that means closure—a word they dare not use. In that context, using the word "restructuring" is like using the term "rightsizing" to explain why an employee has been sacked. What is happening is that the post office network as we understand it is being culled.
  I am the first to accept that post offices have been closed by previous Governments, of all political complexions. However, I remember sitting on the Government Benches—and I will sit there again very shortly and without crossing the Floor—and the then Labour Opposition of 1992–97 telling us that post offices were closing. They said that that was callous, and that the Government of the day needed to do something about it. There was a suggestion at that time that the Government were going to change the benefit system, and that benefits would be paid by means of a card.
  The Conservative Government considered the matter and listened to what the public had to say. Our proposals for the card system were never implemented, but this Government are going ahead with introducing their own version. Labour Opposition Members at the time said that the urban and rural post office networks were both vitally important, for different reasons.

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  In my Ribble Valley constituency, the towns of Clitheroe and Longridge have vibrant post offices. A number of villages still have post offices but, sadly, some have closed since 1997.
  Mr. John Horam: I am interested to hear what my hon. Friend says about the rural scene in his constituency. Does he recognise that in a suburban area such as Orpington, which I represent, the little parades of shops are dependent on the local post offices as a central component? If the post office goes, the parades often fold.
  Mr. Evans: With my retail hat on, I accept that point completely. To the grocer, butcher, fishmonger, pharmacist and other small retailers, the post office is part of the community of services available to the public. When a vital part of that community is taken away, the others start to struggle. When the boards go up outside the post office, it is often not long before the boards go up outside other retail outlets.
  We have always been told that the post office network is important. I was depressed when I saw in the Lancashire Evening Post the other day the headline "Nine post offices to shut". That included five in Preston, two in Chorley and two in Penwortham. Postwatch wrote to me on 18 March about those closures, and about the proposed closure of five post offices in Rotherham and 13 in Bury. Today we have heard about 29 closures in south Birmingham—from a Labour Member. Irrespective of party, if we wish to see a post office network of any worth survive into the future, we should speak up about it now and do something before it disappears completely—otherwise, a vital asset will be lost to this country for ever.
  Several hon. Members have mentioned the growth in the elderly population and how important the post office network is to that sector of the community. Some of them do not have access to cars or other transport, especially in rural areas where the bus service is not what it used to be. That is why they need local post offices, which often sell other items. They also enjoy the opportunity to chat to post office staff and meet other members of the community.
  Mrs. Gillian Shephard: Has my hon. Friend come across the problem that my elderly and rural constituents face because Powergen, with only three weeks' notice, has withdrawn the electricity token service from post offices? People without transport, and of necessity on low incomes—and many of them not very mobile—had been able to purchase tokens at the post office to feed their meters at home. However, after scant consultation, Powergen has decided to withdraw that service. Does my hon. Friend agree that that action weighs most heavily on the elderly and less well-off in rural areas?
  Mr. Evans: Of course it does, because the token system is designed to ensure that the less well-off are able to eke out their resources and maintain their supplies of power. I hope that Powergen will think again. I hope that it will consult properly with the post office network and their customers to see whether the service should continue. I hope that Powergen will also listen closely to what my right hon. Friend has said today. I suspect that
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  we are talking about another nail in the coffin. The withdrawal of that service might not, by itself, be the reason for closure, but alongside all the other changes that the Government have made it will make post offices less viable.
  I asked the Secretary of State for Trade and Industry whether she would consider becoming a postmistress and she said gleefully that she would if she lost her seat. I think that was a hollow reply, because the profitability of post offices is part of the problem. I agree with the hon. Member for Birmingham, Northfield (Richard Burden) about the incentives offered to postmasters and postmistresses to give up their post offices. If people are not making any money from their post office and somebody offers them a pot of cash, they will probably take it, because they are frightened of the future. They have seen the profitability of their post offices decline because of the withdrawal of services such as Powergen's, and the lack of footfall because so many benefits are now paid into bank and building society accounts. They take the cash and get out of the business, thus reducing the number of post offices further.
  I encourage the Government to consider what new services post offices might be able to provide, but some post offices in smaller areas are unable to expand. Will postmasters and postmistresses who see their profitability falling risk borrowing more money—if they even can—to expand the goods and services available in their post offices? If a post office is run by a husband and wife team, they are chained to it from the time it opens in the morning until it closes in the early evening. Because of the lack of profitability, they cannot afford to employ anyone to give them some time off. We have to consider the profitability of post offices, but as we have heard today fewer people are going into post offices and fewer transactions are taking place.
  The Secretary of State mentioned 25 million banking transactions, but how much profit do post offices receive, compared with the old system? The reality is that they are making less profit. There are fewer post offices, and they are not as viable as they used to be. Running a post office is also a huge responsibility, because it is a cash-based business. We heard about the introduction of ATMs to post offices, but many people resent the charges they impose for withdrawals. In the past, withdrawing money was free of charge, but now it costs £1.25 or £1.75. I can understand why people on fixed incomes feel so strongly about having to pay those charges.
  I pay tribute to one of my local post offices in Bolton by Bowland. It has added tea rooms to diversify its services, although that is a lot more effort for those in charge. During the rugby world cup, the post office opened at unsocial hours so that people could come together and enjoy England's great victory.
  Mr. Richard Bacon: How did Wales do?
  Mr. Evans: Well, we helped England to that great victory in some of the games we played in the world cup.
  As I was saying, opportunities for diversification are limited. I hope that the Minister, when he winds up, does not treat this as just another debate on post offices that has to be got through before the next debate on the same

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  issue in a few months' time. In the meantime, we will see yet more closures and more services withdrawn. I welcome the fact that banks are using the post offices as a resource. Banks used to have branches in villages, but they have now withdrawn from villages and smaller towns. I hope that all the banks will join in, including the Scottish banks, so that all customers benefit.
  This whole subject boils down to the question of choice. Some elderly people have received phone calls about how they would like their benefits to be paid, and they have been discouraged from opening a post office account. They are told that it is better for their money to be paid directly into their bank or building society, but that is no choice.
  Mr. Webb: I note that the Minister is shaking his head. Is he suggesting that the hon. Gentleman is lying? I do not understand why, given that all hon. Members have had constituents come to us about post office closures. What does it take to get the Government to realise that this is actually happening?
  Mr. Evans: The hon. Gentleman makes an important point. As he asked in his speech, what planet are the Government living on? Frankly, they are in a parallel universe. I have taken part in public meetings with pensioners in my constituency, and they told me that, when they sent back the forms that they had filled in, someone phoned them to encourage them to go to a bank or building society. Pensioners have stood up in a public meeting to tell me that that has happened.
  Towards the end of our period in government, we became arrogant—we stopped listening—but that took us 18 years. It has only taken a few years for that lot to succumb to the arrogance of power. They must listen to the facts. I am certainly not lying to the House when I say this, and I cannot believe that pensioners are lying to me when they say that they have received phone calls encouraging them not to take up Post Office accounts, but to go to banks and building societies.
  Mrs. Anne Campbell: Does the hon. Gentleman not think that it is very important that pensioners are given personal advice when they make an important decision such as how to draw their benefits or how to bank their money, and that it is difficult to apply one-size-fits-all rules to everyone? Surely he should welcome the fact that people are being telephoned and offered a personal and helpful advice service.
  Mr. Evans: I suspect that, if people choose banks and buildings societies, they do not get a phone call saying, "Have you perhaps considered opening a Post Office account?" No one has told me that that is part of the problem. Yes, I welcome the fact that they are given advice, given that they are taking an important decision, but they ought to be told as well that, if too many of them pull out of post offices completely, they will become less viable than they are currently and that the current post office network will completely disappear. Yes, by all means let us give people information, but let them make the decision. Let us not take the decision away from them or try to goad them into a direction that may be against their own long-term interests. I hope that
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  the Minister will accept that those things are going on, although they are anecdotal stories, and certainly that no one in the House today is lying when we say that those things are happening.
  Mr. Pond: I am not accusing any hon. Member of lying, either verbally or by my body language. I ask hon. Members to understand that we have a responsibility to help people to understand the full range of their choices. I ask them to consider what happens when a pensioner makes or receives a call and is told—perhaps after listening to this debate—by the sub-postmaster or mistress, "Look, they won't let you have a Post Office card account." The pensioner then makes a call to say, "I want a Post Office card account," and the person on the other end of the line rightly says, "Let me tell you about the different range of options first." That may be perceived as encouraging the pensioner away from the Post Office card account, but the person on the end of the line is simply making sure that the pensioner knows the full range of options.
  Mr. Evans: As I say, I very much hope that, when people are considering their options for banks and building societies, they receive similar phone calls to ensure that they know all the options. I look forward to the call-centre scripts being made available in the Library, so that we can see whether that goes on. However, perhaps it would be beneficial if the Minister were to issue guidelines to ensure the integrity of the system, so that elderly people or those in receipt of benefits are not led one way or the other before making an informed decision. I hope that he will consider the system again to ensure that there is no goading one way or the other.
  I have been an MP for 12 years and have been attending debates such as this throughout that time. The acceleration in the number of urban post offices that closed last year is a great worry, as is the number of rural post offices that are still closing, including in my constituency. We have seen rural banks close. We have seen the pubs in rural areas go into decline, and some of them have disappeared. Pharmacies have been mentioned. Small retail stores in villages are no longer profitable. Post offices are the last shops left in some villages and, when they go, a whole way of life—the rural community spirit—will completely disappear from those areas.
  We need to ensure that the consultation on such issues is fair. As the hon. Member for Birmingham, Northfield said, there must be options for other people to take over post offices. The Post Office must be far more vigorous in looking for fresh people to take them over. Perhaps people should be given an incentive to bring in new ideas about how those post offices can work. The consultation must not be rigged or prejudged. It must not be carried out with the intention that those involved were thinking of closing seven post offices, so they will do so irrespective of what the people say.
  Frankly, the supposed managed closure programme represents set-aside for our post offices. They are being put to one side. They are being put into the long grass. The post office network that we all love has become something of a Titanic: it is sinking fast, and instead of the Government shoring up the ship to try to ensure that it will not disappear, they have made the hole bigger. I

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  call on the Minister today to give a guarantee that he will do what he can to find ways to preserve the current network. No managed disappearance of post offices, please. Let us ensure that post offices—whether urban or rural—are valued for what they are. Let us look for ways to ensure that they have a future well into this century.
  3.26 pm
  Mr. Richard Bacon: The motion refers to
  "the significant role played by local post offices in both rural and urban areas".
  My hon. Friend the Member for Ribble Valley (Mr. Evans) has told us about the situation in rural areas, and the hon. Member for Birmingham, Northfield (Richard Burden) made a thoughtful speech about the situation in south Birmingham. Like my hon. Friend. I wish to concentrate on rural areas, and in doing so, talk about the problem facing people in Norfolk because of Powergen's actions, which my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard) mentioned briefly in an intervention.
  People sometimes underestimate just how different things are in rural areas compared with urban areas. My constituency covers 350 square miles: Greater London, which contains 74 parliamentary constituencies, covers 650 square miles. My constituency is more than half the size of Greater London. My right hon. Friend, whose constituency neighbours mine, has a constituency some three times the size of mine—at about 1,300 square miles, I think. Post offices in rural areas are part of the social fabric of local communities, as the hon. Member for Birmingham, Northfield acknowledged when he was dealing with urban areas.
  Mrs. Shephard: I thank my hon. Friend for referring to the entirely different problems faced by people in far-flung rural areas. I have a letter from the postmaster at Banham in my constituency, who says that as a result of Powergen's decisions, residents will now have to travel nine miles to the nearest pay-point outlet and nine miles back. For many elderly, disabled or less well-off people, that is not an option.
  Mr. Bacon: I agree with my right hon. Friend. Such a journey is not an option for many people. That is why I have taken up the issue with Powergen and with the Post Office, to ask whether they can renegotiate. Indeed, I have also taken it up with Ofgem, to see whether it thinks that Powergen is acting against the public interest. I, too, represent constituents who will have to travel some distance to get electricity swipe cards topped up—to a neighbouring market town, in this case—as a result of Powergen's decision to withdraw the contract from the Post Office.
  People in Roydon in my constituency, some of whom are on limited incomes and do not have cars, can knock on the doors and Mr. and Mrs. West will open up after hours, even at 9.30 at night, so that a young mother with two children who has suddenly run out of electricity can be reconnected. Effectively, that is a social service, and there seems to be no reason why Powergen should unilaterally remove the contract from the Post Office.
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  I received from Powergen a letter of the sort that we all receive from time to time, explaining how it was enhancing its service. There is a German word, "Verschlimmbesserung", which, loosely translated, means the process by which, as things are improved, they get worse. We are familiar with that process from many different aspects of life, and it is certainly applicable in this case. I look forward to receiving a sensible reply from Powergen and hearing about a reconsideration of this ill-considered and ill-thoughtout policy.
  Mr. Stephen O'Brien: Is my hon. Friend aware of another relevant German expression that is difficult to translate into any other language? What is happening displays that Powergen has anything other than "Fingersptizengefuhl—a fingertip feel.
  Mr. Bacon: I am aware of that expression; my hon. Friend makes a good point, and Powergen needs to reconsider the issue with some care.
  The second issue that I want to raise involves a specific problem that arose some three years ago because of the decision of Mrs. Rogers, the then sub-postmistress at Coldham Green, Deopham, to retire from running the post office in Pie lane. As she was retiring, she requested that the post box in her front garden be taken away. Indeed, the parish council suggested that the box should be resited somewhere else, which seemed perfectly reasonable. It also seemed reasonable that Mrs. Rogers should no longer have a post box in her front garden when she was no longer running the post office.
  The problem that subsequently arose has endured for so long because of Royal Mail's failure locally—I stress the word "locally"—to understand, recognise or acknowledge the difference between resiting and removing. Thus, the local Royal Mail manager's response to concerned local residents, to the parish council and to me has been to ask why residents of Coldham Green should have an additional post box. In fact, all that local residents are asking for is the relocation of a previously existing box in a slightly different place. The local Royal Mail manager has gone so far as to allege that there is a post box in a place where there is none.
  I have gone to the chief executive and chairman of Royal Mail, who have been helpful, and I look forward to receiving a sensible response. I have walked the route that people must now take, and I can see how dangerous it is. Without a post box in their area, local people must walk to the other end of the village down a road that has a 60 mph speed limit—although it certainly should have a lower limit. Young mothers with prams must push their small children down the lane to the post box at the other end of the village, but there is no verge and there is nowhere for them to hide. That is not a practical option, and many people refuse to take it and are thus deprived of a service. I hope to get a sensible answer out of Royal Mail in due course, and also some indication that it will encourage its local managers to take a slightly more helpful and interested approach. Postwatch is also escalating the priority attached to the local complaint, and I hope that there will be a resolution.
  As for the so-called neutral position on the Post Office card account, a number of hon. Members have referred to the apparent difference between what we, and our

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  constituents, are experiencing in our daily lives and what is happening over there on Planet Hewitt, where there seems to be no difference between the treatment of the options on offer, and they are apparently being laid out in a neutral way. How can Age Concern, Citizens Advice, the National Consumer Council, the National Federation of Sub-Postmasters, the Communication Workers Union and the National Federation of Women's Institutes all have expressed concern about the obstacles and difficulties in opening a Post Office card account, yet the Government and Ministers on Planet Hewitt do not seem to think that there is a problem? The Minister should be careful before he takes on the National Federation of Women's Institutes. He should recall what happened to his boss when he tried to do that.
  It is absolutely clear that there is an issue. Indeed, the guidance given to Department for Work and Pensions staff, contains this statement:
  "We need to pay most of these customers into bank accounts which cost 1p, rather than into Post Office card accounts, which cost up to 30 times more. You should be aiming to get nine out of 10 new claimants into bank accounts, with a small proportion paid through Post Office card accounts."
  That does not sound very neutral to me.
  That prompts another question. Quite apart from the fact that there is not the neutrality that the Government allege, why should the card accounts cost so much more than bank accounts? After all, lottery terminals have been put into convenience stores, post offices and small shops throughout the country. The proposed payment system is relatively simple, and ought not to cost 30 times more than bank accounts. If one looked into the problem, I suspect that one would discover that, as is often the case with Government IT projects, the Government's IT advice has cost more than it should.
  As hon. Members, including my hon. Friend the Member for Havant (Mr. Willetts), who introduced the debate, have said, the key issue is choice. Theoretically, at least, the Government are in favour in choice. Indeed, the Prime Minister's Office of Public Services Reform, in the pamphlet, "Principles into Practice", published in March 2002, said:
  "Choice acknowledges that consumers of public services should increasingly be given the kind of options that they take for granted in other walks of life."
  Amen to that. The Government should back up their rhetoric and give our constituents in both urban and rural areas the kind of choice that they expect.
  3.36 pm
  Mr. Lindsay Hoyle: This is an important debate, in which we can air our views about the future of postal services—a subject that matters to older people, younger people and others who use post offices. In Chorley we face two closures—the Moor Road post office in Pall Mall and the post office on Eaves lane. I am worried about the criteria used for closure, and I would like genuine consultation. Anyone who has been through a closure programme knows that consultation is usually a charade. As we head into a consultation on those two crucial post offices in Chorley, I hope that there will be genuine dialogue, and
  936
  that geographical considerations will be taken into account. There is no post office in Chorley to the south of either of those post offices, and we cannot expect people who have to walk half a mile to use them to walk another half mile to use the next one. Older people cannot walk that far, and a journey of that distance is certainly not feasible for young mothers who may want to call at a post office on the way to school.
  I regret that the Post Office is considering closing those post offices, and there must be full genuine consultation. It should listen to local elected representatives and the people who use those post offices. If the Post Office listens to us and takes our views on board, I do not expect it to close them. If the sub-postmaster wishes to get out of the business, the Post Office should approach shopkeepers in the area and nearby supermarkets and say that, rather than allowing a local facility to be lost, it would like them to consider taking on the franchise. The Post Office should go out and look at other shops to try to see if they can facilitate a replacement. We do not want a Post Office that is determined to close sub-post offices but one that is determined to keep them open. That is a crucial point, and I hope that it will be taken on board.
  We have heard a lot of rhetoric today from the Opposition, and they have shed many crocodile tears. Under the previous Government, 3,500 post offices closed, but not once do Conservative Members refer to that. If they are genuine—and I expect people to be genuine in the Chamber—they should not try to make political gains but should make genuine arguments on behalf of their constituents. That is how debates should be conducted—[Interruption.] Hon. Members might ask, "Which way are you going to vote?" but that is not the way to proceed. We ought to tell the Minister that there are problems, and that we expect a listening Government to take our views on board. They should propose a solution, refine it and use their vote as shareholder in the Post Office to tell it that they do not like the way in which it is doing business, and they expect it to change. The Post Office should listen to hon. Members, and take our views on board.
  Andrew Selous: Does the hon. Gentleman accept that every Opposition Member who has spoken, as well as his hon. Friend the Member for Birmingham, Northfield (Richard Burden), has asked the Post Office to be more flexible and more creative and to look at the issue from the point of view of the whole community? That is the central point that has been made this afternoon.
  Mr. Hoyle: I understand what the hon. Gentleman is trying to say. He is slightly embarrassed because he knows the debate is a political one. I would have liked to believe that we could genuinely express our views and concerns, but apparently, the real purpose of the debate is to make political points. That is wrong. It should be an opportunity for Members to make our voices heard.
  Mrs. Anne Campbell: I do not know whether my hon. Friend's experience is the same as mine, but I discovered that when post offices were facing closure, surveys carried out among the local population made it clear that many people did not realise the full extent of the

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  services that post offices offer. The Post Office could do a great deal more to advertise the services that are available and would be of benefit to people.
  Mr. Hoyle: My hon. Friend is spot on. We ought to be telling people not only how good post offices are and how vital they are to a community, but about the services available to them. People have forgotten how many services post offices offer. I believe that the Post Office should offer even more services, and that they should be franchised.
  Mr. Evans: I hope that neither of the post offices in the hon. Gentleman's constituency is being incentivised to close. I agree that the consultation must be carried out properly, not rigged. The Lancashire Evening Post reports that there will be a six-week consultation, and that
  "Royal Mail bosses say the proposals are a direct reaction to declining custom and changes in the benefits system where cash is paid into the bank."
  Does the hon. Gentleman recognise that that is a problem, and that we must ensure that customers have the choice of collecting their benefits from the post office?
  Mr. Hoyle: Of course the hon. Gentleman is correct. I intended to come on to that point and say that my hon. Friend the Minister may not be aware of the difficulties faced by people who wish to keep to the old system. It is true that the legislation provides the right of choice for them. But somewhere in the bowels of the administration it is made difficult for people not to go into the banking system. That is what worries me.
  I do not believe there are many MPs who have not been approached by constituents—older pensioners—who say, "I don't want the new system. I want to stay with the old system." They fill in form after form, and as Members of Parliament, we get involved. It seems that somebody somewhere is blocking the system and not clearing the forms as quickly and effectively as they should. They are looking for a minor point on which to reject our constituents' requests. The Minister may not be aware of that. We need a thorough investigation to ensure that the process runs smoothly once people fill in the form, and that they do not have to go without the money they are entitled to for any length of time.
  A further issue on which I appeal to the Minister concerns people who may not be able to get to the post office because of illness. Someone has to collect the money for them, and that is a worry if they are ill for four or five weeks. We need to recognise that as a genuine concern and see how we can improve the situation. We all deal with big problems relating to post offices, but we all recognise that sub-postmasters and sub-postmistresses offer a superb service. The post office is the focal point of a community, urban or rural. It provides a service that we love and have enjoyed over many years. We want future generations to be able to enjoy the post office, as we have. I hope that the service can become more flexible and more creative, recognising that post offices should remain open and offer their services to the community.
  We do not want people to look at a map and say, "Let's take these post offices out, because we think there are too many." That is wrong. They should examine the
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  demographics of the area and the age profile of the people who live there. They should listen to the Member of Parliament and other local representatives in each constituency where closures are proposed. Please let us take that on board, and tell the Post Office that its ambitious plan to close so many post offices is unacceptable. Let us listen to the community and put the community interest first.
  3.45 pm
  Mrs. Patsy Calton: We have heard so much this afternoon, and I have spoken before on the matter in the Chamber, about the huge flaws in the network reinvention programme as it applies not just to my constituency but to those of my hon. Friend the Member for Hazel Grove (Mr. Stunell) and the hon. Member for Stockport (Ms Coffey). Flawed information was given to us on 17 December—which some of us did not receive until 18 December—the process itself was flawed, decision making was flawed and secretive, and the sum total of all the work that was put in was that four post offices were closed. Today and this week, post offices are closing and elderly and disabled people are being left without access.
  Of the respondents to our consultation, which we thought supported that of Post Office Ltd., 80 per cent. were over 55, and 40 per cent. had mobility problems. I was astonished at that figure. I expected it to be 10 or 15 per cent. I had no idea that it would be so high.
  To add insult to injury, as I said in an intervention earlier, we ended up being told during the decision-making process that, because it was recognised that the process was flawed, it would be altered for the future. But despite letters to Postwatch, Post Office Ltd. and the Minister, I have been able to obtain nothing other than sympathy, which is lovely but does nothing about the real problem. The process for my constituency and others involved in the same period should have been halted. I requested that of the Minister and Post Office Ltd., and I made my final appeals last week before the closures took place, but I have had no substantive response from either on those last-minute appeals. Postcomm and Postwatch told me that neither of them had any powers to halt the process even though it is recognised that it was flawed from beginning to end.
  The performance and innovation unit report, by which we are guided in the whole procedure, at chapter 8, page 2 on delivering objective 1, states that there should be convenient access for all to post offices—not just some of the population, but all. It states:
  "The Post Office network should offer people in all parts of the country convenient access to the services available in post offices."
  I highlight one of the post offices in my constituency that closed on Monday this week. The main receiving office is not on a bus route, the car park close to it is always full during daytime hours, and it is at the top of a steep hill. I do not understand how all the community can possibly have access to that receiving office.
  It has become clear that the process is being driven not by the strategic overview that we had all expected, but by a wish to close as many sub-post offices as possible as quickly as possible. It has been a case of the devil take the hindmost. The deal offered to sub-postmasters and mistresses has been one that many have simply been unable to refuse. The Government made

  939
  available £180 million for compensation. I do not argue with that. On average, £55,000 was paid out in the last quarter to December 2003 to individual sub-postmasters and mistresses. That is £38 million in one quarter of last year, and the figure is likely to be higher for the current quarter. What checks have been made on those payouts? Why is the payout based on takings six months before closure, when the closure information presented to Postwatch and others is based on takings including the past six months? Is that not an incentive to run down the business in the final six months?
  How many of those sub-postmasters and sub-postmistresses have owned their businesses for less than two to three years, having taken them on knowing that this process was in place? I am not suggesting that that is a factor in all cases, but I would like to think that the Government seek to ensure that taxpayers' money is spent on the purposes for which it was intended, and not simply used for handouts to close post offices that should be kept open because the sub-postmaster or sub-postmistress wants to go.
  My experience of Postwatch has not been as good as that of Labour Members, and I suspect that there are variations between different parts of the country. We have held four public meetings in my constituency, which were attended by Postwatch representatives. My constituents want to know Postwatch's purpose. Why does the Postwatch representative in the north-west, who attended the public meetings, report to Postwatch in London rather than to Postwatch in the north-west? Who authorises him to make derogatory remarks about public campaigns, or did he think of that for himself? Whose side is he on?
  Mrs. Anne Campbell: My experience of Postwatch has been extremely positive. Postwatch has done everything possible to help me to fight inappropriate post office closures in my area. In order to try to save a post office in my constituency, one case has been escalated up the ladder to the top of Postwatch. I cannot praise Postwatch highly enough, and I hope that the hon. Lady's experience is not replicated elsewhere.
  Mrs. Calton: I am happy to acknowledge that my experience occurred in my area. It was not only my experience, but that of members of the public, who asked, "Why did Postwatch bother to come?" I understand that time is short and that the summing-up speeches must begin shortly.
  I shall reiterate the health benefits of a vibrant post office network. It may seem a jump from this debate to health impacts, but the health of communities is a determinant of the health of individuals within those communities. Removing an important asset such as a post office has a huge impact on the health of a community. The other day, I heard that the best treatment for leg ulcers is to put three or four people with leg ulcers together to allow them to talk to each other, which makes them get better, along with the necessary medical work.
  Elderly people should not be left alone in our communities, but they are. A huge percentage of the public spend most of each week alone, and visits to the
  940
  post office and local shops make a big difference to their lives. The long-term cost to the community of post office closures will be huge. The PIU report states that "supporting vulnerable people" and
  "acting as a focal point for the community"
  are important parts of what a post office has to offer.
  I agree that there is an opportunity to reverse years of decline. In particular, it should be possible to offer post offices that open longer and that serve a broader customer base, but that is not the experience in my area, where there has been no attempt to combine retail with a post office to create a thriving local business. It could have been done, but it was not even tried. The question I have to ask is: where is the strategic vision? Those customers will not simply move from one place to another, mainly because they are not capable of doing so. If we turn post offices into banks, they compete with the banks—what about their customer base then? Network reinvention is destroying the customer base, tearing the heart out of communities, increasing car use and adding to social exclusion.
  3.55 pm
  Andrew Selous: I realise that time is short, so I want purely to repeat that it is extremely regrettable that Powergen has decided to discontinue selling electricity tokens. I quote from an email that I received yesterday from an ever-alert South Bedfordshire councillor, who said:
  "There appears to have been no consultation about this … They have given only one week's notice and having spoken to PayPoint it will take about 1 month to set up a new Paypoint station. Apart from this being another nail in the coffin of Village Post Offices if you examine the list of outlets within the Hockliffe vicinity there are 6 in Dunstable and 8 in Leighton Buzzard. None of these are on a direct bus route. Once again this will affect the elderly in particular."
  At a time when we should be encouraging the Post Office to take on an extra range of services to increase footfall, I hope that the Minister will take that matter seriously and speak to Powergen so that something can be done about it.
  3.56 pm
  Mr. Stephen O'Brien: During this debate, hon. Members on both sides of the House sought to express their views and concerns about post office services—as opposed to the post office network, which was the subject of the debate that took place, again in Opposition time, on 13 January. In doing so, we are motivated by our deep commitment to what characterises the communities that we are sent here to represent, be they rural, suburban or urban. As we know from our own experiences, from the representations that we receive day in, day out, and—ironically—from the volume of correspondence in our postbags, people in those communities feel that local post offices define not only their sense of belonging, but their ability to express that through their relationships with staff, particularly in terms of being known and identified. That gives great comfort to elderly and vulnerable people in particular.

  That is the context in which we are considering post office services and the developments that have taken place as a result of the actions and omissions of this Government. The key element in the debate was

  941

  identified by my hon. Friend the Member for Havant (Mr. Willetts) when he so ably, expertly and cogently opened the debate—[Interruption.] I am sure that his objective assessment will be confirmed by Ministers, who are properly subject to it.
  At the heart of the matter lies the element of customer choice, and the whole business of providing post office services must be motivated by what is right for them in making those choices. That is reflected by campaigns that have been going on up and down the land. In Broxtowe in Nottinghamshire, Councillors Sheila Foster, Joan Briggs and Tom Pettengell have raised petitions of more than 1,200 names to campaign against the closures of Chilwell and Attenborough post offices. Yet when we debated that matter on 13 January, the hon. Member for Broxtowe (Dr. Palmer) chose not to join us in the Lobby, although the motion gave him a perfect opportunity to confirm by voting some of the rhetoric that he and others had expressed during that campaign.
  The same could be said of the campaign to try to stop the closure of the Finchley Church End post office in the constituency of Finchley and Golders Green, and of the contributions of the hon. Member for Birmingham, Northfield (Richard Burden). However much Labour Members may not want to incur the wrath of their Whips, there comes a time when their votes must equal their rhetoric and campaigning in their constituencies. It is clear that the Conservative party spokesman in Finchley and Golders Green has been campaigning hard for the retention of that post office, having collected petitions containing more than 2,000 signatures. We are now offering the opportunity to Members across the House, in accordance with the campaigning sentiments that they have articulated both here and outside, to walk through the Lobby to give substance to those campaigns.
  This is our second debate in Opposition time on this subject. The debate on 13 January led the Minister with responsibility for post office services to make an announcement on 5 February, of which the Secretary of State sought to make a virtue. Curiously, she declined to say that that amounted to a large vote of thanks to us for having raised the issue and creating the opportunity for that debate, from which that statement resulted, although that is clearly what happened.
  That point was nailed by the intervention by my hon. Friend the Member for West Derbyshire (Mr. McLoughlin), who demonstrated that the "Westminster Newsletter" issued by the Post Office had stated, following the 13 January debate, that the Post Office would guarantee that it would
  "not make a decision until after the public consultation period, and will provide"
  Members of Parliament
  "with an explanation of the decision".
  That announcement resulted from the statement made by the Minister that there would be no contract to
  "create any binding arrangement for closure until the public consultation has been completed."—[Official Report, 5 February 2004; Vol. 417, c. 50WS.]
  By any definitional interpretation of that, it is difficult to see why that guarantee would have been presented as a new development in the 'Westminster Newsletter", unless there had been no guarantee before then. That is
  942
  precisely the argument that we have been making, and I am glad that the Minister responded to it at the time in relation to the post office network.
  All that we ask of the Secretary of State is that she listen again to the issues raised in this debate. It is jolly sporting of her to be with us today—
  Mr. Hoyle: Cheap shot.
  Mr. O'Brien: Labour Members might consider that a cheap shot, but the Secretary of State chose not to turn up to the last debate, although I, as her shadow, was leading it. The Minister both opened and wound up the debate on that occasion. There was clearly a mismatch there. More importantly, the Secretary of State should listen to the points being made in this debate on the way in which people experience post office services. We have heard countless examples from Members on both sides of the House of the deep concern and distress and of the grave inconvenience that has often been increased as a result of Government policy.
  It is important to recognise that this is not simply an attempt by Her Majesty's Opposition to oppose for opposition's sake, although I am sure that the Secretary of State and the Minister would like to portray it as such. There are now countless early-day motions on this subject. I fully expect all those Members of the Opposition parties who have signed early-day motions 58, 431, 375, 725, 814, 826, 850 and 859 to join us in the Lobby. I also believe that the tens, if not hundreds, of Labour Members who have put their names to early-day motions on these issues—namely early-day motions 236, 373, 389, 397, 628, 648, 689, 549 and 797—should now think very carefully. This is a genuine opportunity for them to give an honest earnest of their campaigning through early-day motions in the Lobby tonight, rather than attempting to curry favour with a Government whom they always wish to congratulate. They stand up to make speeches and suggest that they are campaigning on behalf of their constituents, but they usually vote for the Government who have caused the problem in the first place.
  Mr. Kelvin Hopkins: The hon. Gentleman is trying to entice us to vote for his motion, but it is really rather pathetic. It says nothing about post offices providing a vital public service or that they should be cross-subsidised in some kind of socialist way, which is what I believe. All that we have in the motion are proposals for more consultation and a bit of tinkering to try to make things work better. That is not enough.
  Mr. O'Brien: I am most grateful to the hon. Gentleman. Of course, we would have been interested to see his proposed amendment to the motion, suggesting that his Government should support, in all honesty, the essence of socialism, which he is so keen to promote. The most important point is that he has an opportunity to give expression to what he has been campaigning on.
  We have heard from many Members and it would be invidious, given the shortage of time, to try to mention them all, although, interestingly, my hon. Friend the Member for Ribble Valley (Mr. Evans) offered the

  943
  Secretary of State a job swap. In the resulting exchange, she appeared keen to have the opportunity to be a sub-postmistress if she were not re-elected to this place. We are interested to hear of the candidacy of Mrs. Patel, her local sub-postmistress, whom we would much enjoy seeing in the House.
  Apart from the community-led points and those on the criteria articulated by the hon. Member for Chorley (Mr. Hoyle)—we hope that he will join us in the Lobby this evening—the most important point is that the Government have made a series of attempts to change the way that people get their services, which is convenient to and focused on them.
  There is evidence of Government bias in terms of trying to force people to make a choice against their better instincts. The hon. Member for Northavon (Mr. Webb) made a telling point when he showed that the ready-for-work unemployed are not allowed to have the card account because, apparently, they have to be on the same basis as those who are waged in respect of bank accounts. Again, that is a restriction of choice. Given that the Secretary of State had no answer, that point rather nailed her.
  We are short of time and there are a lot of questions to answer in the 10 minutes remaining. Although many have referred to Planet Hewitt I am far from wanting to do so, given that the Minister will make the winding-up speech. We must consider the fact that in Pond World it is indeed dark and a bit creepy. Pond World is also very wet and blind to the world on earth, as the rest of us—our constituents and Conservative Members at least—recognise.
  What we see with our own eyes, through our constituency postbag, is deep concern about the restriction of choice and the Government's attempt to railroad people into behaving in a way that they feel is best for those people, rather than allowing people to behave in a way that they want to behave in and which they feel is best for them. They want certain services for themselves, and it is time that the Government listened. I hope that full account is taken of the debate so that we get another revision of Government policy, reflecting the will of the constituents whom we represent.
  4.7 pm
  The Parliamentary Under-Secretary of State for Work and Pensions: Never let it be said that the hon. Member for Eddisbury (Mr. O'Brien) lacks either wit or wisdom.
  We have had two parallel debates. The debate is entitled "Post Office Services", but almost all the contributions have been about direct payments. I want to address my initial remarks to that issue as we are going through a transfer to direct payment, which is a process of increasing customer choice, helping to address financial exclusion and improving access to financial services. That important point has hardly been mentioned this afternoon.
  Before Christmas, I met with a number of groups representing those most vulnerable to financial and social exclusion, such as Help the Aged, Mind, Citizens Advice and the Royal National Institute of the Blind. I can tell the House that all welcomed our attempts to bring more people into the financial mainstream.
  944
  One of the main reasons that I came into politics was to combat the poverty and social exclusion that were made so much worse by the previous Government. Financial exclusion is an important aspect of those. I had to smile when the hon. Member for Havant (Mr. Willetts) paraded himself as the friend of the poor and the pensioner. Labour Members remember precisely what he and the Conservative Government did in office.
  The nostalgia for the days of order books that we heard from the hon. Member for Northavon (Mr. Webb) is far removed from the drab reality that left 3.5 million of our citizens financially excluded. That is why Citizens Advice, which a number of Members, including my right hon. Friend the Secretary of State, referred to, points out that financial exclusion is one of the main mechanisms for creating that social exclusion in neighbourhoods and communities and for making it so much more difficult to deal with the eradication of child poverty. It also points out that where people suffer from financial exclusion they also suffer from more general exclusion.
  Mrs. Shephard: Will the Minister give way?
  Mr. Pond: No, I will make a little more progress.
  That is one of the reasons why we are introducing a more modern, efficient and reliable service that increases customer choice, provides better value for the taxpayer—[Interruption]—yes it does, and cuts fraud and boosts financial inclusion. More customers have opted to have their benefits and pensions paid into an account than by order book and cheque, including 6 million people who are now having their pensions paid into an account without problems. Is any Conservative Member seriously suggesting that we now withdraw that choice from people in the vain hope that somehow it will keep local post offices open?
  Andrew Selous: Will the Minister be good enough to acknowledge that no Conservative Member, or any Member, has called for everyone to go back to order books? We are calling for choice. We are just saying that those who want them should be able to keep them.
  Mr. Pond: Good. We have that on the record then.
  This Government believe very much in choice. We believe that post offices have a future as bright and welcoming places that provide high-quality services that people want to use and to which they want to return, not places to which people are tied in order to get their benefit or pension.
  Mrs. Shephard: Will the Minister give way?
  Mr. Pond: I am afraid that time is tight, and I cannot.
  Several hon. Members, including my hon. Friend the Member for Birmingham, Northfield (Richard Burden), the hon. Member for Cheadle (Mrs. Calton), the hon. Member for Ribble Valley (Mr. Evans) and my hon. Friend the Member for Chorley (Mr. Hoyle) made points about the importance of their local post offices to their local communities, which we believe to be very important. That is why we are investing £2 billion in the post office network, with £450 million going into rural post offices.

  945
  My right hon. Friend the Secretary of State and I have heard the concerns expressed about the consultation process. We have strengthened it, as she pointed out, but we recognise that people still have real concerns about the way in which those processes are being pursued. I advise hon. Members who are campaigning to maintain their post offices, as we are, to make absolutely sure that people continue to use those post offices, to encourage them to do so and to help them to recognize—
  Mr. Hoyle: I welcome my hon. Friend's comments. Will he please ensure that there is fair play over the proposed closures of the two post offices in Chorley, and that there is genuine consultation?
  Mr. Pond: We want to see genuine consultation. My right hon. Friend has confirmed that she is in favour of that.
  The challenge for post offices is to make sure that they can offer a range of financial services that allow them to have a vibrant future, which will encourage people to go back to them. By contrast, the Conservative motion is both misguided and opportunistic. Post Office card accounts can only be opened at post office branches—that is the fact. The Government have encouraged customers to use the account that best meets their needs and circumstances. Those who say that it is difficult for people to open a Post Office card account should explain why 2 million people have already done so. All of my Department's direct payment leaflets mention the Post Office card account and how to apply for one. The Post Office has its own leaflets—
  Mr. Bacon: Will the Minister give way?
  Mr. Pond: I have only two minutes and so am unable to do so.
  We are making sensible changes, offering customers a genuine choice. We have listened to customers and their representatives to ensure that we provide a system that meets their individual needs. All customers who want to continue receiving their pension benefit or tax credit through the post office can do so, and they will be able to continue to do so just as now. In recognition of the fact that a small proportion of people will not be able to operate an account, we are developing and designing an exceptions service, and I have been discussing its characteristics with those organisations representing the groups most directly affected.
  Mr. Bacon rose—Mr. Bacon rose—
  Mr. Pond: I cannot give way.
  A number of Members have made points about Powergen. I know that both Powergen and my right hon. Friend will have heard them. [Interruption.]
  Madam Deputy Speaker: Order. The Minister is replying.
  Mr. Pond: Thank you, Madam Deputy Speaker.
  My right hon. Friend and my hon. Friend the Member for Chorley suggested that there had been more crocodile tears from the Conservatives than would be necessary to raise the level of the Nile—
  Mr. Peter Luff rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the original words stand part of the Question:—
  The House divided: Ayes 200, Noes 300.

  Division No. 107]

  [4:15 pm

  AYES

  Ainsworth, Peter (E Surrey)

  Field, Mark (Cities of London & Westminster)

  Allan, Richard

  Amess, David

  Forth, rh Eric

  Ancram, rh Michael

  Foster, Don (Bath)

  Arbuthnot, rh James

  Fox, Dr. Liam

  Atkinson, David (Bour'mith E)

  Francois, Mark

  Bacon, Richard

  Gale, Roger (N Thanet)

  Baker, Norman

  Garnier, Edward

  Baldry, Tony

  George, Andrew (St. Ives)

  Baron, John (Billericay)

  Gidley, Sandra

  Beggs, Roy (E Antrim)

  Gillan, Mrs Cheryl

  Beith, rh A. J.

  Goodman, Paul

  Bellingham, Henry

  Gray, James (N Wilts)

  Bercow, John

  Grayling, Chris

  Beresford, Sir Paul

  Green, Damian (Ashford)

  Blunt, Crispin

  Green, Matthew (Ludlow)

  Boswell, Tim

  Greenway, John

  Bottomley, Peter (Worthing W)

  Grieve, Dominic

  Bottomley, rh Virginia (SW Surrey)

  Gummer, rh John

  Hague, rh William

  Brady, Graham

  Hammond, Philip

  Brake, Tom (Carshalton)

  Hancock, Mike

  Brazier, Julian

  Harris, Dr. Evan (Oxford W & Abingdon)

  Breed, Colin

  Harvey, Nick

  Brooke, Mrs Annette L.

  Hawkins, Nick

  Browning, Mrs Angela

  Hayes, John (S Holland)

  Burns, Simon

  Heald, Oliver

  Burnside, David

  Heath, David

  Burstow, Paul

  Heathcoat-Amory, rh David

  Burt, Alistair

  Hermon, Lady

  Butterfill, Sir John

  Hoban, Mark (Fareham)

  Cable, Dr. Vincent

  Horam, John (Orpington)

  Calton, Mrs Patsy

  Howard, rh Michael

  Cameron, David

  Hughes, Simon (Southwark N)

  Campbell, Gregory (E Lond'y)

  Hunter, Andrew

  Carmichael, Alistair

  Jack, rh Michael

  Cash, William

  Johnson, Boris (Henley)

  Chapman, Sir Sydney (Chipping Barnet)

  Jones, Nigel (Cheltenham)

  Keetch, Paul

  Chope, Christopher

  Kennedy, rh Charles (Ross Skye & Inverness)

  Clappison, James

  Clarke, rh Kenneth (Rushcliffe

  Key, Robert (Salisbury)

  Clifton-Brown, Geoffrey

  Kirkbride, Miss Julie

  Collins, Tim

  Kirkwood, Sir Archy

  Conway, Derek

  Knight, rh Greg (E Yorkshire)

  Cormack, Sir Patrick

  Laing, Mrs Eleanor

  Cotter, Brian

  Lait, Mrs Jacqui

  Cran, James (Beverley)

  Lamb, Norman

  Curry, rh David

  Laws, David (Yeovil)

  Davey, Edward (Kingston)

  Leigh, Edward

  Davies, Quentin (Grantham &

  Stamford)

  Letwin, rh Oliver

  Liddell-Grainger, Ian

  Davis, rh David (Haltemprice &

  Howden)

  Llwyd, Elfyn

  Loughton, Tim

  Djanogly, Jonathan

  Luff, Peter (M-Worcs)

  Dodds, Nigel

  McIntosh, Miss Anne

  Donaldson, Jeffrey M.

  Mackay, rh Andrew

  Dorrell, rh Stephen

  Maclean, rh David

  Doughty, Sue

  McLoughlin, Patrick

  Duncan, Alan (Rutland)

  Malins, Humfrey

  Duncan Smith, rh lain

  Marsden, Paul (Shrewsbury & Atcham)

  Evans, Nigel

  Ewing, Annabelle

  Mawhinney, rh Sir Brian

  Fallon, Michael

  Mercer, Patrick

  Moore, Michael

  Stunell, Andrew

  Moss, Malcolm

  Swayne, Desmond

  Murrison, Dr. Andrew

  Swire, Hugo (E Devon)

  Norman, Archie

  Syms, Robert

  Oaten, Mark (Winchester)

  Tapsell, Sir Peter

  O'Brien, Stephen (Eddisbury)

  Taylor, Ian (Esher)

  Osborne, George (Tatton)

  Taylor, John (Solihull)

  Ottaway, Richard

  Taylor, Matthew (Truro)

  Page, Richard

  Taylor, Dr. Richard (Wyre F)

  Paterson, Owen

  Taylor, Sir Teddy

  Pickles, Eric

  Teather, Sarah

  Portillo, rh Michael

  Thomas, Simon (Ceredigion)

  Price, Adam (E Carmarthen &Dinefwr)

  Thurso, John

  Tredinnick, David

  Prisk, Mark (Hertford)

  Trend, Michael

  Randall, John

  Trimble, rh David

  Redwood, rh John

  Turner, Andrew (Isle of Wight)

  Reid, Alan (Argyll &Bute)

  Tyler, Paul (N Cornwall)

  Rendel, David

  Tyrie, Andrew

  Robathan, Andrew

  Viggers, Peter

  Robertson, Angus (Moray)

  Walter, Robert

  Robertson, Hugh (Faversham &M- Kent)

  Waterson, Nigel

  Watkinson, Angela

  Robertson, Laurence (Tewk'b'ry)

  Webb, Steve (Northavon)

  Rosindell, Andrew

  Weir, Michael

  Ruffley David

  Whittingdale, John

  Russell, Bob (Colchester)

  Widdecombe, rh Miss Ann

  Sanders, Adrian

  Wiggin, Bill

  Sayeed, Jonathan

  Willetts, David

  Selous, Andrew

  Williams, Hywel (Caernarfon)

  Shephard, rh Mrs Gillian

  Williams, Roger (Brecon)

  Shepherd, Richard

  Wilshire, David

  Simmonds, Mark

  Winterton, Ann (Congleton)

  Simpson, Keith (M-Norfolk)

  Winterton, Sir Nicholas (Macclesfield)

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

  Wishart, Pete

  Smyth, Rev. Martin (Belfast S)

  Yeo, Tim (S Suffolk)

  Soames, Nicholas

  Young, rh Sir George

  Spicer, Sir Michael

  Younger-Ross, Richard

  Spink, Bob (Castle Point)

  Spring, Richard

  Tellers for the Ayes:

  Steen, Anthony

  Gregory Barker and

  Streeter, Gary

  Mr. Peter Atkinson

  NOES

  Abbott, Ms Diane

  Brown, rh Gordon (Dunfermline E)

  Adams, Irene (Paisley N)

  Ainger, Nick

  Brown, rh Nicholas (Newcastle E Wallsend)

  Ainsworth, Bob (Cov'try NE)

  Alexander, Douglas

  Brown, Russell (Dumfries)

  Allen, Graham

  Browne, Desmond

  Anderson, Janet (Rossendale &Darwen)

  Buck, Ms Karen

  Burden, Richard

  Armstrong, rh Ms Hilary

  Burgon, Colin

  Atherton, Ms Candy

  Burnham, Andy

  Atkins, Charlotte

  Byers, rh Stephen

  Austin, John

  Caborn, rh Richard

  Bailey, Adrian

  Cairns, David

  Baird, Vera

  Campbell, Alan (Tynemouth)

  Banks, Tony

  Campbell, Mrs Anne (C'bridge)

  Barnes, Harry

  Campbell, Ronnie (Blyth V)

  Barron, rh Kevin

  Caplin, Ivor

  Battle, John

  Casale, Roger

  Bayley, Hugh

  Caton, Martin

  Beard, Nigel

  Cawsey, Ian (Brigg)

  Benton, Joe (Bootle)

  Challen, Colin

  Berry, Roger

  Chapman, Ben (Wirral S)

  Best, Harold

  Clapham, Michael

  Blackman, Liz

  Clark, Mrs Helen (Peterborough)

  Blears, Ms Hazel

  Clarke, rh Charles (Norwich S)

  Blizzard, Bob

  Clarke, rh Tom (Coatbridge &Chryston)

  Bradley, rh Keith (Withington)

  Bradley, Peter (The Wrekin)

  Clarke, Tony (Northampton S)

  Brennan, Kevin

  Clelland, David

  Coaker, Vernon

  Hope, Phil (Corby)

  Coffey, Ms Ann

  Hopkins, Kelvin

  Cohen, Harry

  Howarth, rh Alan (Newport E)

  Coleman, lain

  Howarth, George (Knowsley N &Sefton E)

  Colman, Tony

  Connarty, Michael

  Howells, Dr. Kim

  Cooper, Yvette

  Hoyle, Lindsay

  Corbyn, Jeremy

  Hughes, Beverley (Stretford &Urmston)

  Corston, Jean

  Cousins, Jim

  Hughes, Kevin (Doncaster N)

  Crausby, David

  Humble, Mrs Joan

  Cruddas, Jon

  Hurst, Alan (Braintree)

  Cryer, Ann (Keighley)

  Hutton, rh John

  Cummings, John

  Iddon, Dr. Brian

  Cunningham, rh Dr. Jack(Copeland)

  Ingram, rh Adam

  Irranca-Davies, Huw

  Cunningham, Jim (Coventry S)

  Jackson, Glenda (Hampstead &Highgate)

  Cunningham, Tony (Workington)

  Darling, rh Alistair

  Jenkins, Brian

  David, Wayne

  Jones, Jon Owen (Cardiff C)

  Davidson, Ian

  Jones, Kevan (N Durham)

  Davies, rh Denzil (Llanelli)

  Jones, Martyn (Clwyd S)

  Dawson, Hilton

  Jowell, rh Tessa

  Dhanda, Parmjit

  Keeble, Ms Sally

  Dismore, Andrew

  Keen, Ann (Brentford)

  Dobbin, Jim (Heywood)

  Kelly, Ruth (Bolton W)

  Dobson, rh Frank

  Kemp, Fraser

  Donohoe, Brian H.

  Khabra, Piara S.

  Doran, Frank

  Kidney, David

  Dowd, Jim (Lewisham W)

  Kilfoyle, Peter

  Drew, David (Stroud)

  King, Andy (Rugby)

  Drown, Ms Julia

  King, Ms Oona (Bethnal Green &Bow)

  Dunwoody, Mrs Gwyneth

  Eagle, Angela (Wallasey)

  Knight, Jim (S Dorset)

  Eagle, Maria (L'pool Garston)

  Kumar, Dr. Ashok

  Edwards, Huw

  Ladyman, Dr. Stephen

  Efford, Clive

  Lammy, David

  Ellman, Mrs Louise

  Lawrence, Mrs Jackie

  Farrelly, Paul

  Laxton, Bob (Derby N)

  Field, rh Frank (Birkenhead)

  Lazarowicz, Mark

  Fisher, Mark

  Lepper, David

  Fitzpatrick, Jim

  Leslie, Christopher

  Fitzsimons, Mrs Lorna

  Levitt, Tom (High Peak)

  Follett, Barbara

  Lewis, Ivan (Bury S)

  Foster, Michael (Worcester)

  Lewis, Terry (Worsley)

  Foster, Michael Jabez (Hastings&Rye)

  Liddell, rh Mrs Helen

  Linton, Martin

  Francis, Dr. Hywel

  Lloyd, Tony (Manchester C)

  Gapes, Mike (llford S)

  Love, Andrew

  George, rh Bruce (Walsall S)

  Lucas, Ian (Wrexham)

  Gerrard, Neil

  Luke, lain (Dundee E)

  Gibson, Dr. Ian

  Lyons, John (Strathkelvin)

  Gilroy, Linda

  McAvoy, Thomas

  Godsiff, Roger

  McCabe, Stephen

  Goggins, Paul

  McCartney, rh Ian

  Griffiths, Nigel (Edinburgh S)

  McDonagh, Siobhain

  Griffiths, Win (Bridgend)

  MacDonald, Calum

  Grogan, John

  McDonnell, John

  Hain, rh Peter

  MacDougall, John

  Hall, Patrick (Bedford)

  McFall, John

  Hamilton, David (Midlothian)

  McGuire, Mrs Anne

  Hanson, David

  Mclsaac, Shona

  Harman, rh Ms Harriet

  McKechin, Ann

  Harris, Tom (Glasgow Cathcart)

  McKenna, Rosemary

  Havard, Dai (Merthyr Tydfil &Rhymney)

  Mackinlay, Andrew

  McNulty, Tony

  Healey, John

  Mactaggart, Fiona

  Henderson, Doug (Newcastle N) McWalter, Tony

  Hendrick, Mark

  McWilliam, John

  Hepburn, Stephen

  Mahmood, Khalid

  Hesford, Stephen

  Mahon, Mrs Alice

  Hewitt, rh Ms Patricia

  Mallaber, Judy

  Heyes, David

  Mann, John (Bassetlaw)

  Hill, Keith (Streatham)

  Marris, Rob (Wolverh'ton SW)

  Hood, Jimmy (Clydesdale)

  Marsden, Gordon (Blackpool S)

  Hoon, rh Geoffrey

  Marshall-Andrews, Robert

  Martlew, Eric

  Singh, Marsha

  Meacher, rh Michael

  Skinner, Dennis

  Michael, rh Alun

  Smith, Jacqui (Redditch)

  Milburn, rh Alan

  Smith, Llew (Blaenau Gwent)

  Miller, Andrew

  Soley, Clive

  Moffatt, Laura

  Spellar, rh John

  Moonie, Dr. Lewis

  Squire, Rachel

  Moran, Margaret

  Steinberg, Gerry

  Morgan, Julie

  Stevenson, George

  Mountford, Kali

  Stewart, David (Inverness E &Lochaber)

  Mudie, George

  Munn, Ms Meg

  Stewart, Ian (Eccles)

  Murphy, Jim (Eastwood)

  Stinchcombe, Paul

  Naysmith, Dr. Doug

  Stoate, Dr. Howard

  Norris, Dan (Wansdyke)

  Strang, rh Dr. Gavin

  O'Brien, Bill (Normanton)

  Stringer, Graham

  O'Brien, Mike (N Warks)

  Stuart, Ms Gisela

  O'Hara, Edward

  Sutcliffe, Gerry

  O'Neill, Martin

  Tami, Mark (Alyn)

  Organ, Diana

  Taylor, Dan (Stockton S)

  Osborne, Sandra (Ayr)

  Taylor, David (NW Leics)

  Owen, Albert

  Thomas, Gareth (Clwyd W)

  Palmer, Dr. Nick

  Timms, Stephen

  Perham, Linda

  Tipping, Paddy

  Pickthall, Colin

  Trickett, Jon

  Pike, Peter (Burnley)

  Truswell, Paul

  Plaskitt, James

  Turner, Dennis (Wolverh'ton SE)

  Pond, Chris (Gravesham)

  Turner, Dr. Desmond (Brighton Kemptown)

  Pope, Greg (Hyndburn)

  Pound, Stephen

  Twigg, Derek (Halton)

  Prentice, Ms Bridget (Lewisham E)

  Twigg, Stephen (Enfield)

  Tynan, Bill (Hamilton S)

  Primarolo, rh Dawn

  Walley, Ms Joan

  Prosser, Gwyn

  Ward, Claire

  Purchase, Ken

  Wareing, Robert N.

  Purnell, James

  Watts, David

  Quin, rh Joyce

  White, Brian

  Quinn, Lawrie

  Whitehead, Dr. Alan

  Rapson, Syd (Portsmouth N)

  Wicks, Malcolm

  Reed, Andy (Loughborough)

  Williams, rh Alan (Swansea W)

  Robertson, John (Glasgow Anniesland)

  Williams, Betty (Conwy)

  Wills, Michael

  Robinson, Geoffrey (Coventry NW)

  Wilson, Brian

  Winnick, David

  Roche, Mrs Barbara

  Winterton, Ms Rosie (Doncaster C)

  Rooney, Terry

  Ross, Ernie (Dundee W)

  Wood, Mike (Batley)

  Ruane, Chris

  Woolas, Phil

  Ruddock, Joan

  Wright, Anthony D. (Gt Yarmouth)

  Ryan, Joan (Enfield N)

  Salter, Martin

  Wright, David (Telford)

  Savidge, Malcolm

  Wright, Tony (Cannock)

  Sawford, Phil

  Sedgemore, Brian

  Tellers for the Noes:

  Sheridan, Jim

  Gillian Merron and

  Simpson, Alan (Nottingham S)

  Mr. John Heppell

  Question accordingly negatived.
  Question, That the proposed words be there added,put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
  The House divided: Ayes 297, Noes 196.

  Division No. 108]

  [4:29 pm

  AYES

  Abbott, Ms Diane

  Armstrong, rh Ms Hilary

  Adams, Irene (Paisley N)

  Atherton, Ms Candy

  Ainger, Nick

  Atkins, Charlotte

  Ainsworth, Bob (Cov'try NE)

  Austin, John

  Alexander, Douglas

  Bailey, Adrian

  Allen, Graham

  Baird, Vera

  Anderson, Janet (Rossendale &Darwen)

  Banks, Tony

  Barnes, Harry

  Barron, rh Kevin

  Edwards, Huw

  Battle, John

  Efford, Clive

  Bayley, Hugh

  Ellman, Mrs Louise

  Beard, Nigel

  Farrelly, Paul

  Benton, Joe (Bootle)

  Field, rh Frank (Birkenhead)

  Berry, Roger

  Fisher, Mark

  Best, Harold

  Fitzpatrick, Jim

  Blackman, Liz

  Fitzsimons, Mrs Lorna

  Blears, Ms Hazel

  Follett, Barbara

  Blizzard, Bob

  Foster, Michael (Worcester)

  Bradley, rh Keith (Withington)

  Foster, Michael Jabez (Hastings&Rye)

  Bradley, Peter (The Wrekin)

  Brennan, Kevin

  Francis, Dr. Hywel

  Brown, rh Nicholas (Newcastle E Wallsend)

  Gapes, Mike (llford S)

  Gardiner, Barry

  Brown, Russell (Dumfries)

  George, rh Bruce (Walsall S)

  Browne, Desmond

  Gerrard, Neil

  Buck, Ms Karen

  Gibson, Dr. Ian

  Burden, Richard

  Gilroy, Linda

  Burgon, Colin

  Godsiff, Roger

  Burnham, Andy

  Goggins, Paul

  Byers, rh Stephen

  Griffiths, Nigel (Edinburgh S)

  Caborn, rh Richard

  Griffiths, Win (Bridgend)

  Cairns, David

  Grogan, John

  Campbell, Alan (Tynemouth)

  Hain, rh Peter

  Campbell, Mrs Anne (C'bridge)

  Hall, Patrick (Bedford)

  Campbell, Ronnie (Blyth V)

  Hamilton, David (Midlothian)

  Caplin, Ivor

  Hanson, David

  Casale, Roger

  Harman, rh Ms Harriet

  Caton, Martin

  Harris, Tom (Glasgow Cathcart)

  Cawsey, Ian (Brigg)

  Havard, Dai (Merthyr Tydfil &Rhymney)

  Challen, Colin

  Chapman, Ben (Wirral S)

  Healey, John

  Clapham, Michael

  Henderson, Doug (Newcastle N)

  Clark, Mrs Helen (Peterborough)

  Hendrick, Mark

  Clarke, rh Charles (Norwich S)

  Hepburn, Stephen

  Clarke, rh Tom (Coatbridge &Chryston)

  Hesford, Stephen

  Hewitt, rh Ms Patricia

  Clarke, Tony (Northampton S)

  Heyes, David

  Clelland, David

  Hill, Keith (Streatham)

  Coaker, Vernon

  Hood, Jimmy (Clydesdale)

  Coffey, Ms Ann

  Hoon, rh Geoffrey

  Cohen, Harry

  Hope, Phil (Corby)

  Coleman, lain

  Hopkins, Kelvin

  Colman, Tony

  Howarth, rh Alan (Newport E)

  Connarty, Michael

  Howarth, George (Knowsley N &Sefton E)

  Cooper, Yvette

  Corbyn, Jeremy

  Howells, Dr. Kim

  Corston, Jean

  Hoyle, Lindsay

  Cousins, Jim

  Hughes, Beverley (Stretford &Urmston)

  Cranston, Ross

  Crausby, David

  Hughes, Kevin (Doncaster N)

  Cruddas, Jon

  Humble, Mrs Joan

  Cryer, Ann (Keighley)

  Hurst, Alan (Braintree)

  Cummings, John

  Hutton, rh John

  Cunningham, rh Dr. Jack(Copeland)

  Iddon, Dr. Brian

  Irranca-Davies, Huw

  Cunningham, Jim (Coventry S)

  Jackson, Glenda (Hampstead &Highgate)

  Cunningham, Tony (Workington)

  Darling, rh Alistair

  Jamieson, David

  David, Wayne

  Jenkins, Brian

  Davidson, Ian

  Jones, Jon Owen (Cardiff C)

  Davies, rh Denzil (Llanelli)

  Jones, Kevan (N Durham)

  Dawson, Hilton

  Jones, Martyn (Clwyd S)

  Dhanda, Parmjit

  Jowell, rh Tessa

  Dismore, Andrew

  Keeble, Ms Sally

  Dobbin, Jim (Heywood)

  Keen, Ann (Brentford)

  Dobson, rh Frank

  Kelly, Ruth (Bolton W)

  Donohoe, Brian H.

  Kemp, Fraser

  Doran, Frank

  Khabra, Piara S.

  Dowd, Jim (Lewisham W)

  Kidney, David

  Drew, David (Stroud)

  Kilfoyle, Peter

  Drown, Ms Julia

  King, Andy (Rugby)

  Dunwoody, Mrs Gwyneth

  King, Ms Oona (Bethnal Green &Bow)

  Eagle, Angela (Wallasey)

  Eagle, Maria (L'pool Garston)

  Knight, Jim (S Dorset)

  Kumar, Dr. Ashok

  Purnell, James

  Ladyman, Dr. Stephen

  Quin, rh Joyce

  Lammy, David

  Quinn, Lawrie

  Lawrence, Mrs Jackie

  Rapson, Syd (Portsmouth N)

  Laxton, Bob (Derby N)

  Reed, Andy (Loughborough)

  Lazarowicz, Mark

  Robertson, John (Glasgow Anniesland)

  Lepper, David

  Leslie, Christopher

  Roche, Mrs Barbara

  Levitt, Tom (High Peak)

  Rooney, Terry

  Lewis, Ivan (Bury S)

  Ross, Ernie (Dundee W)

  Lewis, Terry (Worsley)

  Ruane, Chris

  Liddell, rh Mrs Helen

  Ruddock, Joan

  Linton, Martin

  Ryan, Joan (Enfield N)

  Lloyd, Tony (Manchester C)

  Salter, Martin

  Love, Andrew

  Savidge, Malcolm

  Lucas, Ian (Wrexham)

  Sawford, Phil

  Luke, lain (Dundee E)

  Sedgemore, Brian

  Lyons, John (Strathkelvin)

  Sheridan, Jim

  McAvoy, Thomas

  Simpson, Alan (Nottingham S)

  McCabe, Stephen

  Singh, Marsha

  McCartney, rh Ian

  Skinner, Dennis

  McDonagh, Siobhain

  Smith, Jacqui (Redditch)

  MacDonald, Calum

  Smith, Llew (Blaenau Gwent)

  McDonnell, John

  Soley, Clive

  MacDougall, John

  Spellar, rh John

  McFall, John

  Squire, Rachel

  McGuire, Mrs Anne

  Steinberg, Gerry

  Mclsaac, Shona

  Stevenson, George

  McKechin, Ann

  Stewart, David (Inverness E &Lochaber)

  Mackinlay, Andrew

  McNulty, Tony

  Stewart, Ian (Eccles)

  Mactaggart, Fiona

  Stinchcombe, Paul

  McWalter, Tony

  Stoate, Dr. Howard

  McWilliam, John

  Strang, rh Dr. Gavin

  Mahmood, Khalid

  Stringer, Graham

  Mallaber, Judy

  Stuart, Ms Gisela

  Mann, John (Bassetlaw)

  Sutcliffe, Gerry

  Marris, Rob (Wolverh'ton SW)

  Tami, Mark (Alyn)

  Marsden, Gordon (Blackpool S)

  Taylor, Dari (Stockton S)

  Marshall-Andrews, Robert

  Taylor, David (NW Leics)

  Martlew, Eric

  Thomas, Gareth (Clwyd W)

  Meacher, rh Michael

  Timms, Stephen

  Michael, rh Alun

  Tipping, Paddy

  Milburn, rh Alan

  Trickett, Jon

  Miller, Andrew

  Truswell, Paul

  Moffatt, Laura

  Turner, Dennis (Wolverh'ton SE)

  Moonie, Dr. Lewis

  Turner, Dr. Desmond (Brighton Kemptown)

  M, oran Margaret

  Morgan, Julie

  Mountford, Kali

  Twigg, Derek (Halton)

  Mudie, George

  Twigg, Stephen (Enfield)

  Munn, Ms Meg

  Tynan, Bill (Hamilton S)

  Murphy, Jim (Eastwood)

  Walley, Ms Joan

  Naysmith, Dr. Doug

  Ward, Claire

  Norris, Dan (Wansdyke)

  Wareing, Robert N.

  O'Brien, Bill (Normanton)

  Watts, David

  O'Brien, Mike (N Warks)

  White, Brian Edward

  O, 'Hara

  Whitehead, Dr. Alan

  O'Neill, Martin

  Wicks, Malcolm

  Organ, Diana

  Williams, rh Alan (Swansea W)

  Osborne, Sandra (Ayr)

  Williams, Betty (Convey)

  Owen, Albert

  Wills, Michael

  Palmer, Dr. Nick

  Winnick, David

  Perham Linda

  Winterton, Ms Rosie (Doncaster C)

  Pickthall, Colin

  Pike, Peter (Burnley)

  Wood, Mike (Batley)

  Plaskitt, James

  Woolas, Phil

  Pond, Chris (Gravesham)

  Wright, Anthony D. (Gt Yarmouth)

  Pope, Greg (Hyndburn)

  Pound, Stephen

  Wright, David (Telford)

  Prentice, Ms Bridget (Lewisham E)

  Wright, Tony (Cannock)

  Primarolo, rh Dawn

  Tellers for the Ayes:

  Prosser, Gwyn

  Gillian Merron and

  Purchase, Ken

  Mr. John Heppell

  NOES

  Ainsworth, Peter (E Surrey)

  Gray, James (N Wilts)

  Allan, Richard

  Grayling, Chris

  Amess, David

  Green, Matthew (Ludlow)

  Ancram, rh Michael

  Greenway, John

  Arbuthnot, rh James

  Gummer, rh John

  Atkinson, David (Bour'mth E)

  Hague, rh William

  Bacon, Richard

  Hammond, Philip

  Baker, Norman

  Hancock, Mike

  Baldry, Tony

  Harris, Dr. Evan (Oxford W &Abingdon)

  Baron, John (Billericay)

  Beggs, Roy (E Antrim)

  Harvey, Nick

  Beith, rh A. J.

  Hawkins, Nick

  Bellingham, Henry

  Hayes, John (S Holland)

  Bercow, John

  Heald, Oliver

  Beresford, Sir Paul

  Heath, David

  Blunt, Crispin

  Heathcoat-Amory, rh David

  Boswell, Tim

  Hermon, Lady

  Bottomley, Peter (Worthing W)

  Hoban, Mark (Fareham)

  Bottomley, rh Virginia (SW Surrey)

  Horam, John (Orpington)

  Howard, rh Michael

  Brady, Graham

  Hughes, Simon (Southwark N)

  Brake, Tom (Carshalton)

  Jack, rh Michael

  Brazier, Julian

  Johnson, Boris (Henley)

  Breed, Colin

  Jones, Nigel (Cheltenham)

  Brooke, Mrs Annette L.

  Keetch, Paul

  Browning, Mrs Angela

  Kennedy, rh Charles (Ross Skye &Inverness)

  Burns, Simon

  Burnside, David

  Key, Robert (Salisbury)

  Burstow, Paul

  Kirkbride, Miss Julie

  Burt, Alistair

  Kirkwood, Sir Archy

  Butterfill, Sir John

  Knight, rh Greg (E Yorkshire)

  Cable, Dr. Vincent

  Laing, Mrs Eleanor

  Calton, Mrs Patsy

  Lait, Mrs Jacqui

  Cameron, David

  Lamb, Norman

  Campbell, Gregory (E Lond'y)

  Laws, David (Yeovil)

  Carmichael, Alistair

  Leigh, Edward

  Cash, William

  Letwin, rh Oliver

  Chapman, Sir Sydney (Chipping Barnet)

  Liddell-Grainger, Ian

  Lilley, rh Peter

  Chope, Christopher

  Llwyd, Elfyn

  Clappison, James

  Loughton, Tim

  Clarke, rh Kenneth (Rushcliffe)

  Luff, Peter (M-Worcs)

  Clifton-Brown, Geoffrey

  McIntosh, Miss Anne

  Collins, Tim

  Mackay, rh Andrew

  Conway, Derek

  Maclean, rh David

  Cormack, Sir Patrick

  McLoughlin, Patrick

  Cotter, Brian

  Malins, Humfrey

  Cran, James (Beverley)

  Marsden, Paul (Shrewsbury &Atcham)

  Curry, rh David

  Davey, Edward (Kingston)

  Mawhinney, rh Sir Brian

  Davies, Quentin (Grantham &Stamford)

  Mercer, Patrick

  Moore, Michael

  Davis, rh David (Haltemprice &Howden)

  Moss, Malcolm

  Murrison, Dr. Andrew

  Djanogly, Jonathan

  Norman, Archie

  Dodds, Nigel

  Oaten, Mark (Winchester)

  Donaldson, Jeffrey M.

  O'Brien, Stephen (Eddisbury)

  Dorrell, rh Stephen

  Osborne, George (Tatton)

  Doughty, Sue

  Ottaway, Richard

  Duncan, Alan (Rutland)

  Paice, James

  Duncan Smith, rh lain

  Paterson, Owen

  Evans, Nigel

  Pickles, Eric

  Ewing, Annabelle

  Portillo, rh Michael

  Fallon, Michael

  Price, Adam (E Carmarthen &Dinefwr)

  Field, Mark (Cities of London &

  Westminster

  Prisk, Mark (Hertford)

  Forth, rh Eric

  Randall, John

  Foster, Don (Bath)

  Redwood, rh John

  Francois, Mark

  Reid, Alan (Argyll &Bute)

  Gale, Roger (N Thanet)

  Rendel, David

  Garnier, Edward

  Robathan, Andrew

  George, Andrew (St. Ives)

  Robertson, Angus (Moray)

  Gidley, Sandra

  Robertson, Hugh (Faversham &M-Kent)

  Gillan, Mrs Cheryl

  Goodman, Paul

  Robertson, Laurence (Tewk'b'ry)

  Ruffley, David

  Tredinnick, David

  Russell, Bob (Colchester)

  Trend, Michael

  Sanders, Adrian

  Trimble, rh David

  Sayeed, Jonathan

  Turner, Andrew (Isle of Wight)

  Selous, Andrew

  Tyler, Paul (N Cornwall)

  Shephard, rh Mrs Gillian

  Tyrie, Andrew

  Shepherd, Richard

  Viggers, Peter

  Simmonds, Mark

  Walter, Robert

  Simpson, Keith (M-Norfolk)

  Waterson, Nigel

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

  Watkinson, Angela

  Webb, Steve (Northavon)

  Smyth, Rev. Martin (Belfast S)

  Weir, Michael

  Soames, Nicholas

  Whittingdale, John

  Spicer, Sir Michael

  Widdecombe, rh Miss Ann

  Spink, Bob (Castle Point)

  Wiggin, Bill

  Spring, Richard

  Willetts, David

  Steen, Anthony

  Williams, Hywel (Caernarfon)

  Streeter, Gary

  Williams, Roger (Brecon)

  Stunell, Andrew

  Willis, Phil

  Swayne, Desmond

  Wilshire, David

  Swire, Hugo (E Devon)

  Winterton, Ann (Congleton)

  Syms, Robert

  Winterton, Sir Nicholas(Macclesfield)

  Tapsell, Sir Peter

  Taylor, Ian (Esher)

  Wishart, Pete

  Taylor, John (Solihull)

  Yeo, Tim (S Suffolk)

  Taylor, Matthew (Truro)

  Young, rh Sir George

  Taylor, Dr. Richard (Wyre F)

  Younger-Ross, Richard

  Taylor, Sir Teddy

  Teather, Sarah

  Tellers for the Noes:

  Thomas, Simon (Ceredigion)

  Gregory Barker and

  Thurso, John

  Mr. Peter Atkinson

  Question accordingly agreed to.
  MADAM DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House supports the Government's strategy to modernise the way benefits and pensions are paid, and to provide customers with a choice of accounts; welcomes the fact that with Direct Payment customers will still be able to collect their cash from the Post Office if they wish using a current account or basic bank account with Post Office access or the Post Office Card Account; notes the Government's plans for a cheque payment, cashable at post offices, for people who cannot be paid through an account; recognises that Direct Payment is a more modern, efficient and secure method of payment which will also help increase financial inclusion; welcomes the fact that more customers are now paid through an account than by order book without problems, including nearly six million pensioners; notes the previous government's attempt to introduce a Benefit Payment Card, which wasted millions of pounds of tax-payers' money; notes the fact that the Post Office had not until recently kept up with changes in customer demand and so had seen transaction volumes dropping and losses increasing; recognises the need for change and congratulates the Government for taking decisive action to help turn the business around; welcomes the record £2 billion investment in the Post Office network over a five-year period, including £450 million for the rural network and £210 million to modernise the urban network; and believes that this will help ensure a viable Post Office network that people will want to use.

  DEFERRED DIVISION
  Madam Deputy Speaker: I now have to announce the results of the Division deferred from a previous day on the question relating to Fisheries: Catch Quotas and Effort Limitation 2004. The Ayes were 255 and the Noes were 149, so the Question was agreed to.
  [The Division List is published at the end of today's debates.]

Orders of the Day
  European Parliamentary and Local Elections (Pilots) Bill
  Lords message considered [18 March)

  Lords amendment 1D
  4.42 pm
  The Parliamentary Under-Secretary of State for Constitutional Affairs: I beg to move, That this House disagrees with Lords amendment 1D to Commons amendment 1C.
  The amendment would abrogate the powers of this House of Commons and the Government to decide which regions to select for all-postal voting in the forthcoming local and European elections in June, and pass that decision to the Electoral Commission. It is yet another attempt by the other place to overturn the will of this House of Commons. It would be a nonsensical position for this House to adopt.
  Mr. Patrick McLoughlinrose
  Mr. Leslie: Speaking of nonsensical, I give way to the hon. Gentleman.
  Mr. McLoughlin: I am grateful to the Minister for giving way, although it is a pity that he cannot do so in the normal courteous way. I am sure that he was in his place earlier when the Deputy Prime Minister said that it was unacceptable for an unelected House to do what it is doing on this Bill. Why should we then rely so much, as the Government wish us to do, on the Electoral Commission, which is also unelected?
  Mr. Leslie: The hon. Gentleman aids my case. I do not want the House to accept Lords amendment I D. We should not give the decision to the Electoral Commission. We have the responsibility as legislators to listen to its advice, but ultimately it is for us to accept or reject its advice. Indeed, the Electoral Commission has itself made that point. It does not want to make the decision. Sam Younger wrote to the Deputy Prime Minister only yesterday to say that its role was to advise. The letter says:
  "the choice of pilot regions for all-postal voting is for Government and Parliament to decide. The Commission's role is … advisory and it is not for us to say yes or no to pilots in particular areas."
  The Electoral Commission disagrees with the Government about the scale of postal voting. It feels that four regions are too many. The Government disagree, but it is for the House of Commons to reach a final conclusion. We have made our view known time and again, and it is now time to reiterate it.
  Mr. John Redwood: I am grateful to the Minister for graciously giving way. What is the point of a reformed House of Lords, which we were told now had more authority, if every time that it comes up with a good idea, Ministers slap it down and vote it down?
  Mr. Leslie: If the right hon. Gentleman seriously thinks that he can explain to his constituents that, no matter what they may want or for whom they may vote, they will not be able to secure reforms because the other place takes a different view and if he feels that that is a legitimate way for us to govern the country, surely the dividing lines between the two parties have never been any clearer.
  As I have said, the Electoral Commission has made its views known about the scale of postal voting. We disagree with its view that four regions are too many and we feel that postal voting can go ahead in those regions. Yet the Electoral Commission has also said that, as well as the east midlands and the north-east proceeding, we should consider those regions that it defined as potentially suitable, including Yorkshire and the northwest. We wish to proceed with those two regions, thus making up the four regions that we recommend. The House has ratified that decision time and again.
  Returning officers, especially in Yorkshire and the north-west, are now more resolute and more certain that they want to proceed with all-postal voting. Surely they are in the best position to know the ability of those regions to proceed. If they are telling us that they want to move ahead, not on the conventional basis but with all-postal voting, we should listen to them.
  It would be remiss of us to neglect the fact that the referendums on elected regional government are approaching in October. The Electoral Commission has said that it welcomes postal voting in the three northern regions on that occasion, and we need to bear in mind the virtues of consistency between those referendums and what will take place in June. It would be wrong of us not to bear that in mind in the decisions that we take.
  Jon Trickett: Does my hon. Friend agree with the estimate that probably an extra 2 million people would vote under the postal voting system compared with the traditional system? Has it occurred to him that the governing party is clearly on the side of increasing the number of people who vote, whereas the Opposition parties might be seeking tactical advantage by encouraging a diminution in that number?
  Mr. Leslie: My hon. Friend makes a reasonable point, and we need to start asking the Opposition parties why they have been using the other place to block what I regard as a perfectly reasonable innovation in our democracy that will ensure that we make it more convenient and easy for people to express their views in our constitution.
  Mr. David Watts: Does my hon. Friend agree that we are hearing a lot about what the Electoral Commission and the Lords want, but not a lot about what voters want? Does he also agree that the vast majority of voters in Britain and in those regions want to use their postal votes, as my hon. Friend the Member for Hemsworth (Jon Trickett) has just suggested?
  Mr. Leslie: The point that my hon. Friend makes stands well. We are elected to the House of Commons, which is where we are accountable to the population for the decisions that we take. If we decide to proceed with
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  pilot all-postal voting in four regions, how can we explain to the electorate—our constituents—that we cannot manage to do so because the other place decides to thwart that view?
  David Winnick: Is it not outright impertinence for those in the unelected Chamber to try to set down voting procedures when the House of Commons has made its decision? Should we not tell them so now?
  Mr. Leslie: My hon. Friend makes his point so strongly that it could be heard in the other Chamber as we speak. Indeed, it needs to be heard in the other Chamber. It is about time that we faced up to the fact that this House of Commons has made its view known and repeated its view, and that we now need to resolve the issue. We should not let the issue drift further. The Lords need to back down on this matter.
  Mr. Lindsay Hoyle: It has quite rightly been stated that the matter before us is for this House to decide, because we are the elected House, we represent the people and we represent the electorate out there. Therefore, does my hon. Friend agree that this decision should be taken here, not by an unelected House, and certainly not by the Electoral Commission? I say to the Opposition—I think that my hon. Friend will confirm this—that Chorley has tried the pilot scheme for two years running and has doubled the number of people voting in wards by enfranchising them and allowing them to vote through a postal system. Why should they lose that right?
  Mr. Leslie: My hon. Friend hits the nail on the head. An important constitutional principle is at stake. The House of Commons has made its view known on a number of occasions, yet the second Chamber has been acting not in a revising capacity, but perhaps in a blocking capacity. He also made another point: if we are not careful and if the other place rows back from all-postal voting in four regions, fewer people might vote by all-postal means than in the 2003 local elections. Some 22 per cent. of the population voted by all-postal means in the 2003 elections. If we were to take the advice of some peers in the other place and drop the north-west, only 20 per cent. of the population would be proceeding in that way, which would obviously be seen as a retrograde step.
  Mrs. Angela Browning: Will the Minister explain why, when his party introduced the Bill that became the Political Parties, Elections and Referendums Act 2000, it introduced in the Lords more than 300 amendments that had not been considered by this House, but which came back to this Chamber in a debate on a guillotine and were barely considered by the Commons at all?
  Mr. Leslie: No legislation is enacted unless this House of Commons approves it. As the democratic Chamber, this House of Commons endorses all legislation. If the hon. Lady feels that any legislation has got on to the statute book without this House endorsing it, she can

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  write to me and give me her suggestions. I feel that it is quite clear that any basic study of the constitution would conclude that this House needs to make its views known. She may disagree with the length of debate on a particular measure, but no legislation is introduced without this House giving its assent.
  Angela Eagle: Will my hon. Friend take a little time to speculate on why both Opposition parties appear to be against making it as convenient as possible for people to vote?
  Mr. Leslie: I can imagine a number of possible reasons, as I know my hon. Friend could. We should indeed think about that issue, and I shall turn to it in a moment.
  Kali Mountford: Did my hon. Friend note that Baroness Hanham drew a comparison in her closing remarks between convenience and easiness in voting and increased turnout in elections? Is it not lamentable that someone who is neither elected nor accountable to anybody has such a contemptible view of democracy?
  Mr. Leslie: It would be dangerous indeed if the other place were perceived to be making the democratic process any more difficult. Various people from other parties have made statements that perhaps we should make it more difficult for people to express their opinion and make it harder for them to vote at elections. That is fundamentally anti-democratic and the wrong approach.
  Mr. John Gummer: Will the Minister explain how this House can give any opinion at all on amendments that are introduced in the other House and then subjected to a guillotine, ensuring that large numbers of them are not discussed at all? The guillotine is the means by which this Government have disfranchised large numbers of people.
  Mr. Leslie: The right hon. Gentleman does not have to vote for any measure that he does not support. All measures can be voted on, and if he opposes a measure, he can vote against it. That is the fundamental way in which we make decisions in this House of Commons. We are not talking about guillotines in respect of this Bill; we are talking about a fundamental attempt by the other place to block the will of this House of Commons.
  There are many good reasons why we should proceed with a pilot for four regions. We have the resources to do so, and a pilot involving 31 per cent. of the electorate is not excessive. Our decision is clear. We announced on 21 January that we wanted four regions, and the House of Commons ratified that decision on 8 March. It reconfirmed it on 16 March. so why are we debating it again? We have answered questions about fraud and malpractice, and made sure that we have answered questions about supported delivery points, where people can still vote in secret. New changes will aid voters in houses in multiple occupation, and teams of officials can visit such properties with special regard to the problems that can arise. Offences of personation and undue influence over voters are in place, and secrecy
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  warnings will be included in the literature. We have therefore managed to address all the concerns about fraud and malpractice.
  Regional returning officers have made their views very plain indeed, and want to proceed with all-postal voting. The Government want to proceed, and the House of Commons wants to proceed as well, so why are the Conservatives and the Liberal Democrats trying to use the other place to block what is evidently the will of the House of Commons? I shall take up the invitation of my hon. Friend the Member for Wallasey (Angela Eagle) and speculate on the reasons why.
  The Opposition may be afraid of a high turnout in the June elections, and therefore oppose all-postal voting in the pilot. It may be the age-old tactic of opportunism, with the Opposition seeking to derail the local and European elections in June. If that is the true reason why the Opposition are behaving in that way, that is a very dangerous game indeed. The hon. Member for Surrey Heath (Mr. Hawkins) and, in particular, the hon. Member for Somerton and Frome (Mr. Heath) must justify their use of the other place to block the will of the House of Commons. How am I to explain to my constituents in Yorkshire that, no matter how many people want all-postal voting and no matter who they vote for at those elections, they cannot have such a system because the minority parties, using the other place, have sought to block the will of the House of Commons?
  Richard Younger-Ross: The Minister referred to higher turnout and more people voting. Why is it not possible to have a nationwide postal vote? If there are pilot schemes for half the country, why are they in the north? What will the Minister say to people outside the House who will regard that as cynical manipulation?
  Mr. Leslie: The hon. Gentleman should know that we have debated the subject in the Chamber on numerous occasions, and he should be aware of the rationale for the Government's four-region proposal, which was supported by the Commons on a number of occasions. The selection partly reflects the advice of the Electoral Commission on the ranking of suitable regions, but takes into account the fact that in October we will hold referendums on elected regional government. It would be daft to ignore that.
  Joyce Quin: My hon. Friend mentioned the regional referendums in October and the use of all-postal ballots. Will he confirm that we will not necessarily have to accept the unhelpful amendment on regional referendums agreed in the House last week making extra requirements for witness signature? In the postal ballots in my area of Gateshead, we had no such requirement. The turnout was higher than it was in areas where the requirement was made, and the Electoral Commission gave us a clean bill of health regarding fraud—we had no problems of that kind. I therefore hope that my hon. Friend can give me that assurance.
  Mr. Leslie: I know that my right hon. Friend is disappointed that we were effectively forced to accede to the Lords on the declaration of identity, but we did so in

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  the spirit of trying to reach consensus, even though that does not appear to have been acknowledged by the other place. It is important to keep under review the issue of the declaration of identity. It will be used in the all-postal voting pilots in June, but we should revisit the issue.
  Mr. George Osborne: Labour Members seem to suggest that we are against high turnouts, but I dare that say every single Opposition Member was elected on a higher turnout than every single Labour Member. The Minister suggests that there is some mystery about why the Lords keep sending the Bill back and why the House of Commons cannot have its way. Will he address the Electoral Commission's letter of yesterday—not a month ago, not two months ago, but yesterday—in which it continues to say that it does not recommend holding postal votes in the northwest? The Government set up the Electoral Commission to guard the integrity of the electoral process. Will he address the specific concerns of the Electoral Commission and tell us why he thinks that it has got this wrong?
  5 pm
  Mr. Leslie: I apologise to the hon. Gentleman. I have the letter from Sam Younger, the chairman of the Electoral Commission. It does not contain the words that the hon. Gentleman attributed to it—that we should definitely not go ahead with the north-west. The Electoral Commission simply says that its views on all these matters have not changed from the previous occasion. We know very well that the Electoral Commission has said that the north-west is potentially suitable.
  The hon. Gentleman should be aware that the commission has reiterated its view. He knows that we disagree about a number of regions, and I do not demur from that, but it is important to remember that the Electoral Commission has reiterated that there are a number of regions that it considered "potentially suitable". The commission underlines the fact that it is for the Government, Parliament and the House of Commons to make decisions about what happens and which regions should be selected. It is not for the commission to say yes or no to particular regions. That is in the letter.
  Mr. Nick Hawkins: The Electoral Commission's letter of yesterday to the Deputy Prime Minister states:
  "For the reasons set out in my letter of 4 March we are not persuaded of the merits of piloting in 4 regions."
  It goes on to say:
  "The considerations as set out in our December Report regarding the North West have not changed."
  The Minister is indulging in his usual habit of selective quotation and misinterpretation. It is quite clear that the Electoral Commission was against a pilot in the northwest for all the reasons of fraud that it set out before. It still says that it is against the north-west. Will the Minister recognise that?
  Mr. Leslie: I can only sit at the feet of the master of selective quotation. That is certainly not what I understand from the Electoral Commission. I have said to the hon. Gentleman that we disagree with the Electoral Commission about its view of the number, the quantum, the scale of regions to proceed with, but that is an entirely different matter from which particular regions are selected. The Electoral Commission underlined the fact that it had a category of regions that were "potentially suitable", which include Yorkshire and the north-west. It has not changed its view. That remains the case. It is therefore open to us to recommend that we should proceed in four regions.
  We have been round these arguments before and I do not think many of the issues have changed. What has changed is the fact that the Opposition parties seek to justify using the blocking powers of the other place to thwart the will of the House of Commons. How can the hon. Member for Somerton and Frome, for example, call himself a Liberal Democrat but use the House of Lords as he has done to thwart the House of Commons' views and decisions? He should address that point when he speaks. [Interruption.]
  The benefits of all-postal voting are clear—
  Mr. Deputy Speaker: Order. I am sorry to interrupt the hon. Gentleman. May I say to the House as a whole that it would be better if the debate were conducted with one person speaking at a time?
  Mr. Leslie: Thank you, Mr. Deputy Speaker.
  The benefits of all-postal voting are crystal clear. It brings convenience and ease of voting to electors in those regions. We are talking merely about piloting. We should pilot in those four regions. The arguments are clear. I hope that the House stands firm in its view and supports the proposal for four regions, and I urge hon. Members to disagree with the Lords in their amendment.
  Mr. Hawkins: We are going around this track for the fifth or sixth time now, but there are always some new developments. The Government have conceded one of our main concerns about the anti-fraud measure of requiring a witness signature. I am sorry that they refused to concede on the sending of receipts by returning officers, but I suspect that the House will need to return to that in years to come, and I fear that, as the Electoral Reform Society has warned, the incidence of electoral fraud will require a reconsideration of that.
  Anyone who had heard only the Minister's speech this afternoon might mistakenly think that the Government's views on this matter were entirely clear and had never changed, but in fact the Government have changed their mind from three pilot regions to four, at the insistence, as we know, of the Deputy Prime Minister, who has been working the issue by remote control throughout the passage of the Bill.
  The main issue this afternoon, however, is the Government's refusal to trust the Electoral Commission, which they themselves set up. The Government have tried to bully their own Electoral Commission, and they have done so specifically and especially in the person of the Deputy Prime Minister. We always suspected that his involvement in this area

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  was for purely party political reasons, and we saw it for ourselves last week, when he spent the whole time on the Front Bench bellowing and seeking to interrupt and affect the debate.
  We have now all seen the letters that the chairman of the Electoral Commission, Sam Younger, sent to the Minister on 4 March, and to the Deputy Prime Minister yesterday. Significantly, what we have not seen are the letters that Ministers, specifically the Deputy Prime Minister, have sent to the Electoral Commission. I challenge the Minister to place in the Library the letters that all Ministers have sent to the Electoral Commission, because before the matter returns to another place, we all need to have a full picture. I also challenge the Minister, as I did last week, when he declined to respond, to place in the Library the minutes of all meetings that any Minister in this Government has attended with any returning officers. We need a full picture. At the moment we are seeing the responses of the chairman of the Electoral Commission to letters that we have not seen.
  We also fear that Labour has been leaning on returning officers—not only in the Deputy Prime Minister's home area of Yorkshire and the Humber—to seek to intimidate them into changing their views. It is not merely Conservative Members who express these views. As the noble Lord Rennard, speaking for the Liberal Democrats, said:
  "it is alarming that a Labour Government can engage so directly with returning officers charged with conducting the elections fairly, but who are the employees of Labour councils fearful of their re-election and who can exclude the independent Electoral Commission from those deliberations."—[Official Report, House of Lords, 18 March 2004; Vol. 1942, c. 345.]
  That is our concern.
  Mr. David Clelland: The hon. Gentleman referred in his opening remarks to incidents of fraud. Would he like to give some examples of where such incidents have taken place, because as my right hon. Friend the Member for Gateshead, East and Washington, West (Joyce Quin) pointed out earlier, in Gateshead council, where the ballot took place without the need for witness signatures, there was no evidence whatever of fraud. On the other hand, in Newcastle council, where the witness signature was required, 6,000 people were disfranchised because of the lack of a witness signature. Does he think that that is fair?
  Mr. Hawkins: I do not criticise the hon. Gentleman because I know that he has many responsibilities in the House, but I do not think that he took part in the earlier debates on this matter. Had he done so, he would be aware that I have referred at great length to the examples of fraud given by the noble Lord Greaves, not just on one but on several occasions when the matter was debated in another place. I have incorporated my concerns, which are set out fully by the Electoral Commission in its report, in my various speeches, so I respectfully refer the hon. Gentleman to what the Lord Greaves has said. The main concerns about fraud were in the north-west. The Electoral Commission says that one of its concerns about the north-west is that possible prosecutions for fraud might coincide with the period of
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  these elections; that has been one of the main reasons why it is not prepared to approve the north-west as a pilot area.
  Andy Burnham: Again, the hon. Gentleman comments on the north-west and the allegations made by Lord Greaves. Will he clear up the matter: has the Crown Prosecution Service taken forward any of the allegations made in Pendle?
  Mr. Hawkins: I do not know specifically about Pendle, but, as the hon. Gentleman would know if he had listened to earlier debates, Lord Greaves did not refer only to Pendle, and I, like him, gave about 10 different examples of areas of the north-west where fraud had been alleged. The Government's own Electoral Commission has said that it is not prepared to endorse the suggestion that the north-west should be a pilot because of concerns about fraud, and yesterday's letter from Sam Younger, the chairman of the Electoral Commission, repeats that point.
  Andy Burnham: Will the hon. Gentleman give way?
  Mr. Hawkins: I will not give way again. I simply refer the hon. Gentleman to yesterday's letter from Sam Younger. which is absolutely clear, no matter how the Minister tries to reinterpret it. In December, the Electoral Commission said that the north-west is inappropriate; it repeated the point in January; and it made it again as recently as yesterday.
  Mr. David Watts: Why does the hon. Gentleman take the view that we should take so much notice of the Electoral Commission, when the Lords and he rejected its suggestion on the verification of voting? He is keen to take notice of the Electoral Commission when he wants to. Why did he not take notice on both occasions?
  Mr. Hawkins: The Government must explain why they are ignoring their own Electoral Commission. It was not us who set it up. Having listened to the Minister this afternoon, one might think that it is Government policy to ignore the fact that we have a bicameral legislature. The Government want a one-party, one-Chamber state, where they can ram through their views without debate.
  In fairness, many of the noble Lords and Baronesses who have spoken about electoral matters in debates on this Bill have many more years of electoral experience than the Minister. Many of them are in another place precisely because they have long experience as councillors and party agents. [Interruption.] The Minister says that noble Lords and Baronesses have no electoral mandate, but many of them have been around in politics for a lifetime and sit in another place because of their experience. [Interruption.] He should recognise that it is a bit rich for somebody who only arrived in this House in 1997 to criticise as having no mandate those from whichever party who have been appointed to another place because of their political experience.
  Mr. Andrew Miller: On a point of order, Mr. Deputy Speaker. Is it not the case that every Member of this House, irrespective of age and experience, is of equal status?
  Mr. Deputy Speaker: Order. Hon. Members are, of course, of equal status, but they may have different experience in different ways. I do not want to get involved in a matter of debate—far worse things have been said in the House, and we can always seek to improve the standard of exchange. While I am on the subject, I want to hear less noise and more from the person who has the Floor of the House at the time.
  Mr. Hawkins: We must examine what independent commentators say about what the Government are up to in trying to railroad the Bill through. I refer any hon. Members who have not seen them yet to the views expressed by the distinguished and senior home affairs correspondent of The Daily Telegraph, Mr. Phillip Johnston, on Monday of this week. In a well-observed column headed, "Now they want to abolish polling day", Mr. Johnston says:
  "Surely this is a matter that requires all-party agreement. The electoral system is no more Labour's to tinker around with than is the constitution, whose ancient structures are being so casually dismantled in the name of 'modernisation Postal voting, while superficially attractive to politicians who think that we are all too bone idle to get off our backsides to go to a polling station, is wide open to fiddling, intimidation and fraud. It will mark the final disconnection between politicians and the electorate."
  Mr. Johnston also deals with the canard that we heard at Prime Minister's questions earlier this afternoon, when an hon. Member suggested to the Deputy Prime Minister that postal ballots might mean fewer votes for extremist parties. As Mr. Johnston points out,
  "The seats with the highest turnout in the 2001 general election were the three Northern Ireland constituencies where Sinn Fein candidates were elected."
  Does not that give the lie to the suggestion that an increase in turnout means less support for extremists?
  5.15 pm
  Mr. Miller: To correct the hon. Member for Tatton (Mr. Osborne), I had a bigger turnout and a bigger absolute vote than the hon. Member for Surrey Heath (Mr. Hawkins).
  Does the hon. Member for Surrey Heath agree that although the article from The Daily Telegraph is right inasmuch as the voting system is not Labour's to tinker with, it is for this House to make a decision, and this House must take precedence over the other place, where nobody is elected?
  Mr. Hawkins: I simply disagree with the hon. Gentleman. We take the view that the whole purpose of having a bicameral legislature is to give both Houses of Parliament a role. What we dislike is this Government's attempt to change the agenda as it suits them. During the debate on the Bill on 16 December, the Minister said—not once, not twice, not three times, but about six times—that the Government would have a third postal pilot. The volte face took place as soon as the Deputy Prime Minister got involved and insisted that both the north-west and Yorkshire and Humber be included. The Government have been completely inconsistent for party political reasons connected with the Deputy Prime Minister's obsession with the forthcoming referendums on regional government.
  Mr. Redwood: Does my hon. Friend agree that the Lords is particularly important when a strong majority party in this House wishes to twist or distort the constitution or the electoral system? That is when the minority interests and parties need a voice. I am delighted that the Lords will provide that; the Government should be ashamed that they will not.
  Mr. Hawkins: I am grateful to my right hon. Friend: he is absolutely right.
  We can rely on the Electoral Commission's firm view—despite the Minister's attempt to reinterpret it—that the north-west must be ruled out. The Electoral Commission is clear that it has not changed its mind from what it said in December or in January, and sticks to the reasons that it set out previously. That is why those in another place are absolutely right to continue to insist on backing the Electoral Commission. I am confident that in the end the Government will have to give up on this, because otherwise they will lose the Bill altogether. If they do, it will be entirely their own fault.
  Mr. Clelland: My hon. Friend the Minister is right to resist the amendments, especially in light of the damage that has already been done to the Bill by the other House. The amendment requiring witness signatures, which will disfranchise thousands of people—mainly the elderly and those with communication difficulties—has been forced on the Government because the other place is using up time which, because of the approaching elections, this House unfortunately does not have, in order to defeat the Bill. Last week, the Select Committee on the Office of the Deputy Prime Minister interviewed manufacturers of electoral materials who are telling the Government that time is running out in terms of producing those materials. The House of Lords is using that situation to force amendments on a reluctant Government.
  Much comment has been made about the unelected House having undue influence over a matter relating to elections and electors' rights. Some might say that that makes the case for an elected House stronger. I would argue against that, because one can imagine the situation if these decisions were being made by an elected House. It would be much more difficult for this House to get anything through at all—we would have this legislative gridlock time after time. The Government are right to go back to the drawing board on the constitution of the second Chamber. [Interruption.] One of my hon. Friends says, "Abolish them." I am becoming more attracted to that idea as the days go by. We need to consider the powers of the House of the Lords before we start to consider who should sit and exercise them. That is what should have been done in the first place. I hope that we will take this opportunity to do it and that we do not get into this ridiculous situation again.
  Mr. David Heath: Thank you, Mr. Deputy Speaker. That was a briefer contribution from the hon. Member for Tyne Bridge (Mr. Clelland) than I was expecting, but it was valued nevertheless.

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  These ping-pong episodes are among the most unedifying things that we do in the House. As I said when we last debated these matters, it is rare to hear any new arguments on these occasions. However, there is a new element this time, in the form of the letter from the Electoral Commission, which the Minister has chosen to misrepresent to the House, and whose contents he has chosen to ignore. [HON. MEMBERS: "Rubbish!"] Hon. Members may say "Rubbish", but I have the faculty of being able to read. No Member who has read the letter from the Electoral Commission can be in any doubt as to what its conclusions are, and that poses a huge problem for the Government. The Lords have not introduced a killer amendment to the Bill. All that they have done is to make the perfectly reasonable propositions that the Electoral Commission, which the Government set up in order to give advice on electoral matters, should be heard on this matter, and that the Government should not be able to ignore its advice when introducing electoral pilots. Indeed, "pilot" is an inappropriate word to use when the proposal involves nearly half the local authorities in England. That is not a pilot; it is half the country.
  We have heard the absurd argument that it would be a disgrace to democracy if there were no all-postal ballot in the north-west. However, we are not told that it would be a disgrace to democracy not to have one in the south-west. We are told that such a ballot is essential in the east midlands, but not the west midlands. [HON. MEMBERS: "Pilots!"] We now hear the word "pilots", but the three pilots that the Minister asked for in the first place are no longer sufficient. The Government, in the form of the Deputy Prime Minister, have determined that he wants half of England to be involved, and that just happens to be the half that lies to the north of the Trent.
  I do not understand why the Deputy Prime Minister is so adamant that he should use the majority in the House to push through an electoral reform against the consensus of the political parties represented in the House and against the advice of the Electoral Commission. There was a time when there was a pretence that the Deputy Prime Minister was not guiding this whole affair, but that pretence has been blown apart by the fact that the right hon. Gentleman has written to the Electoral Commission—we know not in what terms—and that he has had a rebuttal from it. The commission will not be persuaded that it should abandon its better judgment in this matter.
  Having made a careful study of Yorkshire and Humber, the commission has said that its view has changed, and that it is now prepared to accept that Yorkshire and Humber is an appropriate area. Very well. If that is the case, I accept that as well. I have no wish not to extend this voting experiment to those areas in which it is suitable to do so. Let me tell hon. Members from Yorkshire and Humberside that I am now on their side, because they have the imprimatur of the Electoral Commission.
  Mr. Watts: Is it Liberal Democrat policy that the Electoral Commission should be able to overrule the will of Parliament? Also, will the hon. Gentleman confirm that the view of the Liberal Democrat MEP,
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  Chris Davies, is that postal voting is for lazy people? Does the hon. Gentleman believe that anyone who wants a postal vote is a lazy person?
  Mr. Heath: No, I do not believe that. Frankly, it was an absurd thing for that Member of the European Parliament to say, and I wish he had not said it. Now that I have said that from the Front Bench, I hope that the hon. Gentleman will no longer try to use that argument in evidence against our party's apparent position. It is not the position of our party.
  Mr. George Osborne: Will the hon. Gentleman give way?
  Mr. Heath: In a moment. Let me answer one intervention at a time.
  The role of the Electoral Commission is crucial when designing pilot schemes for innovative ways of voting. I would never have had a problem with the Government had they said, "We are not having a pilot scheme for this innovation. We will have a UK-wide all-postal ballot." I would have said, "Okay, let's have a go and see what happens in the European elections." However, that is not what is on offer. We have the absurd pretence that, somehow, the Government are doing as is recommended when we know that they are not and that this is appropriate for one part of the country and not appropriate for the rest.
  Mrs. Browning: Does the hon. Gentleman agree that the Electoral Commission and its chairman are answerable not to Ministers but to the House? I sit on the Speaker's Committee on the Electoral Commission. The commission is called to our meetings to answer questions. If, as a member of that Committee, I discovered that the chairman had made a specific recommendation to the Government vis-à-vis fraud in the north-west and they had ignored it, they would be in very serious trouble with my Committee.
  Mr. Heath: Let that be a warning to the Minister, because he is clearly going to be in trouble with the Speaker's Committee on the Electoral Commission.
  Hyperbole apart, this is a serious matter. We are discussing this country's electoral system and that should command the respect and agreement, as far as that is possible, of the parties that are contesting those elections. It is simply not right that a party that has a majority in the House—owing to what I think is a corrupt electoral system, and certainly on a minority of the vote—can have its way irrespective of the views of the Electoral Commission that it appointed.
  Mr. Leslie: I have two brief comments to make. First, I hope that the hon. Gentleman withdraws his point about the House somehow being based on a corrupt democratic system. Secondly, will he justify the use of the House of Lords in persistently overturning the will of the House of Commons?
  Mr. Heath: Perhaps the Minister uses the House of Lords for his purposes; I do not use the House of Lords. I respect the judgment of those who sit in the House of

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  Lords at the moment, although I would like it to be reformed and given accountability through a proper electoral system.
  I say that the system is corrupt because it does not reflect the votes that people cast, as the Minister perfectly well knows. That is why he can pray in aid a massive majority in the House won on a minority of the votes cast and say that it should overrule not only Conservative and Liberal Democrat Members of this House, but the other House, which he has chosen not to reform, as well as the independent body that was set up precisely—
  Several hon. Members rose—Several hon. Members rose—
  Mr. Heath: Many Members want to intervene, but I give way to the right hon. Member for Gateshead, East and Washington, West (Joyce Quin), because I think I did her a disservice during a previous debate in not understanding the details of the pilot scheme in her constituency. I apologise to her for that.
  Joyce Quin: I am grateful to the hon. Gentleman, who did not realise that the pilots are different in different areas. In my area, there is no requirement for a witness signature. He has laid great emphasis on supporting the Electoral Commission, but is it not the case that last week the amendment from the other place, which he introduced and which was accepted, ran counter to the view of the Electoral Commission regarding the witness signature?
  Mr. Heath: You would rule us out of order, Mr. Deputy Speaker, if we re-ran a debate on an amendment that has been passed into the legislation. [Interruption.] If I may, I will respond to the right hon. Lady. I am clear in my mind that the advice from the Electoral Commission was that we should have a pre-registration identity system. We have not yet achieved that. I understand from her what the pilot scheme in her constituency involves, which I did not understand before. I admit my ignorance on that. However, it does not alter the fact that for the generality of elections around the country, and for all those that would have lain outside the pilot regions in the election that we are debating, exactly the same system would have persisted. It does not therefore invalidate my argument, although I was incorrect in the detail, which is why I am happy to offer my apologies.
  5.30 pm
  Andy Burnham: I think that the hon. Gentleman was beginning to develop an argument that he would accept Yorkshire but not the north-west. Can he therefore confirm that the only outstanding case of electoral fraud ongoing in the north-west is against a Liberal Democrat in a traditional election opportunity?
  Mr. Heath: I cannot confirm that, although I am sure that the hon. Gentleman is right, as he has a more intimate knowledge of electoral affairs in the north-west than I do. I have never used the argument used by others that the key issue in the north-west is fraud. My
  968
  argument has always related to one of the basic criteria set down by the Government, not me, that given the complexity of electoral arrangements in the north-west and that so many local authority elections are involved in the north-west, it is not an appropriate pilot. That is what the Electoral Commission said about the northwest, and that is the position to which it holds.
  The hon. Gentleman asked me whether my position was developing. In terms of identification of the regions, my position has always been that we accept the advice of the Electoral Commission, which originally proposed two regions, and has moved its position to accept Yorkshire and Humber. I am therefore happy to adopt that position today.
  Andy Burnham: Is it not the case that the Liberal Democrats are singing two different tunes from one end of the Corridor to the other? The noble Lord Greaves has made great play of fraud in the north-west elections, which is why the Liberal Democrats have opposed this Bill down the other end of the Corridor. The hon. Gentleman is now advancing a different argument. Which is it? Clearly, there is no evidence of fraud in postal ballots in the north-west. To what are the Liberal Democrats opposed?
  Mr. Heath: Again, the hon. Gentleman is referring to a previous debate. We are not talking about fraud today, because, I gently remind him, we have dealt with that issue. We are now talking about the selection of regions and only the selection of regions. The burden of our argument has always been that having set up an independent arbiter as to which region should be selected for a pilot and how many regions should be so selected, the Government are deciding that they know better than that independent arbiter, for whatever reason they wish to use.
  Mr. Watts rose—Mr. Watts rose—
  Mrs. Lorna Fitzsimons (Rochdale) (Lab) rose—Mrs. Lorna Fitzsimons (Rochdale) (Lab) rose—
  Mr. Heath: I have given way to the hon. Gentleman, but I will give way to the hon. Lady if she still wants to intervene on me.
  Mrs. Fitzsimons: As someone who shares the hon. Gentleman's support for electoral reform, may I ask whether he will accept my fundamental disappointment at the way in which Liberal Democrats in this place and the other place have handled this issue? First, they are saying that voters in Rochdale are too stupid to understand how a postal vote system would work. Secondly, what is the difference between the Yorkshire local government system and north-west local government system if he is seeking to say that it is more complicated, we are too stupid and we cannot understand it? And thirdly, does he not understand that there is just a tinge of hypocrisy to allowing the argument to be advanced in the other place, but not advancing it in this place, thereby allowing those in the other place to do your dirty work?
  Mr. Heath: The hon. Lady clearly did not listen to the reply that I just gave. We have had a debate on electoral fraud, which has now been resolved, and we are now

  969
  debating one amendment from the other place that deals only with the selection of regions. If she wants to say that accepting the advice of the Electoral Commission on Yorkshire and Humber in some way demeans or derides her constituents in the north-west, why are my constituents, who had an all-postal ballot at the elections last year, too stupid to have an all-postal ballot in these elections? Does she have an answer to that?
  Mrs. Fitzsimons: The problem was pointed out by one of my hon. Friends earlier. It suited your purposes when you tabled an amendment—
  Mr. Deputy Speaker: Order. The hon. Lady, in her excitement, is not using the right language. None of this has anything to do with the Chair.
  Mrs. Fitzsimons: I apologise, Mr. Deputy Speaker. I believe that there is some confusion among the Liberal Democrats. Last week, when they tabled an amendment, they disagreed with the Electoral Commission. This week, they have decided that its recommendations are their bible. Which is it?
  Mr. Heath: I am not gohng to keep replying to the same intervention ad nauseam. The hon. Lady really needs to talk to her hon. Friends about the internal contradictions in their own arguments. Then she can start talking to me.
  Mr. Kevin Barron: Will the hon. Gentleman give way? He said earlier that he would.
  Mr. Heath: Oh, did I? Well, in that case I had better.
  Mr. Barron: The hon. Gentleman just mentioned contradictions. Can he tell us why the Liberal Democrats accept the prospect of an all-out postal vote in the referendum that will take place in October, but do not accept the proposal for postal votes in the local government and European elections in the north-west in June?
  Mr. Heath: Can the right hon. Gentleman explain to me why this is called the European Parliamentary and Local Elections (Pilots) Bill? That is the crux of the matter. As I have said more times than I care to remember, I would have understood the Government's logic if they had applied their proposals to the European parliamentary elections as a whole.
  Kali Mountford: That is not a pilot.
  Mr. Heath: Half of England is not a pilot. That is the problem with the Government's position.
  Sadly, I do not think that we are making any progress. The reason for that is the Government's intransigence and incompetence. The proposal will now go to the other place, and a deal will be done. The Lords will accept Yorkshire and Humberside, or the Government will lose their Bill. Then we shall have the three regions that the Electoral Commission has identified as suitable, and the Government will have the three pilots that they said they wanted in the first instance. Why on earth
  970
  could they not have said that here this evening? Because they want the Lords to take the blame for their incompetence.
  Kali Mountford: I must start by agreeing with the hon. Member for Somerton and Frome (Mr. Heath). It is sad that we can agree on the fact that we are making no progress whatever. This House should be allowed to make progress, because this House has made its position clear. This House contains the democratically elected representatives of our constituents, and the other House does not. I should have thought that that was of some importance to this House.
  That is important to this House because we are discussing how it should formulate elections for the future, and what will happen when we change an electoral system that has a direct bearing on its work, and a less direct bearing on the work of the other place. The line has been revealed by statements made in the other place. The Lords do not object to a pilot, or even to the number of areas included in the pilot; they are against postal balloting per se. Their main objection is to the fact that elections would be more convenient. What an absurd objection! It is absurd to suggest that a disabled person, a person who works very hard or a person who works different shifts should not have the right to a postal vote.
  Incidentally, all those people can apply for a postal vote under the current system. As they can do that on an individual basis, with all the expense that that entails, why is it not sensible to think about what will happen when that convenience is extended to everyone, and the distortion caused by the requirement for applications is removed?
  Andy Burnham: We have heard of the great experience at the other end of the Corridor. Is my hon. Friend aware that the Lords vote was carried by the hereditary peers? What right have they to advise any Member of this House, whatever his or her age, about electoral practice?
  Mr. Deputy Speaker: Order. I remind both hon. Members of the precise terms of the amendment.
  Kali Mountford: I will limit myself to saying how much I agree with what my hon. Friend has said, Mr. Deputy Speaker.
  We must ask what benefit will accrue from the pilot, who will be included, and why this House should or should not take cognisance of what is said in the other place and what is said by the Electoral Commission. We are surely not saying in this debate that we should have government by commission. That would be absurd. It is for this House and this Government to take account of what advice the Electoral Commission gives, but then to make up our own minds on the value of that advice—with some of which we agree and with some of which we do not agree. It is perfectly sensible to say that we want the pilots to cover a larger area, and to include more circumstances against which we can check the outcome. The hon. Member for Somerton and Frome kept saying that half the electorate would be included in the pilot, but that is incorrect. If he cannot do his sums, he should look at the figures again. By my reckoning, 31 per cent. is not half.
  Mr. Watts: I agree with my hon. Friend. Does she share my lack of understanding of how the Liberal

  971
  Democrats can support postal voting in referendums on regional government, but not in European or local elections? Are not those two stances at odds with each other?
  Kali Mountford: It is hardly surprising that the Liberal Democrats are at odds on any issue. It is hardly surprising that they have hung themselves on a particular hook over the precise terms of this afternoon's debate. It suits them to forget the convenient arguments that they have used on other issues at other times. Nevertheless, let us examine what they have said. They have said that what is good enough for the goose is not good enough for the gander. I say that this gander will have its way.
  Mr. Redwood: The proposal from the House of Lords is a modest and reasonable compromise, when the Government are trying to ride roughshod over minority party interests and the interests of anyone who wishes to see sensible reform at a steady pace. I do not speak as one who is against postal ballots in principle; in theory, they are very good. The problem is the practice, because there are a number of genuine concerns about whether such ballots can be administered fairly and well, without corruption, pressure, personation and all the other problems that any true democrat abhors.
  It being one hour after the commencement of proceedings, MR. DEPUTY SPEAKER put forthwith the Question already proposed from the Chair, pursuant to Order [8 March].
  Question put, That this House disagrees with Lords amendment 1D to Commons amendment 1C:—
  The House divided: Ayes 308, Noes 185.

  Division No. 109]

  [5:42 pm

  AYES

  Abbott, Ms Diane

  Brown, rh Nicholas (Newcastle E Wallsend)

  Adams, Irene (Paisley N)

  Ainger, Nick

  Brown, Russell (Dumfries)

  Ainsworth, Bob (Cov'try NE)

  Browne, Desmond

  Alexander, Douglas

  Buck, Ms Karen

  Allen, Graham

  Burden, Richard

  Anderson, Janet (Rossendale &Darwen)

  Burgon, Colin

  Burnham, Andy

  Armstrong, rh Ms Hilary

  Byers, rh Stephen

  Atherton, Ms Candy

  Cairns, David

  Atkins, Charlotte

  Campbell, Alan (Tynemouth)

  Austin, John

  Campbell, Mrs Anne (C'bridge)

  Bailey, Adrian

  Campbell, Ronnie (Blyth V)

  Baird, Vera

  Casale, Roger

  Barnes, Harry

  Caton, Martin

  Barron rh Kevin

  Cawsey, Ian (Brigg)

  Battle, John

  Challen, Colin

  Bayley, Hugh

  Chapman, Ben (Wirral S)

  Beard, Nigel

  Clapham, Michael

  Berry, Roger Clark, Mrs Helen (Peterborough)

  Best, Harold

  Clarke, rh Tom (Coatbridge &Chryston)

  Blackman, Liz

  Clarke, Tony (Northampton S)

  Blears, Ms Hazel

  Clelland, David

  Blizzard, Bob

  Coaker, Vernon

  Blunkett, rh David

  Coffey, Ms Ann

  Boateng, rh Paul

  Cohen, Harry

  Bradley, rh Keith (Withington)

  Colman, Tony

  Bradley, Peter (The Wrekin)

  Connarty, Michael

  Brennan, Kevin

  Cooper, Yvette

  Corbyn, Jeremy

  Howarth, George (Knowsley N &Sefton E)

  Corston, Jean

  Cousins, Jim

  Hoyle, Lindsay

  Cranston, Ross

  Hughes, Beverley (Stretford &Urmston)

  Crausby, David

  Cryer, Ann (Keighley)

  Hughes, Kevin (Doncaster N)

  Cummings, John

  Humble, Mrs Joan

  Cunningham, Jim (Coventry S)

  Hurst, Alan (Braintree)

  Cunningham, Tony (Workington)

  Iddon, Dr. Brian

  Curtis-Thomas, Mrs Claire

  Ingram, rh Adam

  Dalyell, Tam

  Irranca-Davies, Huw

  David, Wayne

  Jackson, Glenda (Hampstead &Highgate)

  Davidson, Ian

  Davies, rh Denzil (Llanelli)

  Jamieson, David

  Dawson, Hilton

  Jenkins, Brian

  Denham, rh John

  Johnson, Miss Melanie (Welwyn Hatfield)

  Dhanda, Parmjit

  Dismore, Andrew

  Jones, Jon Owen (Cardiff C)

  Dobbin, Jim (Heywood)

  Jones, Kevan (N Durham)

  Dobson, rh Frank

  Jones, Lynne (Selly Oak)

  Donohoe, Brian H.

  Jones, Martyn (Clwyd S)

  Doran, Frank

  Jowell, rh Tessa

  Dowd, Jim (Lewisham W)

  Keeble, Ms Sally

  Drew, David (Stroud)

  Keen, Ann (Brentford)

  Drown, Ms Julia

  Kelly, Ruth (Bolton W)

  Eagle, Angela (Wallasey)

  Khabra, Piara S.

  Eagle, Maria (L'pool Garston)

  Kidney, David

  Edwards, Huw

  Kilfoyle, Peter

  Efford, Clive

  King, Andy (Rugby)

  Ellman, Mrs Louise

  King, Ms Oona (Bethnal Green &Bow)

  Ewing, Annabelle

  Farrelly, Paul

  Knight, Jim (S Dorset)

  Field, rh Frank (Birkenhead)

  Kumar, Dr. Ashok

  Fisher, Mark

  Ladyman, Dr. Stephen

  Fitzpatrick, Jim

  Lammy, David

  Fitzsimons, Mrs Lorna

  Lawrence, Mrs Jackie

  Follett, Barbara

  Laxton, Bob (Derby N)

  Foster, Michael (Worcester)

  Lazarowicz, Mark

  Foster, Michael Jabez (Hastings&Rye)

  Lepper, David

  Leslie, Christopher

  Francis, Dr. Hywel

  Levitt, Tom (High Peak)

  Gapes, Mike (Ilford S)

  Lewis, Ivan (Bury S)

  Gardiner, Barry

  Lewis, Terry (Worsley)

  George, rh Bruce (Walsall S)

  Linton, Martin

  Gerrard, Neil

  Lloyd, Tony (Manchester C)

  Gibson, Dr. Ian

  Llwyd, Elfyn

  Gilroy, Linda

  Love, Andrew

  Godsiff, Roger

  Lucas, Ian (Wrexham)

  Goggins, Paul

  Luke, lain (Dundee E)

  Griffiths, Nigel (Edinburgh S)

  Lyons, John (Strathkelvin)

  Griffiths, Win (Bridgend)

  McAvoy, Thomas

  Grogan, John

  McCabe, Stephen

  Hain, rh Peter

  McCartney, rh Ian

  Hall, Patrick (Bedford)

  McDonagh, Siobhain

  Hamilton, David (Midlothian)

  MacDonald, Calum

  Hanson, David

  McDonnell, John

  Harman, rh Ms Harriet

  MacDougall, John

  Harris, Tom (Glasgow Cathcart)

  McFall, John

  Havard, Dai (Merthyr Tydfil &Rhymney)

  McGuire, Mrs Anne

  Mclsaac, Shona

  Healey, John

  McKechin, Ann

  Henderson, Doug (Newcastle N)

  Mactaggart, Fiona

  Hendrick, Mark

  McWalter, Tony

  Hepburn, Stephen

  McWilliam, John

  Heppell, John

  Mahmood, Khalid

  Hesford, Stephen

  Mahon, Mrs Alice

  Hewitt, rh Ms Patricia

  Mallaber, Judy

  Heyes, David

  Mann, John (Bassetlaw)

  Hill, Keith (Streatham)

  Marris, Rob (Wolverh'ton SW)

  Hinchliffe, David

  Marsden, Gordon (Blackpool S)

  Hoey, Kate (Vauxhall)

  Marshall, Jim (Leicester S)

  Hood, Jimmy (Clydesdale)

  Marshall-Andrews, Robert

  Hoon, rh Geoffrey

  Martlew, Eric

  Hope, Phil (Corby)

  Merron, Gillian

  Hopkins, Kelvin

  Michael, rh Alun

  Howarth, rh Alan (Newport E)

  Milburn, rh Alan

  Miliband, David

  Smith, Geraldine (Morecambe &Lunesdale)

  Miller, Andrew

  Moffatt, Laura

  Smith, Jacqui (Redditch)

  Moonie, Dr. Lewis

  Smith, Llew (Blaenau Gwent)

  Moran, Margaret

  Soley, Clive

  Morgan, Julie

  Spellar, rh John

  Morris, rh Estelle

  Squire, Rachel

  Mountford, Kali

  Starkey, Dr. Phyllis

  Munn, Ms Meg

  Steinberg, Gerry

  Murphy, Jim (Eastwood)

  Stevenson, George

  Naysmith, Dr. Doug

  Stewart, David (Inverness E &Lochaber)

  O'Brien, Bill (Normanton)

  Stewart, Ian (Eccles)

  O'Brien, Mike (N Warks)

  Stinchcombe, Paul

  O'Hara Edward

  Stoate, Dr. Howard

  O'Neill Martin

  Strang, rh Dr. Gavin

  Organ, Diana

  Straw, rh Jack

  Osborne, Sandra (Ayr)

  Stringer, Graham

  Owen, Albert

  Stuart, Ms Gisela

  Palmer, Dr. Nick

  Sutcliffe, Gerry

  Perham, Linda

  Tami, Mark (Alyn)

  Pickthall, Colin

  Taylor, Dari (Stockton S)

  Pike, Peter (Burnley)

  Taylor, David (NW Leics)

  Plaskitt, James

  Taylor, Matthew (Truro)

  Pond, Chris (Gravesham)

  Thomas, Gareth (Clwyd W)

  Pope, Greg (Hyndburn)

  Thomas, Simon (Ceredigion)

  Pound, Stephen

  Timms, Stephen

  Prentice, Ms Bridget (Lewisham E)

  Tipping, Paddy

  Touhig, Don (Islwyn)

  Prescott, rh John

  Trickett, Jon

  Price, Adam (E Carmarthen &Dinefwr)

  Truswell, Paul

  Turner, Dennis (Wolverh'ton SE)

  Primarolo, rh Dawn

  Turner, Dr. Desmond (Brighton Kemptown)

  Prosser, Gwyn

  Twigg, Stephen (Enfield)

  Purchase, Ken

  Tynan, Bill (Hamilton S)

  Purnell, James

  Walley, Ms Joan

  Quin, rh Joyce

  Ward, Claire

  Quinn, Lawrie

  Wareing, Robert N.

  Rapson, Syd (Portsmouth N)

  Watts, David

  Raynsford, rh Nick

  Weir, Michael

  Reed, Andy (Loughborough)

  White, Brian

  Robertson, Angus (Moray)

  Whitehead, Dr. Alan

  Robertson, John (Glasgow Anniesland)

  Wicks, Malcolm

  Williams, rh Alan (Swansea W)

  Roche, Mrs Barbara

  Williams, Betty (Conwy)

  Rooney, Terry

  Wills, Michael

  Ross, Ernie (Dundee W)

  Winnick, David

  Ruane Chris

  Winterton, Ms Rosie (Doncaster C)

  Ruddock, Joan

  Wishart, Pete

  Ryan, Joan (Enfield N)

  Wood, Mike (Batley)

  Salter, Martin

  Woolas, Phil

  Savidge, Malcolm

  Wright, Anthony D. (Gt Yarmouth)

  Sawford, Phil

  Sedgemore, Brian

  Wright, David (Telford)

  Sheridan, Jim

  Wright, Tony (Cannock)

  Simpson, Alan (Nottingham S)

  Singh, Marsha

  Tellers for the Ayes:

  Skinner, Dennis

  Derek Twigg and

  Smith, rh Andrew (Oxford E)

  Mr. Fraser Kemp

  NOES

  Ainsworth, Peter (E Surrey)

  Bercow, John

  Allan, Richard

  Beresford, Sir Paul

  Amess, David

  Blunt, Crispin

  Arbuthnot, rh James

  Boswell, Tim

  Atkinson, David (Bour'mth E)

  Bottomley, Peter (Worthing W)

  Atkinson, Peter (Hexham)

  Brady, Graham

  Bacon, Richard

  Brake, Tom (Carshalton)

  Baker, Norman

  Brazier, Julian

  Baldry, Tony

  Breed, Colin

  Barker, Gregory

  Brooke, Mrs Annette L.

  Baron, John (Billericay)

  Browning, Mrs Angela

  Beggs, Roy (E Antrim)

  Burns, Simon

  Beith, rh A. J.

  Burnside, David

  Bellingham, Henry

  Burstow, Paul

  Burt, Alistair

  Knight, rh Greg (E Yorkshire)

  Butterfill, Sir John

  Laing, Mrs Eleanor

  Cable, Dr. Vincent

  Lait, Mrs Jacqui

  Calton, Mrs Patsy

  Lamb, Norman

  Cameron, David

  Laws, David (Yeovil)

  Campbell, Gregory (E Lond'y)

  Leigh, Edward

  Campbell, rh Sir Menzies (NE Fife)

  Letwin, rh Oliver

  Liddell-Grainger, Ian

  Carmichael, Alistair

  Lilley, rh Peter

  Cash, William

  Loughton, Tim

  Chapman, Sir Sydney (Chipping Barnet)

  Luff, Peter (M-Worcs)

  McIntosh, Miss Anne

  Chope, Christopher

  Mackay, rh Andrew

  Clappison, James

  Maclean, rh David

  Clarke, rh Kenneth (Rushcliffe)

  McLoughlin, Patrick

  Collins, Tim

  Malins, Humfrey

  Conway, Derek

  Marsden, Paul (Shrewsbury &Atcham)

  Cormack, Sir Patrick

  Cotter, Brian

  Mawhinney, rh Sir Brian

  Cran, James (Beverley)

  May, Mrs Theresa

  Curry, rh David

  Mercer, Patrick

  Davey, Edward (Kingston)

  Moore, Michael

  Davies, Quentin (Grantham &Stamford)

  Moss, Malcolm

  Murrison, Dr. Andrew

  Davis, rh David (Haltemprice &Howden)

  Oaten, Mark (Winchester)

  O'Brien, Stephen (Eddisbury)

  Djanogly, Jonathan

  Opik, Lembit

  Dodds, Nigel

  Osborne, George (Tatton)

  Donaldson, Jeffrey M.

  Ottaway, Richard

  Dorrell, rh Stephen

  Page, Richard

  Doughty, Sue

  Paterson, Owen

  Duncan, Alan (Rutland)

  Pickles, Eric

  Duncan Smith, rh lain

  Portillo, rh Michael

  Evans, Nigel

  Prisk, Mark (Hertford)

  Fallon, Michael

  Pugh, Dr. John

  Field, Mark (Cities of London &Westminster)

  Randall, John

  Redwood, rh John

  Forth, rh Eric

  Reid, Alan (Argyll &Bute)

  Foster, Don (Bath)

  Rendel, David

  Fox, Dr. Liam

  Robathan, Andrew

  Francois, Mark

  Robertson, Hugh (Faversham &M-Kent)

  Gale, Roger (N Thanet)

  Garnier, Edward

  Robertson, Laurence (Tewk'b'ry)

  George, Andrew (St. Ives)

  Rosindell, Andrew

  Gidley, Sandra

  Ruffley, David

  Gillen, Mrs Cheryl

  Russell, Bob (Colchester)

  Goodman, Paul

  Sanders, Adrian

  Grayling, Chris

  Sayeed, Jonathan

  Green, Damian (Ashford)

  Sheerman, Barry

  Green, Matthew (Ludlow)

  Shephard, rh Mrs Gillian

  Greenway, John

  Shepherd, Richard

  Gummer, rh John

  Simmonds, Mark

  Hague, rh William

  Simpson, Keith (M-Norfolk)

  Hammond, Philip

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

  Hancock, Mike

  Harris, Dr. Evan (Oxford W &Abington)

  Smyth, Rev. Martin (Belfast S)

  Soames, Nicholas

  Harvey, Nick

  Spicer, Sir Michael

  Hawkins, Nick

  Spink, Bob (Castle Point)

  Hayes, John (S Holland)

  Steen, Anthony

  Heald, Oliver

  Streeter, Gary

  Heath, David

  Stunell, Andrew

  Heathcoat-Amory, rh David

  Swayne, Desmond

  Hermon, Lady

  Swire, Hugo (E Devon)

  Hoban, Mark (Fareham)

  Syms, Robert

  Horam, John (Orpington)

  Tapsell, Sir Peter

  Howarth, Gerald (Aldershot)

  Taylor, Ian (Esher)

  Jack, rh Michael

  Taylor, John (Solihull)

  Johnson, Boris (Henley)

  Taylor, Sir Teddy

  Jones, Nigel (Cheltenham)

  Teather, Sarah

  Keetch, Paul

  Thurso, John

  Kennedy, rh Charles (Ross Skye &Inverness

  Tredinnick, David

  Turner, Andrew (Isle of Wight)

  Key, Robert (Salisbury)

  Tyler, Paul (N Cornwall)

  Kirkbride, Miss Julie

  Tyrie, Andrew

  Kirkwood, Sir Archy

  Viggers, Peter

  Walter, Robert

  Winterton, Ann (Congleton)

  Waterson, Nigel

  Winterton, Sir Nicholas(Macclesfield)

  Watkinson, Angela

  Webb, Steve (Northavon)

  Yeo, Tim (S Suffolk)

  Whittingdale, John

  Young, rh Sir George

  Widdecombe, rh Miss Ann

  Younger-Ross, Richard

  Wiggin, Bill

  Willetts, David

  Tellers for the Noes:

  Williams, Roger (Brecon)

  Mr. David Wilshire and

  Willis, Phil

  Mr. Geoffrey Clifton-Brown

  Question accordingly agreed to.
  Lords amendment disagreed to.
  Committee appointed to draw up a Reason to be assigned to the Lords for disagreeing to their amendment 1D to Commons amendment 1C; Mr. Nick Hawkins, Mr. David Heath, Mr. Christopher Leslie, Laura Moffatt and Ms Bridget Prentice; Mr. Christopher Leslie to be the Chairman of the Committee; Three to be the quorum of the Committee.—[Mr. Jim Murphy.]
  To withdraw immediately.
  A Reason for disagreeing to the Lords amendment reported, and agreed to; to be communicated to the Lords.

  Equitable Life Inquiry
  [Relevant document: the oral evidence taken before the Treasury Committee on Tuesday 16th March, on the Equitable Life Inquiry, HC 71-iv, Session 2003–04.]
  Motion made, and Question proposed, That this House do now Adjourn.—[Ruth Kelly.]
  5.59 pm
  The Financial Secretary to the Treasury: The House will recall that the origin of the Equitable Life inquiry carried out by Lord Penrose was the financial crisis experienced by the society in July 2001, when it closed to new business and cut policy values. The inquiry's terms of reference were to inquire into the circumstances of the Equitable Life assurance society, taking account of the relevant life market background, to identify the lessons to be learned for the conduct and administration of life assurance business, and to give a report thereon to Treasury Ministers.
  Richard Ottaway: On the lessons learned, the Financial Secretary will be aware that Lord Penrose found that regulatory failure was the fundamental reason for, if not the primary cause of, the company's financial crisis. Is it now Government policy never to consider compensation where there has been regulatory failure of any sort?
  Ruth Kelly: If the hon. Gentleman were to acquaint himself in greater depth with the contents of the report, he would see that Lord Penrose says specifically that regulatory system failures failed policyholders in this case. He does not point to operational failure. However, I shall deal with that point later.
  Mr. Eric Forth: Further to the question from my hon. Friend the Member for Croydon, South (Richard Ottaway), can the Financial Secretary envisage any circumstances in which there would be a case for the Government to pay compensation to policyholders? Or would she rule out the payment of compensation in any circumstances that she could foresee?
  Ruth Kelly: I have considered in great depth the contents of Lord Penrose's report. Lord Penrose makes no recommendation for compensation. He finds no instance of maladministration by the regulator, nor does he make any allegation of negligence by the regulator. The Treasury has also examined the contents of its report. We see no reason to think that the regulator was negligent or that there was any maladministration at any time while the society was being regulated by the Treasury or, indeed, under the previous regime.
  Clearly, the Treasury cannot underwrite every business in the country. No regulator can ever provide a 100 per cent. guarantee against failure. However, Lord Penrose says that blame would have to be apportioned through the court system. He says:
  "It was not for me to measure any person's actions against accepted standards of conduct defining the legal duties of other people performing comparable duties in other organisations and other similar circumstances."

  977
  He considers that
  "Breach of duty, and the financial consequences of breach, are properly matters for the established courts of justice and for other appropriate tribunals in the financial sector."
  That is not my analysis, but the analysis of Lord Penrose himself. He finds that, from the early 1970s, the society embarked on a growth strategy that resulted in the progressive financial weakening of the society, such that its ability to meet the long-term expectations of its policyholders was in doubt from the late 1980s onwards.
  Lord Penrose describes how the company deliberately ran down its inherited estate and then, in the 1980s, moved into deficit to keep up bonus levels and win market share. According to Lord Penrose, sustained growth became an independent objective pursued with something approaching missionary zeal. He adds:
  "Bonus policy became central to achieving the Society's marketing objectives"
  and that
  "the surplus published by the Society became a function of the desired level of bonus."
  He outlines how, in 1973, the society introduced the concept of a terminal bonus and then, in the 1980s, progressively shifted the bonus mix away from annual guaranteed reversionary bonuses towards terminal bonuses, which were not covered by reserves. That allowed the society to inflate bonus levels to a level higher than available assets would have implied.
  Mr. John Redwood: Does the Financial Secretary accept that the financial condition of Equitable Life was much worse in 1997, 1998 and 1999 than it was some years earlier and that that gave the regulators a much greater opportunity to intervene and take action to try to protect policyholders in the late 1990s than at any time earlier?
  Ruth Kelly: I could quote from Lord Penrose's report on that point, but I shall quote from the independent authority of the ombudsman, who considered that specific period. She says:
  "There is no doubt that in late 1998 the Treasury had briefed FSA in considerable detail about Equitable's weak regulatory solvency position and had indicated a possible need for the regulator to intervene … it is very evident … the prudential regulators' stated approach to their role … could not be criticised for a lack of concern about Equitable and the position of their policyholders nor could their approach in respect of Equitable be described as 'passive"
  Lord Penrose writes:
  "By disregarding accrued terminal bonus, the Society was able to over-allocate bonus beyond available assets at market value, and in particular to make payments on claims that exceeded the relative available assets at the time".
  By 1989, according to Lord Penrose:
  "the Society deliberately distributed a high proportion of the available return for market-related reasons, and entered the 1990s with a negative estate accordingly."
  The society was therefore unable to withstand the financial implications of the House of Lords judgment in the Hyman case.
  Lord Penrose says:
  "Superficially claims of £1.5 billion should not have brought down a society with funds of £32 billion."
  Mr. John McFall: My hon. Friend will know that Lord Penrose appeared before the Treasury Committee last week and said that the society was largely the author of its own misfortune. However, on the very point made by the right hon. Member for Wokingham (Mr. Redwood), I hope that my hon. Friend will be aware of Chris Headdon's interview on Radio 4 this morning, when he said that Lord Penrose did not find any evidence of concealment. She will also be aware of the financial reinsurance product—the side letter—that Chris Headdon had, of which the Financial Services Authority was not aware. Indeed, the FSA has said that, if it had been aware of the side letter, it would not have guaranteed anything with regard to the society. Does that not raise questions about a deliberate policy of concealment on behalf of the executive in Equitable Life?
  Ruth Kelly: My hon. Friend makes some very interesting points. Of course it is not for me to comment on any action that may be taken by the FSA, the prosecution wing of the Department of Trade and Industry or the Serious Fraud Office, although he will be aware that Lord Penrose has forwarded his report to the SFO. Lord Penrose is clear that a unique situation was developing at Equitable Life. He states:
  "The Society's uniqueness lay in the approach adopted by its management, not in the essential characteristics of its business."
  With regard to the reinsurance treaty, Lord Penrose is absolutely clear as well that
  "Those involved at the society were not in any doubt that a right for the reinsurer to cancel in those circumstances would undermine the regulatory value of the agreement."
  Mr. Jim Cousins: Did the regulators not require the reinsurance provision, and was not the response of the people who then had control of the society to threaten to sue the regulators?
  Ruth Kelly: Again, my hon. Friend makes an extremely valid point. Reinsurance treaties were granted relatively routinely, but he draws attention to, in effect, the difficult relationship that existed between the regulators and the society over quite a long period, under the stewardship of the FSA, the Treasury and, indeed, the DTI before that, particularly in relation to guaranteed annuity rates.
  I should make it clear to the House that the Government sympathise with the plight of policyholders who have suffered not only much worry and distress over the past few years, but significant reductions in their expected income in retirement as a result of those issues. As I outlined to the House in my statement on 8 March, Lord Penrose finds that that weakening of the society was made possible by a culture of manipulation and concealment on the part of the company's previous senior management. The report details how executive management failed to keep the board fully informed about the true state of the company's financial position.
  Mr. Mark Francois: The Financial Secretary will be aware that hundreds of thousands of people around the country are suffering as a result of

  979
  that extremely unfortunate situation. Those people acted in good faith and have done nothing wrong. What have the Government got to offer them, other than sympathy?
  Ruth Kelly: The key conclusion to draw from Lord Penrose's report is not only the one to which my hon. Friends have pointed—
  "Principally, the Society was the author of its own misfortunes"?
  as Lord Penrose says—but that, as he also says:
  "If the proposals in hand for the future of the new regulatory regime are implemented and if they are effective in practice, the major criticisms of the earlier regulatory regime will have been addressed both in relation to the general approach to regulation and in relation to the particular issues arising from discussion of regulation of the Society."
  So policyholders throughout the country, both in the society and in other life assurance societies, as well as in financial services more generally, can be reassured that Lord Penrose himself concludes that the FSA reforms introduced by this Government, which started in 1997, were the ones that have put the regulatory system on to a fair basis and that can address these issues.
  Mr. David Ruffley: Although Lord Penrose states that the society was the author of its own misfortunes, he goes on to say:
  "Regulatory systems failures were secondary".
  Does the Minister accept the proposition that a secondary cause can none the less be a significant issue? The fact that a cause is secondary does not mean that it is non-existent. Should not the Government take some responsibility for that secondary cause, which was a failure?
  Ruth Kelly: I shall deal with the regulatory system failure in great detail later in my speech. Profound lessons for the House arise from Lord Penrose's report, and I am sure that when the hon. Gentleman reflects on its contents, he will also reflect on his role in these affairs.
  Lord Penrose states:
  "Substantial amounts of technical and financial information were provided to the Board…These failed fully to present the overall financial position of the Society, and in particular the risks inherent in the policies that were pursued in relation to bonus allocation".
  He finds that
  "the Board's understanding of the annuity guarantee issue was at best limited until the Autumn of 1997, and some directors may not have had any understanding of the position."
  He also states:
  "Arguably the first and most significant failure in this report lay at the heart of the Society…The Board at no stage got fully to grips with the financial situation faced by the Society: information was too fragmented, their collective skills were inadequate for the task, and there were no effective arrangements for ensuring that there was detailed examination of, and onward reporting to the Board on, actuarial reports."
  Lord Penrose notes that there were
  "executive directors with relevant actuarial qualifications but little or no relevant experience".
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  As for the board's non-executive directors, he notes that they
  "were so wholly dependent on actuarial input from the chief executive/actuary that they were largely incapable of exercising any influence on the actuarial management of the Society".
  Furthermore, he finds:
  "None of the non-executive members of the Board had relevant skills or experience of actuarial principles or methodologies".
  He states:
  "the non-executive directors generally had a poor understanding of the Society's developing financial position."
  He goes on to describe the board as a
  "self-perpetuating oligarchy amenable to policyholder pressure only at its discretion."
  Mr. David Drew: The issue of the role of non-executive directors is not limited only to Equitable Life. We have seen numerous reports on what needs to happen with regard to that role. Are the Government now looking seriously at the matter, not necessarily in terms of legislation or regulation, but to seek to find some arrangement with the City so that we can sort things out once arid for all?
  Ruth Kelly: My hon. Friend makes a good point. The Department of Trade and Industry recently discussed in the course of preparing the Companies (Audit, Investigations and Community Enterprise) Bill the respective responsibilities that non-executive directors should be expected to have. The Government are actively taking that issue forward.
  Lord Penrose describes how the management also failed in its obligations to disclose full information to its own policyholders and to the regulators. He finds that the management of the society fixed on the differential terminal bonus policy as early as 1983, but did not inform policyholders for more than a decade. He says:
  "The policy was not disclosed to policyholders by direct communication, in any way, until 1996…Failure to disclose this intention must be regarded as a serious omission in communication to policyholders of relevant information about their prospective interests from at least 1988, and arguably from the time in the early 1980s that management first took that decision."
  Even when the company decided to inform policyholders in 1996, it was done badly. Penrose states:
  "Attempts were made to change expectations in 1996 and later years. These were ill-conceived, poorly expressed and confusing. The intimations to policyholders were generally uncommunicative."
  As for the society's approach to the regulators in that period, Lord Penrose notes that Mr. Ranson, the appointed actuary from 1982, and both chief executive and appointed actuary of the company between 1991 and 1997, was "frequently aggressive" in his dealings with regulators, "dismissive" of regulators' concerns and "obstructive" of scrutiny. The regulatory returns were, Lord Penrose says, "opaque and uncommunicative", and
  "failed to identify in value the growing guaranteed obligations that resulted from a combination of falling interest rates and lightening mortality."

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  Lord Penrose therefore argues that primary responsibility for the society's problems lies with the society and its former management, saying:
  "Principally, the Society was the author of its own misfortunes."
  Lord Penrose makes it clear that Equitable Life was unique. As I told my hon. Friend the Member for Dumbarton (Mr. McFall), Lord Penrose says:
  "The Society's uniqueness lay in the approach adopted by its management, not in the essential characteristics of its business."
  That unique management approach led to the fundamental weakening of the society, as its inherited estate was run down and ultimately became negative. Nevertheless, Lord Penrose's verdict on the regulatory system is perfectly clear.
  Mr. Andrew Love: Does my hon. Friend agree that the fact that the managing director, who directed the society, was also the appointed auditor led to a clear conflict of interest that should not have arisen?
  Ruth Kelly: My hon. Friend is right that a conflict of interest arises in that situation. It is precisely to avoid such a conflict of interest that reforms to the Financial Services Authority have been introduced to remove responsibility from the appointed actuary and place it firmly on the board of insurance companies, where it should properly be.
  Mr. Edward Garnier: I declare an interest as a former policyholder with Equitable Life. I still have one school fees policy, for the good that it does me.

  The Financial Secretary is giving us a précis of the Penrose report, which we can all read for ourselves, but she has not told us what the Government are going to do, having read the report. Will she do so, and if so, at what stage?
  Ruth Kelly: I shall tell the House about the way forward very shortly, but I thought it important to expose the contents of Lord Penrose's report to the House, as he makes some profound comments about the operation of the regulatory regime before the FSA was set up.
  Lord Penrose's verdict on the regulatory system is perfectly clear, as he says:
  "the regulatory system failed policyholders in this case".
  However, he adds:
  "regulatory system failures were secondary."
  He clearly states that it was
  "the system that failed to provide the regulation that changing circumstances in the industry required, not that there was failure to implement what was fundamentally a satisfactory system."
  He makes no allegation of maladministration or negligence against the regulator or individuals, and says:
  "I do not pin the blame on individuals, who in the main have operated in good faith and to the best of their abilities within the system as they found it."
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  Nor does he suggest that any individual regulatory decision led to economic loss by policyholders. Specifically, he notes that
  "it is not enough in this case to infer from the coincidence of systems deficiencies and loss that one caused or contributed to the other".
  The House should reflect carefully on the lessons that he draws about the nature of the reactive and underresourced regulatory system in place before 1997 and his key message that the regulatory system must be kept up to date to take account of industry developments. Lord Penrose states:
  "It seems not unreasonable to suggest that those in control of any supervisory regime have a duty…to take steps to ensure that the systems of regulation that are in force and enforced remain relevant to the changing requirements of the industry."
  Chris Grayling: The Financial Secretary is being careful to pin the blame on the regulatory regime before 1997, but is it not the case that in 1998 and 1999, after discussions had taken place in the Treasury and in the FSA about the financial viability of Equitable Life, Equitable Life salesmen were still visiting my constituents and selling them with-profits policies which ultimately caused them substantial loss? How can she therefore claim that all was well after 1997, after the reforms that her Government introduced, when palpably for my constituents that was not the case?
  Ruth Kelly: As Lord Penrose himself recognises, it is not possible to introduce a fundamental overhaul of a regulatory regime overnight. If the hon. Gentleman cares to consult the Penrose report he will see that it states that
  "the regulators persisted in a reactive stance in respect of PRE"—
  that is on page 722 of the report at paragraph 215. I quote further:
  "In day-to-day regulatory practice, officials operated within the constraints imposed by the existing system, and they had no alternative but to do so."
  The regulatory regime was in the process of being overhauled.
  As Lord Penrose says, the Equitable case argues strongly for a closer merging of
  "prudential and conduct of business regulation"
  and he says that while setting up the FSA
  "the need for greater regulatory resource had been identified for the Treasury."
  The House will no doubt be interested in the fact that whereas before 1997 there were 70 supervisors supervising 800 life companies, compared with 400 staff regulating 600 banks, that figure for the regulation of life companies has been doubled by the reforms that the Government introduced. The FSA has not only doubled the resources allocated to life insurance regulation, but significantly upgraded the personnel devoted to that task.
  Today I want to concentrate on the way forward, drawing on Lord Penrose's conclusions on the lessons learned from his investigation. We are continuing the process of regulatory reform that we began in 1997, pushing forward in particular the specific changes in the life insurance sector that the FSA has in train. In addition, we are acting on Lord Penrose's suggestions

  983
  for change in the areas of accounting standards, corporate governance of mutuals and the actuarial profession. Lord Penrose welcomes the FSA's regulatory reform, which, he says,
  "has sought to anticipate many of the lessons that might be drawn by this enquiry and it should come as no surprise that it has largely succeeded."
  Let me remind the House what has been achieved in this area over the past six years. On 20 May 1997, the Government announced major changes to the structure of financial services regulation in the United Kingdom. Those were implemented by means of the Financial Services and Markets Act 2000, which created a new framework for the regulation of financial services, providing clarity, fair competition and protection for consumers. The Act established the Financial Services Authority as the single regulator for the financial services industry, operating under a single coherent legislative framework, replacing nine different sectoral regulators. It also introduced a single ombudsman scheme to resolve consumer complaints and a single financial services compensation scheme. The major reforms that the FSA has since launched are in many cases changes that have been possible only because of the move to a fully integrated regulator combining prudential and conduct of business regulation.
  The main changes that the FSA has already introduced—apart from increasing the resource devoted to life insurance regulation—are first, moving to a single risk model to determine the allocation of the FSA's own resources, and secondly, breaking down the barriers between different types and areas of supervision. The largest companies are now supervised, whatever their principal line of business, on a group basis, so the major insurance groups are now handled by the FSA's major financial groups division, rather than by its insurance division.
  Moreover, the FSA has proposed significant changes to the role of the appointed actuary, some of which I have already outlined to the House. The FSA is also introducing, from this year and next, realistic reporting by life offices. The requirement to report assets and liabilities on a realistic basis includes a requirement to provide for accrued terminal bonus. Lord Penrose welcomes those proposals as
  "clear recognition of the importance of looking beyond a narrow concept of solvency".
  Bob Spink: That is all well and good, but my constituents want to know what the Government will do to give them the compensation that they both want and need. Lord Penrose said to the Treasury Committee that he did not consider it in his remit to discuss administration and compensation; he considers that to be the Government's remit. When will the Government come forward and offer the victims of Equitable Life some hope?
  Ruth Kelly: Lord Penrose definitely did not say in his evidence to the Treasury Committee that that was the Government's responsibility. He was clear that he accepted the conclusion that this was regulatory system failure, not operational failure. But as I outlined to the House, and have been outlining to the House, we have
  984
  set up a structure in which consumers have recourse, if they believe that they have an individual grievance, to the financial ombudsman service.
  Let me make it clear to the House that the issue that has been identified by Lord Penrose is not a simple one. It is an extremely complex legal and actuarial issue—about £3 billion of bonuses being paid out more than the company could afford over a period of 10 years or even longer. Lord Penrose says that his estimate is "crude", but he also says that the amount and whether this would lead to claims could be determined only by the courts. He is absolutely clear in his report on that point.
  Mr. James Plaskitt: Does my hon. Friend recall that when Lord Penrose gave evidence to the Treasury Committee a few days ago, he said that in order to prove blame it was essential to demonstrate breach of duty, and that that in his view was clearly the business of the courts?
  Ruth Kelly: My hon. Friend makes an extremely valuable point.
  Mr. Garnier: How does the Financial Secretary expect the damaged policyholders of Equitable Life to afford to get to the court?
  Ruth Kelly: The first point to make is that Lord Penrose considers this to be such a complex issue that it can be determined only by the court. He is absolutely clear on that point. I have described the structure set up, which includes the financial ombudsman service to adjudicate on individual policyholder complaints, and if people feel that they have an individual grievance, they could take advantage of the structure that we have set up to present their claim. It would then be up to the financial ombudsman to decide whether it was an issue that he could consider, or whether it would be better determined directly by a court of law.
  Mrs. Angela Browning: I realise that the Financial Secretary may not wish to comment on the solvency of Equitable Life at the moment. It says that it is solvent, but if all the policyholders follow the route that she suggests through the ombudsman, she must surely address the question, which is very real, that Equitable Life may not remain solvent if it has to meet all those demands. What is her assessment of the impact that that will have not just on Equitable Life, but on all the other life companies that may well have to contribute to the fund that will be needed to pay out?
  Ruth Kelly: Equitable Life—it is an important point—has made it clear that it disputes entirely the analysis and the factual basis of the content presented by Lord Penrose on the over-allocation of bonuses throughout this period. It is an extremely complex legal and actuarial issue, upon which different actuaries will undoubtedly have different views. Equitable Life is clear that it is currently solvent and the FSA has no basis on which to override that view.
  Mrs. Jacqui Lait: Will the Financial Secretary address herself to the issue of how this matter will get to the court? Who will be able to afford to take a case to the courts?
  Ruth Kelly: Clearly, it is up to individuals and categories of individuals to decide what they want to do on the basis of the analysis presented by Lord Penrose. As I have said, there are different interpretations both about the facts and the interpretation of those facts leading to his analysis that £3 billion of over-bonusing took place within that time scale. He says that the issue is so difficult that only the courts can determine it, but policyholders must decide on the basis of advice what is in their best interests.
  Sir Peter Tapsell: The paradox of the situation is that the policyholders would be better off if the society became insolvent, in which case, as I understand it, the Government would have to pay them 90 per cent. of their promised benefits. Is that not the case?
  Ruth Kelly: I was about to come on to the proposals set down by the Financial Services Authority, which are currently out for consultation, to ensure better treatment of customers by firms. The hon. Gentleman makes a point about what is currently in the best interests of customers, and the society is absolutely clear that its continuing in business is in the best interests of current policyholders. As I have said, the society is confident that it is solvent.
  From next month, firms must also publish a statement of their principles and practice in financial management, setting out how they manage their with-profits funds.
  Mr. Redwood: I am grateful to the Minister for giving way, because many people are concerned about the matter. Is it not the case that what she now says—that the company is solvent and that, as the regulator, the FSA is happy with it—means that she does not think that anybody has a legitimate claim against the company, and that she does not think that anything wrong has happened, because the Government are still not taking regulatory action?
  Ruth Kelly: I have said nothing of the sort. I have set out the facts as presented by Lord Penrose, who says that his estimates are necessarily "crude". Lord Penrose has also said that the issue could be determined only by a court of law. I do not want to pre-empt a judgment by a court of law or, indeed, any judgment made in another setting.
  Mr. Andrew Tyrie: The Minister says that the policyholders who have been hit should consider going to court. Let us suppose that they go to court and win: who would pay the bill and where would the money come from? In that case, the money would come straight from Equitable Life, so, in other words, it would be robbing Peter to pay Paul. Is she not, therefore, holding out false hopes to hundreds of thousands of policyholders?
  Ruth Kelly: I am not holding out false hopes; I am not saying anything of the kind—I am presenting the situation as Lord Penrose found it.
  Dr. Vincent Cable: Before the Minister develops her points about the need for litigation, is she aware that all the policy makers who were members of the with-profits scheme in February 2002—in other words, the people who ratified the scheme—were required to sign away their right to go to court or the financial ombudsman? None of those members has any possibility of pursuing legal action.
  Ruth Kelly: Although I do not like to get involved in legal matters—as the hon. Gentleman is no doubt aware—there are various legal interpretations of that point.
  I am confident that the root-and-branch reform of insurance regulation that I have described will result in the industry becoming more transparent and accountable, and with the financial resources to meet fully the reasonable expectations of its policyholders. I am also confident that the introduction of the stakeholder suite of more simple and transparent saving and investment products, which the Treasury is currently developing in conjunction with the FSA, will provide the life industry with products that are attractive to consumers and that will also help to improve the transparency and accountability of the industry.
  The reform of the regulatory system has been strongly endorsed by Lord Penrose, who said:
  "If the proposals in hand for the future of the new regulatory system are implemented, and if they are made effective in practice… the major criticisms of the earlier regulatory regime will have been addressed".
  Speaking of the FSA's response to the lessons learned from Equitable Life, Lord Penrose said in his recent evidence to the Treasury Committee:
  "my clear impression is that the approach now being adopted is a very considerable improvement on what there was before".
  Looking ahead, Lord Penrose points to the need to reform accounting standards for the life assurance sector, and states:
  "The fundamental problem with the statutory accounts of any life office is that the accounting professions have failed to develop acceptable accounting standards for the preparation and presentation of accounts of long-term business that require realistic accounting on a consistent basis…what is required are practical standards of general application."
  As I announced on 8 March, I have asked the Accounting Standards Board to carry out an urgent study of accounting for with-profits business within the accounts of life insurance companies. The study will address the accounting framework for with-profits business, including provision for disclosure of terminal bonus. The study is particularly timely, as it will enable an assessment to be made of with-profits accounting against the background of recent developments in realistic accounting within the FSA regulatory regime.
  Although, as Lord Penrose pointed out, the problems at Equitable Life arose as a result of particular circumstances in place during the inquiry period, the report raises important questions for the governance of mutual life offices in general. The Government see no reason in principle why boards of mutual life offices should not be as accountable to their members as those of comparable companies are to their shareholders. On 8 March, I announced that I have asked Paul Myners to

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  lead a review into the corporate governance arrangements applicable to mutual life offices. The review's terms of reference are to:
  "Consider the governance framework for mutual life offices in comparison with that for comparable companies (and, where relevant, for listed companies). Where appropriate, bring forward recommendations to ensure that boards of mutual life offices are as accountable to their members as boards of comparable companies are to their shareholders."
  Mr. Love: I welcome the Myners review. My hon. Friend will be aware that the articles of Equitable reflected company law in that 10 per cent. of the members were needed to requisition special business, but that was an impossible task because its membership was so large. Its memorandum and articles meant that it had a self-selecting board of directors. Does my hon. Friend agree that we need to ensure that policyholders are protected and that they are consulted before actions are taken in the society?
  Ruth Kelly: Although I do not want to prejudge the results of Paul Myners's inquiry into the accountability of mutual life offices, my hon. Friend draws attention to a particularly important point. We need to ensure that mutual life offices are as accountable to their policyholders as possible.
  The review will consult as widely as possible, taking into account the recent experience of other mutuals in this respect in developing its conclusions and recommendations. As the governance of mutual life offices has much in common with that of other mutual societies, the review may, where appropriate, develop general governance principles for other types of mutual, taking into account the particular characteristics of other parts of the mutual sector. The review will deliver a report, with recommendations, by the end of 2004.
  Mr. Geoffrey Clifton-Brown: Will the Financial Secretary give way?
  Ruth Kelly: I must continue with my speech.
  Actuaries play a vital role in the financial services industry and, as a profession, have placed admirable emphasis on high standards of technical ability, knowledge and integrity. However, Lord Penrose makes it clear in his report that it is not enough to rely on that. He makes a number of general criticisms of the actuarial profession, drawing on his findings in relation to Equitable Life. Clearly, a modern professional or regulatory framework is necessary. As I announced on 8 March, Sir Derek Morris will lead a wide-ranging review of the actuarial profession. It will start on 1 May, following his retirement from the Competition Commission. The review's terms of reference are:
  "Consider what professional and/or other regulatory framework would best promote recognised, high-quality and continuously developing actuarial standards, openness in the application of actuarial skills, transparency in the professional conduct of actuaries, accountability for their actions and an open and competitive market for actuarial advice in the UK."
  Mr. Clifton-Brown: Will the Financial Secretary give way?
  Ruth Kelly: On the subject of actuaries, I give way for the last time.
  Mr. Clifton-Brown: One of the items that Penrose identified was the obstructive nature of the actuary at Equitable Life. He also identified the paucity of function of the non-executive directors and the problems involving the auditor. Clearly, there were service failures by the regulator in relation to Equitable Life. Have the Government considered whether, instead of a protracted court procedure, it might be better to have a one-off payment for affected policyholders on the basis that the regulator would not be held liable?
  Ruth Kelly: I do not think that those were the conclusions drawn by Lord Penrose's report. He is absolutely clear that this is not a question of individual regulatory failure, but of regulatory system failure and the policy that prevailed. The House should reflect carefully on what Lord Penrose has written in that regard.
  Lord Penrose's report provides a full and detailed account of the developments at Equitable Life over a long period. In doing so, it has provided us with a clear explanation of how the society got itself into financial difficulties, and clear pointers to the way forward. One of the key lessons that he draws from his work, with the benefit of hindsight, is that the regulatory system in place before 1997 was inadequate and unable to keep pace with changes in the financial services industry. Since 1997, this Government have radically overhauled the regulatory system that we inherited. We will ensure that that system remains fit for the purpose.
  6.40 pm
  Mr. Oliver Letwin: I do not think that the many hundreds of thousands of people who have been adversely affected by this saga will take much comfort from what we have just heard. I shall begin by declaring an interest, as the member of a family that is among those affected. I intend to pursue this issue over the coming months and, for the avoidance of doubt, if at any time, now or under a future Government, any compensation becomes payable to my family, it will go to charity.
  I have to enter a note of surprise and regret that the Chancellor is not here this evening. It is a pity that he has not chosen to speak in this debate, and that he is not here to listen to it. It is also a pity that he has not taken any part in the proceedings, and that he has never been willing to have anything to do with the subject. The people who have suffered from these events will take their own note of that.
  Mr. Plaskitt: While we are on that point, will the right hon. Gentleman tell us why he was not here to reply to the statement on this matter?
  Mr. Letwin: I was here throughout those events, after about the first three minutes. I have chosen to reply to the Minister today precisely to indicate that we treat this matter with the greatest possible seriousness, although all my hon. Friends on the Front Bench are more than capable of answering the Minister. Indeed, my hon. Friend the Member for Chichester (Mr. Tyrie) will be

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  winding up. The Treasury Bench appears to have only one Minister interested in the subject; I believe that she will also be winding up. That is a disgraceful state of affairs, on which the hon. Member for Warwick and Leamington (Mr. Plaskitt) should reflect. [Interruption.] The Chief Secretary should not rumble from a sedentary position, as he was yesterday being remote controlled by the Chancellor, although not very effectively.
  The Minister has made an argument, of which I take note, and I shall recapitulate it briefly. Putting together what she said today with what she said in her statement, we see that the shape of that argument is perfectly clear. She argued that this failure happened primarily because of management, and that regulatory failure was therefore only a secondary cause. She then argued that all such regulatory failure was pre-1997, and that it was entirely due to a light-touch regime rather than to any operational failure. She argued that there was therefore no need for Lord Penrose, the ombudsman or anyone else other than the courts to look at the question of maladministration, and that there was therefore no need for anyone other than the courts to investigate whether anyone was owed compensation.
  As the courts will only award compensation against other policyholders and—as a fascinating earlier exchange revealed—people will probably need a lawyer to discover whether they can go to court in the first place, there is very little chance of their obtaining any compensation. The Minister has repeatedly argued in her statement and in public that all of that is utterly different from Barlow Clowes because there is now a compensation scheme. That is the Financial Secretary's argument, although it did not take me 40 minutes to put it to the House. That is all that she has ever said.
  Let us go through that argument step by step. Is it true that the Penrose report reveals that the primary cause of the failure was management? Yes. I hope that the Financial Secretary will take comfort from that; it is the one part of her argument that is perfectly accurate. Secondly, is it true that the Penrose report concludes that the regulatory failure was only secondary? No, it is not. The Penrose report indeed indicates that it was secondary, but what does it mean by secondary? It is very clear: had the management not mis-performed and had the society been in good shape, the existence of a regulatory problem would not have been a difficulty for policyholders. We accept this, of course.
  If a fragile piece of glass is not broken, the fact of its fragility is not a problem, but in this case the glass was broken and fragile. The reason, in part, for that fragility was regulatory failure. The regulatory failure was a necessary—[HON. MEMBERS: "System failure."] I shall come to the system question in a moment. I hope that Labour Members hold their fire, because they are about to hear what Lord Penrose has to say about that. Regulatory failure in this case contributed to the problem and it was a necessary cause of the problem. Had regulation been perfect—had it even been good—in Lord Penrose's view the outcome might have been different.
  Lord Penrose does not—in this, the Financial Secretary is quite right—say how much regulatory failure contributed to the appalling problems that arose or how responsible those problems are. He goes on to explain that that is because he was precluded from
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  making those judgments. That is very different from him having concluded that it was not of importance; he was precluded from considering that question.
  Next, is it true—this is the most dull and tedious of all the Financial Secretary's arguments—that all the failure was pre- 1997? No, that is not what Lord Penrose says. In relation to 1998, he says
  "GAD's approach over this period seems to me to have been persistently naive".
  In relation to 2000, he says that in
  "the specific circumstances of the Society at the time one might reasonably have expected that more would have been done to test the assumption that the profits would emerge."
  Again in relation to 2000, he says that
  "the FSA and GAD were incapable of making an independent assessment of the Society's prospects of sale because of their lack of knowledge and understanding of the totality of the Society's business."
  Finally, in relation to January to July 2000, he says that
  "little was done by the FSA in relation to the court case between the Court of Appeal judgment in January and whispers of the possible outcome in June and July of the House of Lords' hearings."
  Those are all events post-1997. Do I therefore conclude that this Government are the object of criticism? No, because unlike the Financial Secretary I have no interest here in playing politics. Do I conclude that pre-1997 there were no failures? I do not. I accept that there were failures before 1997. This is a failure of British government and a failure, regrettably, of government under two separate Administrations. On this, the only clean hands in the House, alas, belong to those who sit on the Liberal Democrat Benches, because they have not been in government. Very likely, had they been in government, they also would have been responsible for this failure, but I have to admit that they did not get the chance to be responsible.
  Mr. Nigel Beard: Does the right hon. Gentleman not recognise that Lord Penrose speaks of a system failure, not a failure of the operators, and that the system was put in place by the Government he supported and was supported by the majority in Parliament, who were Members from his party? That shows the barrenness of the philosophy of light-touch regulation, which did no service to the Equitable policyholders or to the financial services industry generally.
  Mr. Letwin: In a moment or two, the hon. Gentleman will regret those remarks. Let me deal with both in turn, because they indeed relate to the next point in the Financial Secretary's argument, and both are false.
  I will read the hon. Gentleman some passages from the report—there are many—that indicate that Lord Penrose, in clear and absolute contradiction to the Financial Secretary, repeatedly points to operational failures as opposed merely to system failures, though he indeed believes that there were also system failures for which our Government were partly responsible. I am not playing politics; I am telling the hon. Gentleman and his colleagues what is in the report, rather than inventing a further version of it.

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  At paragraph 240 in chapter 19, Lord Penrose tell us:
  "There was a general failure on the part of the regulators and GAD".
  At paragraph 158 in chapter 19, he describes the Department of Trade and Industry, the Treasury and the Government Actuary's Department as "complacent".
  In paragraph 171 of the same chapter, he describes the failure of the regulator
  "to appreciate that a change of valuation assumptions had real implications".
  In paragraph 187, he describes
  "short-term objectives related to support of solvency that should have alerted regulators to the Society's weakening position".
  In paragraph 209, he tells us that
  "information was not used to form a realistic appraisal of the society's financial position".
  In paragraph 228, he tells us that
  "unsatisfactory answers were accepted without follow up".
  The hon. Member for Bexleyheath and Crayford (Mr. Beard), whom I have encountered on various occasions in the House, is intelligent and honest enough to recognise that those are operational failures. They occurred partially under our regime, and partially under the regime of the Financial Secretary and her colleagues. They were operational failures, however, not ministerial failures, and not parliamentary failures.
  Mr. Redwood: Does my right hon. Friend accept that the Financial Secretary contradicted herself, because she said that this was a system failure by regulators? She then said that Equitable Life was unique it was the only one that went wrong, it was the only problem child. It is beyond belief that there could be a serious system failure of regulation, over a period of 10 years or more, and only one casualty. Surely it must be the case that the main regulatory failure was specific regulation failure of that company.
  Mr. Letwin: My right hon. Friend, as always, makes an extremely powerful point. Another fascinating point emerged today for the first time, I think. The Financial Secretary lauded the Government for having improved the personnel who were regulating. Why would it be necessary to improve the personnel who were regulating if there were no failures on the part of the personnel who were previously regulating? Those are obviously operational failures—[Interruption] The hon. Member for Warwick and Leamington chunters from a sedentary position about system failure. According to the Financial Secretary's statement, if personnel were implicitly not up to the job, that indicates that they were doing something wrong at the operational level.
  Ruth Kelly: The right hon. Gentleman is making a very interesting argument about operational failure. In the context of his remarks, however, can he explain to the House this quote—I do not paraphrase—from Lord Penrose, who says it was,
  "the system that failed to provide the regulation that changing circumstances in the industry required, not that there was failure to implement what was fundamentally a satisfactory system"?
  Mr. Letwin: The problem with the Financial Secretary's argument is that because she is playing party
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  politics, she refuses to acknowledge what is clear, and what I have acknowledged: there were system failures. Were I denying that there was a system failure, she would have something to say. But I have not denied it. There was system failure, and operational failure, and I have just listed six cases in which Lord Penrose points specifically to operational failure.
  Mr. Plaskitt: Will the right hon. Gentleman give way?
  Mr. Letwin: No, I am going to answer the other part of the point made by the hon. Member for Bexleyheath and Crayford, if I may. The next thing that he said was that it was all light-handed regulation that was at fault, which the Financial Secretary has said on repeated occasions. The fact that it was light-handed may have partially been at fault. It is therefore of great interest that the right hon. Member for Darlington (Mr. Milburn)—not a Conservative Member, and not a Minister in our regime, but a Minister at the time in the Financial Secretary's Government—said about the nature of the regulatory regime on 28 June 1999, at column 39:
  "There will be a light touch where possible…The Bill avoids over-burdensome regulation that would serve only to stifle innovation and to increase consumer costs. Instead…the FSA will be under a duty to demonstrate that the burdens that it seeks to impose are proportionate to the benefits that will result."—[Official Report, 28 June 1999; Vol. 334, c. 39.]
  It does not therefore pay to insult the many hundreds of thousands of people involved by engaging in the petty party politics of claiming that light-handed regulation, which may have been partly to blame, and system failure, which was certainly partly to blame, is exclusively the problem of one Government or the other.
  Mr. Beard rose—Mr. Beard rose—
  Mr. Letwin: The truth is that there was system failure, which occurred under both Governments, and there were operational failures, which occurred under both Governments. That is the conclusion to which any ordinary person reading the Penrose report would come.
  Mr. Barry Gardiner: Does the right hon. Gentleman want the Government to compensate Equitable Life policyholders? Is that his party's policy, and what does he think it would cost?
  Mr. Letwin: That is the point I was coming to—the question of maladministration. As I have said, the Financial Secretary's assertion is that because, as she wrongly asserts, there was no operational failure and because, as she wrongly asserts, it was all a long time ago, there is, in her wrong estimation, no reason for an investigation into whether there was maladministration, and hence no need for anyone to ascertain whether compensation is payable. Our view is that there should be such an investigation, that there needs to be such an investigation, that Lord Penrose did not conduct such an investigation because the remit under which he was operating specifically precluded him from doing so, and that it is therefore appropriate for the parliamentary ombudsman's remit to be extended to include the

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  Government Actuary's Department so that she can conduct a proper investigation and identify whether there was maladministration, or for the Government to ask Lord Penrose to extend his remit to engaging in an investigation. or for the Government to find another suitable means of conducting it.
  This is the Financial Secretary's position. She does not know whether there was maladministration, because she did not ask Lord Penrose to find out so he did not feel enabled to tell her, and she does not want to know whether there was maladministration because she does not want to know whether following maladministration there would be compensation. The reason she has been put up to present the specious argument that she has presented is that the Chancellor does not want to find out whether compensation would be payable.
  Ruth Kelly: How does the right hon. Gentleman react to a statement made by Lord Penrose to the Treasury Committee only last week? He said
  "I do not identify any respect in which I recognise limits on what I was able to do."
  Mr. Letwin: What is odd is that in the report Lord Penrose makes it perfectly clear that he had not the remit to investigate maladministration.
  Ruth Kelly: What about the courts?
  Mr. Letwin: We will return to the courts in a moment. As the Financial Secretary well knows, the courts are not an answer.
  Let us test the Financial Secretary's bona fides in a perfectly straightforward way. If it is the case that Lord Penrose was perfectly able to investigate maladministration and if the Financial Secretary has nothing to fear from an investigation of maladministration, will she now—by making a small change in a statutory instrument—allow the parliamentary ombudsman to investigate maladministration?
  Ruth Kelly: It cannot be done.
  Mr. Letwin: Ah! The Financial Secretary says, from a sedentary position, that it cannot be done. We will provide the Financial Secretary with the means of doing it in the House, and see whether she accedes to that. The fact is that the Financial Secretary and her colleagues do not want an investigation of maladministration, and I think that that is a disgrace.
  Mr. Garnier: The Library briefing paper on the matter reports
  "The Inquiry board did not have as part of its remit the responsibility of making recommendations about compensation, indeed the remit is quite narrowly restricted to, as Ruth Kelly's letter made clear:
  "identify any lessons to be learned for the conduct, administration and regulation of life assurance business; and to give a report thereon to Treasury Ministers."
  The Financial Secretary's letter was written to thank Lord Penrose for taking on the job of holding the inquiry.
  Mr. Letwin: I am grateful to my hon. and learned Friend, who with his normal forensic ability has pointed to the relevant evidence.
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  Finally, let us turn to the question of compensation and Barlow Clowes. This is one of the most extraordinary features of the Financial Secretary's argument. In fact, it is so extraordinary that as far as I could make out, although she spoke for a long time, she did not include it today. She included it in her original statement, however, and she has been making it in broadcasts repeatedly. It is the argument that somehow we need not worry about whether there is maladministration and we need not have an investigation into whether compensation is due as a result of maladministration, because there is a compensation scheme now in existence. Well, there is a compensation scheme now in existence, and it relates to insolvency.
  The effect of compensation following insolvency is to restore people to the position that is absolutely guaranteed to them, which is a great way below what people have a reasonable expectation of otherwise receiving. The Financial Secretary knows that very well, and she therefore knows that unless horrors strike the society, the existence of the compensation scheme is a complete irrelevance to the many people whose reasonable expectations have not been fulfilled. That, I fear, is another disgraceful aspect of the Government's position.
  Mr. Forth: Is it not the case that if policyholders followed the Financial Secretary's advice, they would end up, in effect, suing themselves?
  Mr. Letwin: Suing themselves or suing one another, which is not fair, right, just or decent. If there was
  regulatory failure and there was, because Lord Penrose shows it—and if there was operational failure, which Lord Penrose also shows, and if those occurred through two Administrations, as they did, it is reasonable that there should be a proper investigation of maladministration.
  Mr. Beard rose—Mr. Beard rose—
  Mr. Letwin: I shall not give way because I am just concluding.
  It is reasonable and possible to have a proper investigation into maladministration, and such an investigation would establish whether there were or were not grounds for compensation because it would establish the extent to which the maladministration caused the defect for policyholders. The Financial Secretary cannot reasonably debar that further investigation, and I hope that in some months' time, with whatever kicking and screaming, she will accede to that request.
  7 pm
  Dr. Vincent Cable: I express my appreciation for having the opportunity to speak on this subject on a somewhat more level playing field than we had at the time of the Minister's statement—she had then had 11 weeks to peruse the report, whereas we had had a couple of hours. I should like to say at the outset that I identify myself with the Conservative shadow Chancellor's comments on the absence of the Chancellor of the Exchequer. This is an important issue,

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  and he should be here. That is no reflection on the Financial Secretary, who is an able Minister who clearly understands the subject and debates the points well, but my point is that the Chancellor should be here.
  The Chancellor has shown a selective interest in issues of financial regulation. I recall responding to a statement that he made on Sandler products, which was not exactly at the front rank of public controversy on financial regulation, and when in opposition, he took a close interest in matters of financial regulation in relation to the BCCI and Barlow Clowes. His absence today suggests one of two things: he is very embarrassed, or he is not interested. Either of those reasons is unacceptable.
  Before we plunge further into the technicalities of Penrose, it is important to reinforce the basic message that we are talking about human beings who have suffered much distress and loss, many of whom are perfectly ordinary constituents. It works out on average that we all have about 1,500 affected constituents, many of whom were not sophisticated investors or they would not have been in Equitable Life in the first place. Equitable Life's reputation as a secure, reliable fund was what drew many people to it who wanted a source of security.
  The Penrose report raises two fundamental issues, and the right hon. Member for West Dorset (Mr. Letwin) dealt with one of them at length, very clearly and correctly. That is the distinction between the failure of the regulatory system and the operational failure of regulation. It is abundantly clear on any reading of the report—it was clear when the report was first published—that both are involved. We could debate endlessly whether their relative involvement was 50:50 or 75:25, but both were clearly involved. In the penultimate paragraph of the report, in which Lord Penrose brings his thoughts to a conclusion, he brings both those concepts together, making the point in one paragraph with admirable clarity. It says, and this was the point that the Financial Secretary made:
  "As for the regulatory system, I do believe that it has failed policyholders in this case."
  The system failed—Lord Penrose is absolutely right. However, he then goes on to make a point that clearly has weight in his mind, because these are almost the last words in the report:
  "But I do take the view that the system itself was not overseen, and in particular was not kept up-to-date, and operated in an ineffective manner."
  The system operated ineffectively—there was operational failure. The word is the same.
  The second key insight of Penrose, to which the right hon. Member for West Dorset did not refer, but which needs to be stressed, was that the main failure was not the failure created by guaranteed annuities in the House of Lords, although many of us had assumed all along that that was the ultimate source of the problem. The problem that Penrose and some action groups identified was that of prolonged large-scale over-bonusing. In effect, there was a pyramid selling scheme. I am not an expert in finance, but those who are tell me that there is a technical phrase for it: a Ponzi pyramid selling scheme. In terms of the broader argument, the significance of
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  that is that one can argue that it was just about understandable that the management—and certainly the regulators—did not guess correctly which way the House of Lords would jump in a highly contentious ruling. In fact, Penrose does not argue that case, but he could have. However, it was completely unforgivable and unacceptable for the management and those who were supposed to be overseeing and regulating the scheme to administer what was a pyramid selling scheme for 10 years.
  To reinforce the point that has already been made, the report is replete with references to operational failure. I need not read it in detail; rather, I shall pick out a few key summary passages, some specific and others general. I shall read verbatim one key conclusion from the final chapter, because it captures its spirit:
  "There was a general failure on the part of the regulators and the GAD to follow up issues that arose in the course of their regulation of the Society, and to mount an effective challenge of the management."
  How can that possibly be interpreted in any way other than as concluding that there was an operational failure? It is an explicit and completely unqualified conclusion.
  There are numerous instances of the Penrose report's picking up on particular operational failures on the part of the regulators. For example, it refers to the regulators failing to pick up on the company's admission that it was not reserving for its guarantees. It refers to
  "a serious lapse in regulation…Any reasonably diligent inquiry would have elicited"
  the necessary information. The report proceeds to discuss the episode following the period in which the regulators had been alerted to the existence of the annuities guarantee. It says that they knew about the problem in 1993, and states that
  "the approach of the GAD and regulators remained the same",
  even
  "when they were aware that the Society's financial position was weak and that there was a need for vigilance in scrutiny and supervision."
  This is all about operational matters and the way in which regulation was conducted; it is not about the system.
  Mr. Plaskitt: The report does indeed make these individual observations, but what does the hon. Gentleman makes of Lord Penrose's statement in paragraph 29 of chapter 20? He stands back and sums it all up as follows:
  "The thrust of my criticism is that…it was the system that failed to provide the regulation the changing circumstances in the industry required."
  Dr. Cable: I am not disputing that. Both the Conservative spokesman and I fully acknowledged at the outset that the system clearly failed, but it is also true that there were many incidents of very specific, as well as general, negligence. The issue is the importance of that in the overall scheme of things. We shall come later to the question, which has already been raised, of who is to decide whether that in its totality amounts to maladministration, because we have yet to reach that point.
  Chris Grayling: The hon. Gentleman is absolutely right to make that point, and in that regard I was

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  astonished by the Financial Secretary's intervention on my right hon. Friend the Member for West Dorset (Mr. Letwin). The hon. Gentleman will be aware that Lord Penrose says the following in the postscript to his report:
  "Many readers of this report will be frustrated that it has not provided answers to two questions: who is at fault for the problems encountered by the Society, and who deserves redress as a consequence. It has been no part of this inquiry to attempt to answer either question."
  Surely that alone puts a stamp of endorsement on the request from all sides for the ombudsman to look at this issue.
  Dr. Cable: Yes, although I am not sure that the ombudsman constitutes the right mechanism, the logic of what the hon. Gentleman says is right.
  Certain issues relating to regulatory failure were not even covered in the Penrose report because there was so much material around. One such issue was drawn to my attention by a consultancy company called Thesys, which attempted to brief Lord Penrose but did not succeed. It made the point that a series of insurance laws and regulations were issued in 1958, 1973 and 1983, as a result of which "schedule 5" provisions were established. Those provisions were an arrangement whereby the Department of Trade and Industry collected data with the specific purpose of enabling independent assessments of whether insurance companies were actuarially sound.
  In the early 1990s, the schedule 5 forms stopped being filled in. The regulators decided that it was inconvenient or too onerous to collect that information. If one wanted to be party political about it, one could say that Lord Heseltine was the Secretary of State for Trade and Industry at the time and so was somehow responsible for what happened. Indirectly, I suppose that he was. Clearly, however, an operational decision was taken to stop collecting data that were crucial to identifying the failures that subsequently emerged. It was essentially an operational failure—one that even Lord Penrose has not detected.
  We then come on to the question of maladministration—what it means, and its significance. I have been careful—I note that the right hon. Member for West Dorset was also careful—to make it clear that we are not asking the Government to get out their cheque books and sign blank cheques to large numbers of people because of their losses. That would be inappropriate, because we first need to establish whether maladministration has taken place. I do not yet know whether it did; the report did not reach a conclusion on that.
  Mr. Gardiner: I am trying to follow the hon. Gentleman's argument carefully. Would he not have to show not only that there had been maladministration, but that that maladministration had been relevant to the failure? It is not enough to say that there were operational errors in which those applying the regulations failed to apply them properly. It is necessary to show that they failed to apply relevant regulations in such a way as to precipitate the position with which we now have to deal.
  Dr. Cable: I would not dispute that perfectly sensible point. That would be the purpose of the next stage of the
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  inquiry—to establish whether the maladministration was indeed relevant and central to the failure or otherwise. I entirely accept the hon. Gentleman's valid point.
  We must be absolutely clear—the Financial Secretary was not—about Lord Penrose's assessment of his own role. At the end of the report, Lord Penrose clearly states:
  "The jurisdiction to adjudicate on regulatory failure in duty is not mine."
  He makes it absolutely clear that that was not his job. He has not exonerated the government—I mean with a little "g"—of maladministration; he did not reach a decision on it.
  There are different ways of following the report through. The normal procedure would be to go to the parliamentary ombudsman, which is what the right hon. Member for West Dorset suggested. That is what has happened in the past, but there are some practical reasons for not doing that. It would certainly take up much of the parliamentary ombudsman's time: the Barlow Clowes case took more than a year, and as the Chancellor said at the time, it took a year to establish what was already known. The ombudsman has already looked into this problem, but not with great success—indeed, many of the key points were subsequently contradicted by Penrose. I believe that there is a simpler way of dealing with it.
  Mr. Beard: Has not the parliamentary ombudsman said that she could find no instances of maladministration? That is why she found as she did. Surely that demolishes the elaborate case that the hon. Gentleman is attempting to build up.
  Dr. Cable: As I recall it, the parliamentary ombudsman was examining the period covered by the Baird report with respect to the role of the Financial Services Authority. Most of the maladministration seems to have occurred in the early and mid-1990s. That is the period that someone would have to investigate. If it were not to be the parliamentary ombudsman, who would it be?
  My suggestion is simple and practical. The Chancellor or the Financial Secretary could simply write to Lord Penrose, asking him—because he was immersed in the subject—to provide a judgment on whether or not maladministration took place. He could be asked to respond within three months. If the Financial Secretary is right, I suspect that he would reply, "I don't need three months. I don't need to spend my time and your money because I don't believe there is any maladministration." Why cannot the Financial Secretary take that small additional step to clarify and prove her point?
  Ruth Kelly: If the hon. Gentleman had spent more time on the concluding chapters of the report, he would have seen that Lord Penrose said:
  "An open adversarial process such as would have been necessary to replicate the litigation process over the longer period and the wider range of issues would have been beyond contemplation."

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  He also said that, if he had gone down the route that the hon. Gentleman suggests, he could not have concluded his inquiries within a time scale that had regard to the public interest.
  Dr. Cable: It is difficult to understand why Lord Penrose would have been constrained, as all the information is in the public domain and is set out at great length in the report. That is the raw material that would have been available to the parliamentary ombudsman, who also would not have been able to call on further information.
  Mr. Garnier: Is the hon. Gentleman not puzzled by the Financial Secretary's intervention? She has suggested that people should take their disputes to court, but would not that mean that she was multiplying—in spades—the adversarial nature of any inquiry that a court would engage in, not to mention the costs involved?
  Dr. Cable: The hon. and learned Gentleman is right, and I asked about the court in an earlier intervention. The Financial Secretary replied that that was a complicated legal argument that she did not wish to get into. The legal argument may be complicated, but Equitable Life has sent out a very large number of letters on this matter. I shall read an extract from a letter sent to my hon. Friend the Member for Cheadle (Mrs. Calton). The extract covers Equitable Life's response to the proposal that the matters be taken to the court and to the financial ombudsman.
  I suspect that the Minister is not entirely familiar with the idea that the financial ombudsman is a mediator who cannot mediate unless both sides are willing. The letter makes very clear the view of Equitable Life about litigation and the financial ombudsman. In respect of legal action, it states:
  "The issue you raise was…dealt with under the Scheme of Arrangement, also known as the Compromise Scheme, which applies to all with-profits policyholders with policies in force on 8 February 2002. Following approval of the Scheme by the members and the Court, certain rights were given up in exchange for an uplift in policy values. As a result, your claim cannot be upheld.
  Also included in the Scheme was the removal of your rights to pursue such complaints by legal or other means, including the Courts and the Financial Ombudsman Service."
  From the outset, Equitable Life denied that it would be willing to engage in any form of mediation through the financial ombudsman service. It made it clear that it had already covered itself in respect of action through the courts. The invocation of the courts is therefore a completely false trail, which would cost many people large amounts of money to no effect at all.
  Another issue in relation to compensation needs to be clarified.
  Mr. Gardiner: If it is a completely false trial, why does the hon. Gentleman think that Lord Penrose commented on it in his report?
  Dr. Cable: The report's conclusion is unsatisfactory in that respect. Lord Penrose does not suggest that he was aware of what Equitable Life had said about the limits of litigation but, if the hon. Gentleman knows the reference, I should be happy to take it.
  Mr. Gardiner: I do not know the reference, but I hope that the hon. Gentleman is not suggesting that Lord Penrose was not aware of the arrangement made between policyholders and Equitable Life about giving up their legal rights.
  Dr. Cable: I do not know whether he was aware of that or not, but he seems to have urged a course of action that the overwhelming majority of policy holders would not be able to pursue in any circumstances. To that extent, the recommendation—if that is what it was was not terribly helpful.
  The issue of the money is also important. If a compensation claim were to be made, through the courts or, in some other way, through the ombudsman, a basic question must be answered. How much have the policyholders lost—a lot, or a little? Penrose was clear that the loss had been substantial. He said:
  "However, whatever the position on compensation might prove to be in the end of the day, it is clear that many Equitable policyholders have suffered much worry and distress, and many…will continue to experience real financial hardship".
  How great is that real financial hardship? I tabled a question to the Financial Secretary some weeks ago to see whether she could put in the public domain some estimate of the costs. It is clear how they could be calculated. One would look at particular groups of policyholders on the basis of all the evidence that is now available, taking into account the different maturities and types of policy, and compare them with the average. I know that the Financial Secretary was happy, in principle, to put that information into the public domain.
  I have now been told that the information cannot be disclosed for reasons of commercial confidentiality invoked by Equitable Life. I was sufficiently concerned by that conclusion to ring the chief executive this lunchtime and ask him why the information could not be made available. I was told that it would be too difficult to provide it. However, it was not too difficult in the golden days when Equitable Life was outperforming the rest of the industry.
  The company is no longer willing to disclose the information, which leaves two worrying conclusions. It might be that there were no serious losses, which is possible but implausible. Certainly Lord Penrose did not think that. The alternative is that the current management is so embarrassed by its performance that it is not willing to release the information. However, that information is crucial to the policyholders in making their case, whether for a further inquiry by Penrose or the ombudsman, in the courts or by some other means. That is a serious dereliction of duty by the company now, let alone in the past.
  Chris Grayling: I agree that it is a dereliction of duty by the company. Moreover, an organisation that is no longer open for new business, and is therefore not

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  trading in the conventional way that other companies and organisations in the sector are trading, should not use commercial confidentiality as a defence, because it does not apply as it would to any other organisation competing in the financial services industry.
  Dr. Cable: That is a good point that I had not thought of, and it may be an avenue to pursue through the FSA or directly through the Financial Secretary. I thank the hon. Gentleman for that intervention.
  An important point was raised by the hon. Member for Tiverton and Honiton (Mrs. Browning), when she suggested that the company could now slide towards insolvency. I was worried when the Financial Secretary made her original statement, because on more than one occasion she referred to the possibility of compensation by that route. It would certainly be an easy way out for the Government if compensation had to be paid by the industry and not by the Government. However, it is important to reflect on the implications.
  If the industry scheme were to be brought into effect and had to provide substantial compensation in the event of insolvency, we have to ask where the money would come from. In principle, it could come from shareholders' funds in the insurance industry, but some of the leading insurers are mutuals and do not have any shareholders. Whatever happened, many individual policyholders in the insurance industry would end up footing the bill for the disaster. That would come at a time when some participants in the industry are struggling themselves with much tougher insolvency rules imposed by the FSA. My final thought is purely speculative. The Government think that they have drawn a neat line under the episode, but if they force the industry to fund compensation, we could see a cascade effect that caused far greater damage than the original Equitable Life disaster. That is why the Government must think much more constructively about examining the question of maladministration and the consequences of that.
  7.24 pm
  Mr. James Plaskitt: I have had quite an interest in the Equitable Life issue for some years, not only as a member of the Treasury Committee, but from my constituency experience. All hon. Members probably have constituents who are affected by this affair. I do not know how many of mine are affected, but about 50 of them have given the details of their cases to me, and I have found that information very helpful in pursuing the matter through my membership of the Treasury Committee.
  It is important to bear in mind the individual stories that lie behind what we are discussing. Many of the people involved do not have considerable means, but they invested significant sums in what they thought was a highly reputable company, and they are now in retirement in much reduced circumstances. Those people are closely following not only the Treasury Committee's deliberations, but what we say in the House. Many of them have been waiting for Lord Penrose to report. So we have reached a critical juncture in trying to unearth exactly what happened.
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  Lord Penrose appeared before the Treasury Committee on 16 March—I think that it was the first time for about 40 years that a judge had appeared before a Select Committee—and he gave us extremely important evidence. Of course we wanted to know whether, in his view, he had been given the right terms of reference, and he told us:
  "I was the tool that I was given to do the job."
  In other words, he set his own terms within his given remit. He has certainly not indicated to us that he was in any way restricted in undertaking the research and investigation that he was asked to do.
  Lord Penrose's report enables us to identify key moments in the history of the Equitable Life saga. He shows us that the company was using "actuarial techniques" to create what he calls "apparent surpluses" in the 1970s, that
  "the Society did not again get back to a position of having an excess of assets over the realistic policy values"
  in the early 1990s, and that the accumulation of all that, over 20 or 30 years, led the company to have a £3 billion shortfall by the end of 2000.
  After the Treasury Committee took evidence from members of Equitable Life when we opened our inquiry two years ago, we concluded:
  "Equitable Life's risky decision in 1993 not to build up a reserve to cover the costs of guaranteed annuity rate liabilities was a crucial turning point."
  So it is natural to focus on what Lord Penrose tells us in his report about regulatory system failure. When he was before us last week, commenting on his report, we asked him about regulatory systems failure and he said in evidence:
  "One has a growing divergence between what the regulatory system required in the way of information in the annual financial statements of life offices and what the life offices themselves were actually doing in the conduct of their business."
  He continued:
  "There would be no reaction to growing terminal bonus if terminal bonus was not a focus for regulatory attention…I think that critically is what went wrong."
  In considering the focus of Lord Penrose's report, the additional comments that he has made in summary form in evidence to the Treasury Committee help to clarify the situation as he finds it, and they bear out exactly what he says at paragraph 69 in chapter 20 of the report:
  "the thrust of my criticism is that for the most part it was the system that failed to provide the regulation that changing circumstances in the industry required".
  When Lord Penrose was before the Treasury Committee last week, we wanted to ask him to expand on the occasions during this story when key opportunities to reform the regulatory system were missed. The evidence increasingly focuses on the period 1990 to 1994, and discussions of the European Union's third life directive. When Lord Penrose appeared before the Treasury Committee, I put it to him that that was probably an important chance to align the regulatory system with developments in the industry. He answered with the simple word "Yes". He also added that the original formula made it an obligation to make proper provision for terminal bonuses.

  1003
  In this debate, it will be interesting to look briefly at the way in which the third life directive evolved. Lord Penrose gives all the evidence in his report. In 1990, when the original regulation was first put before the committees that dealt with it, it stated:
  "the valuation method shall take into account, either implicitly or explicitly, future bonuses of all kinds, in a manner consistent with the other assumptions on future bonuses of all kinds, in a manner consistent with the other assumptions on future experience and with the current method of distribution of bonus."
  Subsequently, there were four years of argument before the directive finally emerged and took its place. It in interesting to see how the wording changed. This was the wording that finally appeared in the directive in 1994:
  "The amount of the technical life-assurance provisions shall be calculated by a sufficiently prudent prospective actuarial valuation, taking account of all future liabilities as determined by the policy conditions for each existing policy".
  That represents a very significant watering down of the directive between 1990 and 1994, so one has to ask how it came to be watered down, and why it emerged in that form and not in the form in which it originally entered the negotiations. In the very chapter in which Lord Penrose looks at the evolution of the directive, he reminds us that it was the United Kingdom delegation that led the resistance to the original wording.
  That gives us strong evidence to support the view that there was unnecessarily light-touch regulation at that time, and it clearly points the finger towards why, in the 1990s, an important opportunity to bring the regulation into line with what was happening in the industry was missed.
  We have heard the suggestion, or accusation, that after 1997 and the change of Government, the Treasury was passive in relation to all these issues. It is hard to find the evidence to back up that suggestion. The ombudsman, from whom the Treasury Committee heard evidence, said that the Treasury was in no sense passive. He reminded us that in 1998, quite a vigorous battle went on between the Treasury and Equitable Life, with the Treasury threatening to close Equitable Life down, and Equitable Life threatening to take the Treasury to judicial review. That does not suggest that there was passivity on the part of the Treasury.
  When the Treasury Committee began to look into the matter back in 2001, it heard evidence about what had been happening immediately after 1997. The prudential insurance regulator became concerned about levels of reserves for the guaranteed annuity rate policies in 1997. The Government Actuary's Department subsequently undertook a survey, and it told us in evidence that Equitable Life stood out among all the other life assurance companies. Immediately afterwards, red letters, as they were called, circulated between the Treasury and the company, raising issues about Equitable Life's potential solvency.
  Mr. Letwin: The hon. Gentleman has certainly done his homework. Is he really arguing that if his current disquisition leads to a conclusion that all the failures occurred before 1997—he knows that I deny that that is the case, but we shall let that be for a moment—and if
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  it emerges that there was both systemic and operational failure before that time, it would affect in any way the issue at stake—the entitlement of current and lost policyholders to possible compensation if there was maladministration? Why does it matter whether the failure occurred before 1997 or afterwards?
  Mr. Plaskitt: What matters is unearthing exactly what happened, and that is what Lord Penrose was asked to do. It is essential to look at the totality of his findings, and he helps us to do so by standing back in the final chapter of the report, having looked in detail at events that took place over many years, and asking what basic conclusion one can draw about the causes of the problem. He says, as we know, that the company was first and foremost the architect of its own misfortune, and regulatory system failure played a secondary role.
  Mr. Letwin: Why does it matter when that took place? If the hon. Gentleman is making a serious argument about the possible rights of policyholders, is it not incumbent on him to address the question of whether the failure was partly operational, as the hon. Member for Twickenham (Dr. Cable) and I have amply shown is demonstrated in the report? Why does the date matter to the hon. Member for Warwick and Leamington (Mr. Plaskitt)—other than as a party political point?
  Mr. Plaskitt: I am not making a party political point at all. I am trying to extract from the dense, 800 page-plus Penrose report the essence of its findings, because that is what my constituents and the constituents of other right hon. and hon. Members affected by the affair want to know. They want to know what happened and how it happened.
  Mr. Harry Barnes: Surely the question to which our constituents, including the 50 who have been in touch with my hon. Friend, want an answer is: what is to be done now? It is important to understand the analysis and accept that the Conservatives and Equitable Life were to blame, but now we must decide what is to be done to get out of the mess that other people have created. There are avenues available to the Government that might assist with that process.
  Mr. Plaskitt: My hon. Friend is absolutely right. My constituents, and, I am sure, his constituents and others, want to know what happens now. However, unless we understand fully the history of how things happened, we cannot work out correctly what must happen next. That suggestion was put to Lord Penrose as part of his terms of reference. He was asked to advise on what lessons should be learned, and what action should be taken. Action is under way—the ombudsman is undertaking work and there may be court actions. Lord Penrose himself suggested that the situation would eventually lead to litigation. That will be a lengthy process, but without the facts and the history before us, we could never determine what the next steps should be.
  One important step is getting the regulatory system right, and the Financial Services Authority has introduced significant changes. Again, we asked Lord Penrose for his view because, having looked into the matter and unearthed important evidence of regulatory

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  system failure, he could judge the current regulatory system against previous shortcomings and determine whether things have improved. In his evidence he was clear that they have, and pointed to resource improvements. For example, there are now twice as many regulators working on the regulation of life insurance companies. I reflected on that when Opposition Members intervened on this subject—I wondered whether the bowler-hatted bureaucrats who feature in their party's recent campaign efforts included the additional regulators who were appointed. If they are suggesting that those people should be removed again, we will slide back to the excessively light-touch regulation that contributed to the problem in the first place.
  Secondly, Lord Penrose acknowledges that the organisational structure of regulation is now far better. Different skills are working together and are located in the life offices—a complete change from what happened before. Lord Penrose welcomes the regulatory system changes referred to as the "twin peaks" arrangement—traditional paper-based solvency investigation and measures allied to the broader factor. When he looks at the regulatory system in place now, he concludes:
  "My clear impression is that the approach now being adopted is a very considerable improvement on what there was before."
  That will reassure constituents who want to know whether the lessons have been learned from the whole tragic affair.
  Chris Grayling: The hon. Gentleman should go back and talk to his constituents who have been affected. I have no sense that constituents who have written to me have the slightest concern about the regulatory system. What they want to know is what is being done about their position. The Penrose report specifically states that compensation was not an issue that he considered or was asked to consider. If the hon. Gentleman is arguing that regulatory failure contributed to what happened—he is now explaining why the improvements that he says his Government introduced have made a difference to that—does he not therefore think that a proper investigation into the question of maladministration would now be appropriate?
  Mr. Plaskitt: We have had an investigation conducted by Lord Penrose into the regulatory system failure. The other questions are entirely separate. We have rehearsed many times in the course of this discussion how those will be taken forward. The hon. Gentleman is right. Our constituents want to know that, but I do not think he is suggesting that there should be a Government-underwritten compensation scheme. If he is suggesting that, he needs to explain how we will overcome the moral hazard issue that such a scheme would raise.
  To conclude, we have a story of manipulation, concealment and misrepresentation by Equitable Life. We have evidence of a domineering and manipulative chief executive, an inert board and institutional laziness and complacency, all underpinned by an inadequate regulatory system that was itself endorsed by policy decisions designed to prevent appropriate regulation coming into place. In the course of reading Lord Penrose's report one comes across a paper written by Mr. Ranson of Equitable Life delighting in the title,
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  "With Profits Without Mystery". From the perspective of Equitable Life's policyholders, it is more a case of "with losses without honesty".
  7.43 pm
  Chris Grayling: Despite the differences of emphasis in the debate tonight, hon. Members in all parts of the House are united in the view that the case of Equitable Life has been a tragic state of affairs that has caused problems not just for those who have lost money as a result of what happened, but for the whole country. The entire financial system on which the pensions of the future and the security of many of our people depend has been challenged and weakened by what happened with Equitable Life.
  I agree with the hon. Member for Warwick and Leamington (Mr. Plaskitt) that lessons need to be learned. We need to understand what went wrong and ensure that it cannot happen again. To that extent we may agree, but as for the rest of his comments, and the comments of the Minister and other Labour Members, I find it depressing and disappointing—and I know that my constituents who have suffered in the affair will find it equally depressing and disappointing—that the Government's only real response in the wake of the Penrose report is to try to focus the criticism on the regulatory regime before 1997, and thus on the Conservative Government.
  We need to set aside party politics, understand what went wrong and explore still further the questions that remain unanswered. We must provide real responses that our constituents will understand and that will leave them with a sense that their anxieties, questions and complaints are being properly addressed and not, as I fear, left to one side. As I listen to Labour Members, I am left with the sense that my constituents' concerns are being left to one side.
  I received a letter just this morning from one of my constituents and it is difficult to argue against the simplicity of what he says. He writes:
  "Equitable Life was at one time highly respected being the oldest mutual life office in the world. The management certainly made mistakes and behaved in an arrogant manner but it is up to the Regulator to protect the Public's interest. It is after all what he is there for!"
  It is clear that the regulator, in whatever shape, form or system, did not fulfil that remit. Ultimately, as I said to the Financial Secretary in my intervention, even up to the latter days before the House of Lords judgment, even when discussions were taking place between the Treasury, the FSA and Equitable Life, my constituents and others around the country were still being sold policies that would quickly turn into a disaster for them.
  The reality was that, throughout the process, from start to finish, people were let down by the system and the regulation, as well as by the management of the organisation itself. That the Financial Secretary should set her face against the simple question of whether there was maladministration is extraordinary and inexplicable. I cannot for the life of me see how she believes that she will benefit politically. Out there are thousands of people who are waiting upon her decisions, waiting upon the views and decisions of the House, who

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  believe that it would be right and appropriate for there to be an investigation into whether there was maladministration, and it is simply not happening.
  Lord Penrose is clear in what he says. The Financial Secretary intervened on the hon. Member for Twickenham (Dr. Cable) and quoted the last sentence of paragraph 77 of chapter 20 of the report, but at the beginning of that paragraph Lord Penrose states:
  "Many readers of this report will be frustrated that it has not provided answers to two questions: who is at fault for the problems encountered by the Society, and who deserves redress as a consequence? It has been no part of this inquiry to attempt to answer either question."
  He goes on to say:
  "The first inevitably involves issues of the scope of duty and of breach of duty that I was not asked to consider and that I would have been unwilling to consider as part of an inquisitorial process."
  So not only was Lord Penrose not asked to deal with, and did not deal with, those issues, he believed that that aspect of what went on should not have been part of his remit. Surely, if nothing else, he is arguing in support of the requests of my right hon. Friend the Member for West Dorset (Mr. Letwin) and of others inside the House and outside it for a simple process that asks the question: was there maladministration?
  There has been debate over the ombudsman's ability to provide a proper assessment of what happened. It has been suggested that the Government Actuary's Department is not within the ombudsman's remit and therefore there is nothing that the ombudsman can do. But as my hon. Friend the Member for Chichester (Mr. Tyrie) has made clear, the reality is that, if the House were united, those changes, adjustments to the system and changes to the remit of the ombudsman, could be pushed through quickly. The disappointing thing, of course, is that that united support does not exist within the House.
  I want to press the Financial Secretary on her challenging of the regulatory regime that existed before 1997. I looked back today at the letters that I have received from constituents about their experiences of what went wrong and I have read carefully the sections of the report that walk us through what happened after 1997. It is clear that discussions were taking place within the Treasury when it took over the role of regulator after 1998, and then within the FSA when it took over the job of regulation shortly after that. There were robust debates and serious questions were being asked about the solvency of Equitable Life.
  When the Minister made her statement to the House a couple of weeks ago, she referred several times to discussions that took place in the years up to 2000–01. She will remember referring to information about reinsurance being withheld from the regulator, which she said took place in the latter days of the last decade. That happened under the new regime, albeit in its infancy as an alternative system. Such questions as, "Where did the regulatory system fall down?" must, by definition, apply as much to what occurred after 1997 as to what took place before 1997.
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  I have read various sections of the report, which the Minister will know better than I do. Chapter 17, page 611, specifically refers to
  "a meeting called at HMT's request to discuss the Society's approach to the annuity guarantees and the solvency implication of reserving for them."
  The Government Actuary's Department addressed the solvency issue shortly afterwards in a document produced in December 1998, saying:
  "While this is reassuring it should be realised that publication of such a low solvency position is likely to severely undermine the company's reputation in the market and could threaten its survival as an independent entity."
  At that point in 1998, serious discussions were taking place within the Treasury about whether Equitable Life was founded on stone or sand. Yet, when I read the letters from my constituents, I found that a significant number of them began their involvement with Equitable Life at that time. Those people did not take out policies in the 1970s or 1980s but were sold policies right up until the turn of the decade, and even beyond, and they lost money.
  Among those letters, I found an example of a constituent who challenged some of Equitable Life's operational practices. He made a number of claims about how policies were sold to him, and, indeed, denied ever signing contracts with Equitable Life. None the less, he was placed under heavy selling pressure by Equitable Life salesmen in 1999 who were trying to persuade him to take up business with them. Some 25 to 30 per cent. of the people who wrote to me to complain took out policies at the end of the 1990s, and I cannot understand how the Minister can turn round to them and say, "There was a dodgy regime in place before we took office. We did something about it, and that is the end of the matter." That is essentially the message that the Government have given to my constituents. I ask the Minister to think again about the sole message that this House is sending to all the people affected in my constituency, her constituency and those of other hon. Members: "The regulatory regime did not work. We have changed it so it will all be fine for the future."
  There is also the question whether operational failure led directly to financial loss. I must say that I was surprised by Lord Penrose's comment that there was no direct connection between regulatory failure and financial loss. If that were the case, why, when the Treasury and the FSA were discussing the solvency of Equitable Life, was the society still permitted to go out and sell policies to my constituents, who, within a very few years, suffered substantial financial loss as a result? The Minister may shake her head and smile, but my constituents will not understand why the regulator was not involved in what happened to them. Surely the House has a duty to see the matter through to the end. We have a duty to all those who lost money to look in every corner for what may or may not have happened. They are asking us to send the case back to the ombudsman for a proper investigation into whether there was maladministration. Is there really any reason why the Government should not say yes to that investigation?
  I suggest to the Minister that there is a danger that, as she sits in her office in the Treasury considering regulatory issues, she may take her eye off the real ball—

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  the fact that thousands of pensioners out there have lost money and their retirements will not be the same. We have a duty to them to see this through to the end by granting the investigation to determine whether there was maladministration and whether they have a case for compensation. If she fails to do that, she will let down not only those people, but this whole place and the whole reputation of politics and Government. She must change her mind, she must send them the right message, and she must do it now.
  7.55 pm
  Mr. Adrian Bailey: Like every other Member, I have constituents whose pension plans and retirement aspirations are much reduced as a result of the Equitable Life fiasco. I have an interest as a representative of those constituents and a further interest as chair of the all-party group on building societies and financial mutuals.
  I join the Minister and other Members in expressing sympathy for those people affected by this fiasco. That was brought home to me today when I had coffee with a distinguished member of the local business community, who confided in me that he was still working only because Equitable Life had not delivered on his pension and, in turn, his retirement plans.
  On compensation, the Government's response is consistent with that which took place following other pension fiascos and, on some occasions, scandals. Nobody can argue that the Government cannot underwrite risks, then say that Equitable Life is a special case, given that Penrose himself blames the company, not the regulators. I look back to the Maxwell scandal at the Daily Mirror. I appreciate that the pensioners affected by Equitable Life have been badly hit—in some cases, the impact has been devastating—but it was exactly the same for the Daily Mirror pensioners. There were huge issues of corporate governance in that case, too, but the Government did not rush in to compensate.
  Another such episode, and another sorry legacy of the former Tory Government's regulatory regime, was that of pensions mis-selling. On that occasion, the industry itself had to compensate people who were sold pensions on false pretences. If the Government were to step in on this occasion, I wonder whether the companies that paid out that compensation would come to them to demand that they underwrite the bad management and mis-selling that took place all those years ago.
  Mr. Letwin: Of course, everybody recognises that in many cases no question of compensation arises, but does the hon. Gentleman recognise that the distinction lies in the question of whether there was maladministration? That distinction was recognised by Parliament and by the current Chancellor in relation to the Barlow Clowes case, in which compensation was payable because maladministration was ascertained.
  Mr. Bailey: Penrose says that there was no maladministration in this case. Frankly, many of the constituents whose perspective Conservative Members have assumed will not understand the subtleties and refinements of whether that is so. The fact is that they took up schemes that, one way or another, did not deliver on their pension aspirations.
  1010
  My hon. Friend the Member for Edmonton (Mr. Love) made a valuable point about the statement made earlier this month, when he noted that the Financial Times expert had said that, even after all the problems, some of Equitable Life's returns were no worse than those of some other companies, so how could we justify compensating those pension holders and not those in other companies that had failed to deliver for totally different reasons? That would be difficult to justify.
  I want to deal with my concerns about the mutual sector. It has been pointed out on a number of occasions that the problem at Equitable Life related to management. The quote often given from the Penrose report is that
  "The Society's uniqueness lay in the approach adopted by its management, not in the essential characteristics of its business."
  Central to that was the fact that the chief executive officer was also the actuary, and that the company pursued a policy of failing to keep adequate reserves, overpaying bonuses and failing to keep the board informed of the position and the risks involved.
  The report also makes it clear that the critical responsibility for valuing liabilities, assessing the liability implications of new products and identifying risk was discharged by a discrete part of the organisation that was not subject to effective scrutiny or challenge. Obviously, monitoring needs to be improved, and improvements are also needed in corporate governance. We must be clear, however, that because this organisation was a mutual, policyholders did not see their obligation as one of scrutiny, as might be the case for a shareholder in a conventional plc. This distinction was pointed out in Penrose. Most policyholders who take out a policy in a mutual see their obligation as simply to pay a premium, but to have no extra responsibility.
  Under the articles of Equitable Life, the policyholders were effectively powerless. My hon. Friend the Member for Edmonton made the point about their registration under the provisions of the Companies Act 1989, which provide for a 10 per cent. vote to get a special meeting. That is, of course, impossible if there is no adequate register or access to a register for policyholders. Mutuals have to find a means whereby they can provide for policyholder participation.
  I welcome, as do other mutuals, the Treasury initiative set up by Sir Paul Myners to look into corporate governance and policyholder representation in mutual life offices. The Minister has already set out the terms of reference, so I will not go over them again. It is fair to say that the mutual life assurance industry accepts the need to take action to improve representation by policyholders. We must make it clear, however, that the situation at Equitable Life arose not because it was a mutual but because the management policy was bad and, indeed, not even compatible with the basic principles of mutuality.
  The initiative raises the challenge to ensure that the corporate governance of mutual life offices provides the necessary checks and balances to ensure that a saga such as this is never repeated. I am sure that there will be a dialogue between Sir Paul Myners and the mutual sector to ensure that steps are taken to prevent any such repetition.

  1011
  I want to conclude by making these particular points. Equitable Life has reached this situation because of poor management, not the structural issue with mutual ownership. That could happen with plcs. Independent Insurance went bust, despite the fact that it was a plc. There is no guarantee, even with a plc, that shareholders will bail it out and there are plenty of examples of shareholders letting a plc collapse.
  The mutual life offices recognise the fact that this episode highlights issues of governance and involvement of policyholders, but we must make it clear that it is a one-off. Equitable Life is not representative of the mutual industry as a whole and it is as anxious as anybody to ensure that its rules and procedures prevent any repeat of this with a mutual company.
  8.6 pm
  Mr. Edward Garnier: If the only pension arrangements people have are with Equitable Life, they are likely to think that it is representative of the mutual system, so I am not at all sure that the perhaps not intentionally but none the less effectively complacent attitude with which the hon. Member for West Bromwich, West (Mr. Bailey) finished provides us with a helpful analysis of where we are.
  I want, if I may, to pick up, but not too seriously, a point made by the hon. Member for Warwick and Leamington (Mr. Plaskitt). He thought that Lord Penrose was the first judge to appear before a Select Committee for 40 years. I was on the Home Affairs Committee in 1992-93 and judges regularly appeared before it. Of course, judges chair Select Committees in the House of Lords.
  If this were the Court of Appeal, and it is not, and Lord Justice Letwin as opposed to my right hon. Friend the Member for West Dorset (Mr. Letwin) had given judgment as opposed to having made a speech, I could say, "I have heard what Lord Justice Letwin says and I have nothing further to add." However, he has not given judgment. We are in the House of Commons and I am here to represent my constituents and to say what I believe ought to be done in a political sense as a consequence of this fiasco.
  I have already declared my interest as the former holder of a number of Equitable Life policies. I continue to hold, I think, one further policy with it, so clearly I have been affected, and may continue to be affected, by what has happened. I have not yet reached the stage at which I am prepared to be as generous as my right hon. Friend in the event of compensation being provided, but I put that to one side.
  Many of my constituents, like those of other hon. Members, have been affected by this disaster. Some are members of the Equitable members action group and some are not, but all have been adversely affected. The number runs into the hundreds—we are not talking about just one, two or three isolated individuals.
  The dilemma that my constituents face is exacerbated when one considers that those people are not in a position to repair the damage done to them. They are, by and large, at the end of their working life or have finished it, so they do not have the economic ability to
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  get another job to refill their pension pot. I accept that not every injury commands a remedy. Plenty of people suffer accidents, be they financial, commercial or physical. Those do not require compensation, but we are considering rather different circumstances.
  I can say on behalf of my constituents that all who have been affected by this disaster welcomed the setting up of the Penrose inquiry and, to a greater or lesser degree, they have welcomed its findings. However, where they, and I on their behalf, complain is in respect of what the public authorities have done and propose to do. What they—my constituents—say about the management of Equitable Life is unprintable. Disquiet is growing, however, about the Government's response, and I regret, as I have huge respect for the Financial Secretary, that that disquiet will be in no degree lessened by her response in her statement on 8 March or in her opening speech today.
  The appearance—I can put it no higher than that—which comes not only from the Government but from other agencies, is that all is well, all the mistakes were in the past, and that that is all that needs to be done about it. I note that the Financial Services Authority's press release, which enclosed the letter that the chairman, Mr. McCarthy, wrote to the Financial Secretary on 8 March, says, under "Notes for editors":
  "The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal."
  My constituents are entitled to ask whether the FSA, in its handling of this affair, has come up to its remit.
  The chairman of the FSA, in his letter to the Financial Secretary, says that Lord Penrose
  "makes clear that the issues on which he comments can be settled definitively only by resolution in the courts or by some other adjudicator."
  Some other adjudicator, as was pointed out by my right hon. Friend the shadow Chancellor and the hon. Member for Twickenham (Dr. Cable), could mean a reborn Penrose. He has already found facts, and he is tremendously well placed to be that other adjudicator. I am depressed, however, that the chairman of the FSA thinks it appropriate—as does the Financial Secretary, I fear—to require our constituents to go to court to seek redress.
  Mr. Barnes: Does the hon. and learned Gentleman feel that the Government could be involved in a compensation scheme that was in some way based on need? Different people are in different sets of circumstances—I am not sure whether I want to see him compensated, but numbers of his constituents might be much more deserving cases because their pensions and future provision have gone, and they might therefore be reasonably considered by the Government to be on a list for some percentage of compensation.
  Mr. Garnier: I was simply making my personal interest clear, and I do not wish to personalise this debate at all. I can see that there is some argument to be

  1013
  made, and the telling question from the Labour Benches was that asked by the hon. Member for North-East Derbyshire (Mr. Barnes): what are the Government going to do? Were it to involve some form of means-tested compensation scheme, let us look at it. That is an advance from him, however, which we have not yet heard from his right hon. and hon. Friends on the Front Bench. At least he is addressing his mind to the real moral and political questions which this debate throws up, and which I fear that the authorities and the Government are ignoring.
  It seems to me that the Government are hiding behind the Penrose report. The Financial Secretary quoted large chunks—she spent about 20 or 30 minutes doing so—of the report at the beginning of her speech. That is not difficult. The more difficult political and moral question is to ask what flows from the findings of fact that Lord Penrose has made. I have heard nothing from the Government other than that my constituents are urged to go to court, but this Government have removed access to legal aid, and therefore access to the courts, for these much-put-upon people. Any court case would take years to prepare, and if not a year, certainly months to reach a conclusion at trial.
  We need only look at the current court case involving the BCCI scandal, which took place some years ago, to realise that. It will take the High Court many months to dispose of that case—and given that one party is bound to be dissatisfied with the result, it will go to the Court of Appeal and, no doubt, to the House of Lords. So we are not looking at an easy way out, however easily the words "go to court" trip off the ministerial tongue.
  What else did the Minister say? She said "We have set up the Myners review and the Morris review." I should have thought that the House was fed up with hearing the Government talk about reviews. They have had more "reviews" than Raymond. It is time that they started to do something rather than pushing issues over the political horizon.
  We are all immensely grateful for what Lord Penrose has done, but what a judge cannot do is provide a Government with political answers. We saw that with the Scott inquiry and the Hutton inquiry, and we are seeing it with the Saville inquiry. We have four judges who have held, or are in the process of holding, well-organised and well-designed inquiries, and they do their job; but they do their job as finders of fact rather than as providers of political and economic answers. It is wrong of the Government to say "Penrose has reported: we need do no more."
  I believe that this saga points to a need to do away finally with the compulsory annuity system. The Minister and I debated that at some length last year, and I might remind her that my Retirement Income Reform Bill achieved a Second Reading by a majority of 101—not bad for a private Member's Bill, if I may say so.
  What this whole saga demonstrates is that the Government are failing to get a grip on the underlying problems of financial provision for the elderly. I have a number of elderly constituents who will be financially severely embarrassed as a consequence of this disaster. It highlights the need for liberalisation of the way in which people can invest for their retirement. The Government insist that people should be forced to buy annuities with their pension pot at 75. If the public are
  1014
  no longer prepared to trust financial institutions, for goodness' sake let them choose their own means of saving and investing for their retirement—and while they are about it, I urge the Government to listen very carefully indeed to what has been said by my right hon. Friend and the hon. Member for Twickenham. There they may find an escape route, and I urge them to burrow into it.
  8.18 pm
  Mr. Barry Gardiner: I know that others wish to speak, so I shall curtail my remarks.
  Rarely does the failure of a company have an impact on so many lives in such a personal way as has the mismanagement at Equitable Life. More than I million policyholders have been affected, and the reputation of a whole industry has been tarnished. The constituents of mine who were unlucky enough to be policyholders tell me of the financial difficulties that they suffer as a result of Equitable Life's mismanagement, and the financial insecurity that that brings them. Many had saved solely with Equitable Life because it had a good name and they believed that the Government of the day had put in place an effective regulatory system. In fact, as with many investors, they were wrong. Despite rapid change and evolution in the market, the then Government failed to make substantive changes to the regulatory system.
  In his detailed report, Lord Penrose notes that in 1988, nine years before the current Government took office, a Department of Trade and Industry Minister—the right hon. Member for Bromley and Chislehurst (Mr. Forth)—made a conscious decision not to update the regulation of life insurance. It was just one of a catalogue of decisions to continue that Government's light-touch regulatory system, which was in the end to have such a disastrous effect on my constituents and so many others throughout the country.
  The 1988 decision was compounded by decisions in the early '90s that saw Conservative Members lobbying against changes that would have made the Equitable fiasco at least remote, if not impossible. The Government of the day lobbied against a Brussels directive that would have placed a statutory responsibility on companies to set aside reserves for terminal bonuses. The then Government viewed that as overly cautious, and suggested that a tougher regulatory system would have created too much red tape. Perhaps Conservative Members could therefore explain to my constituents, who are indeed cautious and save diligently, what would have been over-cautious about offering them protection and asking companies to abide by the most basic process of reserving.
  Mr. Barnes: My hon. Friend is correct in pointing to the previous Conservative Government's errors and omissions. However, if the Conservatives were still in office now that Penrose has revealed all these errors, what would have to be done, and would that Government not be obliged to move towards compensation? What difference is there because we have a Labour Government? We have to pick up the mess that the Conservatives left us in.
  Mr. Gardiner: My hon. Friend makes his own points, but I would hazard that if it were the case that

  1015
  Opposition Members were now on the Government Benches, we would never have had a Penrose report, because they would have known full well what it would show.
  In some cases, it is possible to say that hindsight makes our vision somewhat clearer, but I do not believe that that was the case in the regulation of the financial services industry.
  Mr. Letwin rose—Mr. Letwin rose—
  Mr. Gardiner: I shall not give way, because I need to make progress. The right hon. Gentleman has had plenty of time to make his points this evening, and he was not as generous as my hon. Friend the Financial Secretary in taking interventions.
  I do not believe that that was the case with the regulation of the financial services industry, because it would be too generous to say that Tory failures properly to regulate the financial services industry could be explained only with hindsight. I say that because other financial services organisations had already realised the need for more effective regulation. By 1986, regulation was already in place to support the wish of the Association of Friendly Societies to offer a voluntary compensation scheme. That scheme, which guaranteed 90 per cent. of a guaranteed policy, was already operating successfully and could have been used as a role model, yet the then Government decided not to move forward with a similar scheme. I am pleased to say that the current Government saw the need for such a scheme and introduced the financial services compensation scheme as part of the Financial Services and Markets Act 2000. That scheme protects consumers if companies become insolvent now.
  In 1997, this Government inherited a hotch-potch of a regulatory system from the previous Government, who favoured cutting red tape over protecting consumers. Neither I nor this Government want more red tape, but I do want effective regulation. Conservative Members play a devious game when they portray all regulation as red tape, as they have recently in the Chamber. As someone who spent 10 years running a successful business, I understand the impact that red tape can have on a business and how it can stifle a company's competitive edge, but I also understand that with ineffective regulation it is usually the big firms that benefit, not the small consumers. Large investors can spread their risk and hedge their bets; small investors cannot and do not.
  In his report, Lord Penrose concluded:
  "Principally, the Society was the author of its own misfortunes."
  That was because the regulatory system that the Conservative Government had in place was weak and ineffective. Without an effective regulatory system, the rules were not there for Equitable to break, and there were few mechanisms to alert the authorities to Equitable's failures. The primary problem was not that the regulator did not implement existing regulations properly, but that the regulations that existed were not the proper ones.
  1016
  The Opposition's position is fundamentally this: they want to parade themselves as the champions of the policyholders, but they do not want to find themselves committed to compensating those policyholders should they ever be in government. That is why they have suggested the device of an inquiry to establish whether there was maladministration and whether compensation is therefore due. That, however, is a specious argument, which does them no credit—and I make my points because of the logic of the shadow Chancellor's own arguments. The Opposition claim not merely that there was an inadequate regulatory system, but that the operation of such a system as there was, was itself inadequate. If they are convinced that operational failure occurred, why do they not follow their own logic and say that there was also maladministration, and that compensation is therefore due? The answer is that it is difficult for them to justify a commitment to spending upwards of £3 billion in compensation to policyholders when they are already committed to cutting £18 billion off the police, defence, housing and education budgets.
  8.25 pm
  Norman Lamb: I should begin by declaring an interest as a former policyholder. I was one of the lucky ones: I did not have all my eggs in one basket, but the hon. Member for North-East Derbyshire (Mr. Barnes) has reminded us today of the many people who suffered great losses as a result of this debacle. As recently as this week, I received an e-mail from a constituent—he is of modest means—reminding me that he had lost 23 per cent. of his pension, with another 10 per cent. still to go.
  I want to draw attention to what many consider to be the misleading nature of the Government's response to the Penrose report, and to look at where we go from here. The Financial Secretary said in her statement to Parliament:
  "Lord Penrose makes no recommendation for the payment of compensation."
  The implication of that is that compensation should not flow from Lord Penrose's findings, but in fact the position is very different: such an outcome was simply beyond his remit. He was not asked to consider it, and he did not consider it. The Financial Secretary then said:
  "Nor does he conclude that economic loss was caused to policyholders by the regulatory system."—[Official Report, 8 March 2004; Vol. 418, c. 1258.]
  She then prayed in aid the report, which states that
  "it is not enough in this case, to infer from the coincidence of systems deficiencies and loss that one caused or contributed to the other."
  However, when Lord Penrose appeared before the Treasury Select Committee, I said to him,
  "but saying you cannot infer one from the other crucially is not the same"
  as saying that
  "you do not rule it out. It is simply not part of your remit".
  Lord Penrose replied:
  "That is so."
  I then said,
  "So you cannot rule out the possibility that compensation does flow from failures of the regulatory system?"

  1017
  That, of course, is the very issue that we are discussing this evening. Lord Penrose replied:
  "I have sought to avoid adjudicating one way or the other."
  In other words, the question remains to be asked, considered and determined.
  In her statement to Parliament, the Financial Secretary made great play of the fact that the regulatory system failures were secondary factors—an issue that the Conservative spokesman raised during his contribution this evening. The Financial Secretary pointed out the report's conclusion that
  "the Society was the author of its own misfortunes."
  Indeed, she repeated that point in her evidence to the Select Committee. But as Lord Penrose confirmed to the Committee, it is almost inevitably the case that regulatory failure is secondary. The initial problem is a company that is not behaving properly. It is then for the regulator to sort out that problem, and such action is secondary to the original problem. So to assert that regulatory failure is a secondary factor is merely to state the obvious. The conclusions that the Financial Secretary draws from the Penrose report are therefore not justified.
  What does the report tell us? It tells us that there were systemic failures, and it clearly points to a failure to modernise the system of regulation. But it also points in many paragraphs to failures on the part of regulators within a flawed system: in other words, operational failure. Mention has been made of several such examples this evening, and I shall not discuss them given the lack of time, save for one. In talking about the Government Actuary's Department, Penrose says that
  "the standards of scrutiny still impress me as complacent, lacking challenge and hesitant in criticism and in following up on any criticism made."
  That is a pretty damning criticism of how the Government Actuary's Department operated—a matter to which I shall return later.
  What has been the Government's response to the key issue of what should be done for policyholders? The hon. Member for North-East Derbyshire constantly reminded us of the centrality of that issue. The Financial Secretary referred to the financial services ombudsman, whose role is to consider individual claims, but also, crucially, to consider individual complaints of misselling. That process is wholly irrelevant to all those who have no specific complaints about mis-selling, but have simply suffered a substantial loss as a result of what has happened over the last few years. The more successful the claims pursued through the financial ombudsman service, the more likely it is that the company will be driven into insolvency.
  It seems to me that the Government could be accused of being reckless in standing by and allowing that to happen. Should the company become insolvent, the financial services compensation scheme will come into play, which will result in the rest of the industry—particularly the policyholders of other life companies—bearing the cost of this debacle. Is that any fairer than the taxpayer picking up the tab? It seems to me that the one option is no fairer than the other. The Government's response is a recipe for years of litigation and years of claims being made through the financial ombudsman service, with lawyers and no one else being
  1018
  the beneficiaries. Surely it would be better to find a more ordered way forward than that suggested by the Government's response.
  To establish what job is now required, I go back to what Lord Penrose said in his evidence to the Select Committee. He talked about the gates that one has to go through in law to establish compensation flowing from failure. He talked about establishing a duty of care—first establishing that a breach of that duty had taken place, then establishing what should flow from it. That is what now has to happen. We should attempt to determine what, if any, compensation flows from the regulatory failures identified by Lord Penrose. That is the essential next step, so how can we best achieve it?
  The Financial Secretary refers only to the courts as the place where those issues should be considered, but that is simply not an option for most policyholders. We can therefore reflect on three other options. First, the parliamentary ombudsman. It is already clear that in many respects the report already published on a narrow time period has been substantially undermined by Lord Penrose's findings. The parliamentary ombudsman should be prepared to recognise that now, and to reopen her inquiry.
  It is my belief that the Government Actuary's Department is arbitrarily excluded from the scope of the parliamentary ombudsman. There is no case in logic for its continuing exclusion. The report is riddled with findings of negligent regulatory failure in respect of how the Government Actuary's Department carried out its functions. That should be remedied by the Government without delay. Not to do so is a cynical exercise designed simply to prevent any challenge to the GAD's exercise of its functions.
  My hon. Friend the Member for Twickenham (Dr. Cable) referred to the second option of an extended remit for Lord Penrose. That should be seriously considered. Let us face it, he understands the subject, so he is in the best possible position to look again into the problem of compensation on the basis of the findings of fact that he produced.
  Finally, there is the proposal from Peter Martin, a former non-executive director of Equitable Life. He has put forward the possibility of a mediation process involving a retired Law Lord or Court of Appeal judge. In respect of the Penrose report, he suggests that that person would conduct an
  "'early neutral evaluation' of the legal liability aspects of its findings of fact and expressions of view with the purpose of bringing all parties into discussions to effect an overall disposal of all claims. This would have to be strictly confidential to the parties but all would have to 'buy in"'—
  and by that he means policyholders, the Equitable Life Assurance Society, the Treasury, the FSA, Ernst &Young and the former directors.
  Surely, that process deserves proper consideration. In the Treasury Committee last week, I asked the Financial Secretary two or three times whether she ruled out such an approach. She did not do so, and I hope that she will consider that option seriously, as it seems to me to be a way of avoiding years of uncertainty. Unless we find an orderly way forward, the impact of the Equitable Life disaster—on its victims, and on confidence in the industry in general—will be very severe.
  8.36 pm
  Mr. Andrew Tyrie: The only interest that I wish to declare is that I have a large number of constituents who have been deeply affected by this matter. Quite rightly, they remain in close touch with me about it.
  Tonight, we should be working out what is to be done for those who have been affected, and how to restore trust in the industry and in Britain's savings culture. We should do that together, and the debate should have been largely non-partisan. However, the problem for the House—and not just for those on the Opposition Front Bench—is that the Government, through their response to the report, have rejected working together to sort the matter out. I very much regret that.
  The Financial Secretary is an intelligent and thoughtful woman, and I was very surprised and disappointed by the disingenuity of her statement on 8 March. This evening's debate has restored some balance, and it is worth going through some of the key points that have been raised.
  grandcommitteereport
  Mr. Plaskitt: The hon. Gentleman is dwelling on when the regulatory system failed, but what does he make of Lord Penrose's comment in paragraph 162 of chapter 19? There, he says that, in the 1980s and 1990s, there were
  "specific proposals for change that Ministers did not pursue."
  Why was that?
  Mr. Tyrie: That is probably right. I do not know: I have not looked into enough of the detail in the back papers to be sure. Neither has the hon. Gentleman, as he is only reading Lord Penrose's conclusions. Further on in the report, he will find a litany of regulatory failure that happened after 1997. There are pages and pages of that, and failure at the operational level. The hon. Gentleman is making exactly the sort of partial and partisan remarks that do him and his party no credit. The hundreds of thousands of people who have been affected by the firm's collapse will take note.
  Opposition Members do not dispute Lord Penrose's conclusions about the early 1990s. It would be helpful if the Government abandoned their denial of the shortcomings of the regulatory system and of the operational regulatory failure evident after 1997.
  Secondly, the Financial Secretary sought to insert into the debate the question of light-touch regulation. She tried to attribute blame for the Equitable Life crisis to the light-touch approach of the previous Conservative Government. That may or may not be true, as the issue is very complicated. What is certainly not true is that the Labour Government abandoned that approach for something different when they came to power. On the contrary, as my right hon. Friend the Member for West Dorset (Mr. Letwin) has said, the
  1020
  right hon. Member for Darlington (Mr. Milburn), when he was Chief Secretary, endorsed light-touch regulation. He did not do so when he arrived at the Treasury and while he worked out what to do: he did so a full two years after Labour came to power. He said, in an even more forceful statement than that cited by my right hon. Friend, that the Financial Services Authority
  "will operate according to a philosophy based on light-touch regulation with protection where necessary and fairness throughout. The Bill"—
  the Financial Services and Markets Bill—
  "will reduce regulation".—[Official Report, 28 June 1999; Vol. 334, c. 35.]
  That does not sit squarely with the Financial Secretary's earlier portrayal of the Government's approach to regulation.
  Mr. Gardiner: Does not the hon. Gentleman appreciate the distinction between a light touch in a system of regulation that is wholly inadequate—as I am sure he would accept the previous system was—and a light touch in a system of regulation that is robust?
  Mr. Tyrie: I am afraid that I find that question incomprehensible. I shall look at it in Hansard and have another go at it, but for the moment I shall move on.
  The remarks by the then Chief Secretary sound like an endorsement of a regulatory system that failed. Indeed, that is exactly what the Financial Secretary appears to say about the regulatory system before 1997. The only problem is that it is a description of the system after 1997. Sleight of hand is everywhere. The Financial Secretary looks puzzled, but puzzlement is probably preferable to the knowing understanding of the issue that she has adopted so far.
  Mr. Gardiner: The hon. Gentleman is being partisan.
  Mr. Tyrie: We have been forced into making such remarks by the presentation of the Penrose report by the Financial Secretary on 8 March. On the compensation scheme, she told the House that
  "the Government have introduced the comprehensive financial services compensation scheme, which is ready, were problems to materialise in a company, to pay out 90 per cent. of guaranteed policy values."
  Several policyholders thought that that might help them, but the truth is that it is not a new scheme but an amalgam of two existing schemes. Moreover, it will not help existing Equitable policyholders, as the Financial Secretary well knows, because it underwrites only the guaranteed amount of any policy, not the terminal bonuses that have been lost. She held out false hopes to many people with those remarks. Some of them have written to me and I expect that they will write to her in due course.
  The hon. Member for Warwick and Leamington (Mr. Plaskitt) raised the issue of whether Lord Penrose could consider compensation. The Financial Secretary said
  "Lord Penrose makes no recommendation for the payment of compensation."—[Official Report, 8 March 2004; Vol. 418, c. 1270, 58.]

  1021
  Of course he did not do so: he was not asked to. Furthermore, he said only last week in Scotland that he did not make any recommendations about policyholder compensation because it formed
  "no part of my remit".
  Ruth Kelly: How does the hon. Gentleman respond to the comment by Lord Penrose in the foreword to the report that
  "There was no mechanism that could have been devised, and put into effect within a time scale that would have had regard to the wider public interest in obtaining the account of the developments of the Society's position, that could have accommodated in parallel the investigation and resolution of disputed contentions of conformity or non-conformity with generally accepted norms of practice in any of the fields that would have been relevant."?
  Mr. Tyrie: The Financial Secretary seems to say that the situation is so complicated that we cannot handle it and no scheme could be devised to do so. Of course it could, and Lord Penrose could be asked to consider that. I strongly agree with the hon. Member for Twickenham (Dr. Cable) on that point. Having spent two and a half years considering the issue, Lord Penrose could work up a scheme and a methodology for working out whether compensation should be paid—in other words, to establish liability—and then what that compensation should be. The fact is that Lord Penrose was not asked to do that. The Government did not want the answers, so they did not even ask the questions.
  Perhaps the worst misrepresentation involves the ombudsman's role. The Financial Secretary said that the parliamentary ombudsman
  "has cleared the Government of all cases of maladministration."
  That is like clearing the fox of killing the chickens without bothering to look at the hencoop. The ombudsman has only looked at one case. She has only been allowed to look at 18 months of a 20-year problem. Moreover, she made it clear that she was unable even to inquire into the workings of the key Department—the Government Actuary's Department—where most of the litany of regulatory failure cited in the Penrose report appears to have emanated. So the Government, particularly the Government Actuary's Department, have not been cleared of anything at all, but that has not stopped the Financial Secretary saying:
  "There is no issue after 1997 in Lord Penrose's report that has not been considered by the parliamentary ombudsman".—[Official Report, 8 March 2004; Vol. 418, c. 1270.]
  What an absurd remark. I leave that lying there for the people listening to the debate to judge its plausibility.
  At the start of the debate, my right hon. Friend the Member for West Dorset went carefully through each stage of the Financial Secretary's argument. We can now see more clearly why that line of argument has been developed: because it is the Government's best defence for doing nothing to help the policyholders who have been hit. First, she said that the management were to blame. Few hon. Members dispute that. She then said that the regulatory failure was secondary and systemic. Lord Penrose's report shows it to have been significant and operational. She then sought to create the impression that all the regulatory failures took place before 1997, but much of it took place after 1997—not
  1022
  that that distinction should matter to a responsible Government. She was chuckling away at that moment ago.
  The Financial Secretary sought to create the impression that light-touch regulation was an exclusively Conservative policy; but, as we know, it was the Government's policy when they framed the Financial Services and Markets Act 2000. Finally and most perniciously, she sought to imply that there was no maladministration. In fact, no systematic effort has been made to look for maladministration. The Government are preventing the ombudsman from looking in the one place where it is most likely to be found: the Government Actuary's Department.
  The Financial Secretary and the rest of the Government can do one simple and sensible thing now: they should get on with amending the Parliamentary Commissioner Act 1967, to enable the parliamentary ombudsman to examine the workings of the Government Actuary's Department. Only then will we know whether the litany of regulatory failure identified by Lord Penrose constitutes maladministration, and we can then get clear recommendations on compensation. The Government could make that amendment tomorrow if they chose to do so. They could get on with it right away. The Financial Secretary shakes her head in disagreement. Perhaps she would like to explain why she could not do that tomorrow.
  Ruth Kelly: The hon. Gentleman must realise that secondary legislation cannot be used to make retrospective changes of the kind that he advocates.
  Mr. Tyrie: If the Financial Secretary looks at the Parliamentary Commissioners Act 1967, she will find a specific section that enables her to do so, and it is absolutely incredible that she should be denying that. I hope that I can find it—oh I can—how convenient. It states:
  "A complaint under this Act may be made in respect of matters which arose before the commencement of this Act".
  I have been advised that a complaint can therefore be made that relates to matters that occurred before the commencement of an amendment to the Act.
  Another crucial passage in the Act says that
  "a complaint not made within that period"
  may none the less be considered if
  "there are special circumstances which make it proper to do so."
  So the ombudsman can make her own discretionary judgment on that matter.
  Ruth Kelly rose—Ruth Kelly rose—
  Mr. Tyrie: I should like the Financial Secretary to answer the point that has been made, instead of trying to interrupt, because hundreds of thousands of people want her to make an intelligent reply.
  8.49 pm
  Ruth Kelly: We have had an interesting debate with some passionate contributions on each side of the House, including from my hon. Friends the Members for Brent, North (Mr. Gardiner), for Warwick and Leamington (Mr. Plaskitt) and for West Bromwich,

  1023

  West (Mr. Bailey). Before responding to the debate, I should make it clear to the House that I have not presented my findings or the Government's findings, much as some hon. Members have tried to insinuate that that is the case; I have presented Lord Penrose's account. Tonight, I have found that the real position of the Liberal Democrats is that Lord Penrose's report is unsatisfactory, and that the position of the official Opposition is to try to attribute to Lord Penrose a view that he does not hold. I shall shortly deal with each point raised by the right hon. Member for West Dorset (Mr. Letwin).
  First, I must dispel some myths that have been raised during the debate. Lord Penrose is absolutely clear that it was not the guaranteed annuity problem that led to the society's financial crisis in 2001. He says that, superficially, a £1.5 billion additional liability
  "should not have brought down a society"
  with funds of £32 billion. The issues that he identifies are deep-rooted and go back 30 years into the history of the society. He says that, primarily,
  "the Society was author of its own misfortunes."
  Hon. Members in all parts of the House are agreed with Lord Penrose that, with hindsight, it was
  "the system that failed to provide the regulation that changing circumstances…required, not that there was failure to implement what was fundamentally a satisfactory system."
  Nevertheless, I believe that the House should reflect carefully on the fact that that was the system that Ministers and Parliament had intended.
  The difference between the two sides of the House tonight arises on whether there was operational failure that led to economic loss by policyholders. Lord Penrose has not presented in his report evidence of operational failure. I quote:
  "The deficiencies are not so obvious as some are inclined (or wish) to believe…and it is not enough in this case, to infer from the coincidence of systems deficiencies and loss that one caused or contributed to the other."
  He stresses that he examines the regulators with the benefit of hindsight and that they were operating under a system that was different in approach, resources and values from that which applies today. I think that the House should reflect carefully on the fact that it is a question of the laws that Parliament enacted and the context in which Ministers resolved how those laws should be implemented that Lord Penrose criticises, rather than the discrete actions of the regulator.
  Let me deal with the points raised by the right hon. Member for West Dorset. First, he tried to insinuate that because the level of skills needed to be upgraded after the FSA was instituted, that was itself a sign of operational failure. However, if he had done his homework and read the report more fully, he would have read Lord Penrose's view of that issue. I quote from chapter 13:
  "Ministers resolved…that scrutiny would continue to be based on the examination of the regulatory returns, and that action on the basis of policyholders' reasonable expectations would be reactive to what was found in the returns so as to restrict the workload that a less restrained approach would involve."
  1024
  It was that which led deliberately to the under-resourcing of the DTI. Lord Penrose goes on to make the link by stating that the DTI was
  "ill-equipped to participate in the regulatory process. It had inadequate staff, and those involved at line supervisor level in particular were not qualified to make any significant contribution to the process."
  Lord Penrose himself is clear that that was not operational failure but a deliberate decision taken by managers, and when he was asked in the Select Committee on the Treasury about systemic failure, he said that those issues were aspects of the same problem. He is absolutely clear about that point.
  Mr. Tyrie rose—Mr. Tyrie rose—
  Ruth Kelly: If the hon. Gentleman listened, he might hear the quotes from the Penrose report. I must put the points on the record before the end of the debate.
  The right hon. Member for West Dorset referred to chapter 19 and paragraph 187, which is about subordinated debt. If he read the Penrose report more closely, he would see that Lord Penrose says of that episode:
  "The authorisation was within the scope of the relevant regulations and guidance. I do not criticise any of the formal steps taken or the propriety of the order granted."
  The right hon. Gentleman went on to refer to paragraph 117, which is about the failure to appreciate a change of valuation assumptions in the regulatory returns. The practice adopted between 1990 and 1997 by Equitable Life of using different interest rates for valuing its assets and liabilities was within the regulations of the time. As they were within the regulations, regulators had no grounds to challenge the decision—again, there was no evidence of operational failure.
  Mr. Tyrie: Will the hon. Lady give way?
  Ruth Kelly: No, I must make my points before the end of the debate.
  The right hon. Member for West Dorset cited paragraphs 240 and 228 of chapter 19 about the general failure by regulators to follow up issues and the ineffectiveness of challenge. Again, we can trace Lord Penrose's comments back to under-resourcing—a decision was deliberately taken by Ministers in the DTI to restrict the work load that a less restrained approach would involve. As Lord Penrose says, individual regulators
  "operated in good faith and to the best of their abilities within the system as they found it".
  The right hon. Gentleman also cited paragraph 209 of chapter 19 about the information obtained, which was not used to form a realistic appraisal of the society's financial position. Had he looked back a couple of paragraphs he would have found that Lord Penrose deliberately makes a link to the Government's success in watering down the third life directive and the fact that a paper-based approach remained in place. He said that that approach had "other consequences" and made a link to the episode. Again, it was a policy decision, not an operational failure.

  1025
  Many hon. Members have raised the question of the ombudsman's remit and her inquiry. You will know, Mr. Deputy Speaker, as will hon. Members, that the parliamentary ombudsman is an Officer of the House, who reports to it and is independent of the Executive and Government. That is an important principle that all hon. Members should abide by. In her initial investigations, the ombudsman chose to examine the FSA's period of stewardship. She could have chosen to examine a different period, but did not. She chose to look at one lead case. She could have chosen a different case, but did not do so. She concluded that there was no case for the Government to answer, and that there was no maladministration that led to loss. The fact that hon. Members do not agree with her conclusion does not mean that they should reject it.
  Mr. Letwin: Will the hon. Lady give way?
  Ruth Kelly: No, I have two minutes left, and the right hon. Gentleman must let me make my point.
  We are determined to protect policyholders. Lord Penrose says that the FSA reforms
  "represent a major comprehensive re-assessment of the requirements of an efficient regulatory system".
  We are determined not to be complacent. There will be a programme of comprehensive reviews—a review of corporate governance of life mutuals will be led by Sir Derek Morris; a review of actuarial standards of performance will be led by Paul Myners; and a review of accounting standards will be led by the independent Accounting Standards Board. That work, alongside the FSA reforms welcomed by Lord Penrose, will develop the architecture of the life assurance industry for present and future policyholders, and will help to ensure that the regulatory system remains up to date.
  We have also pledged to consult shortly on legislation that will protect policyholders from unlimited liability—an issue raised in the Penrose report that we are determined to address. I have also spoken to the financial ombudsman to see whether he needs any additional resources or help from the Government to deal with any consequential claims that may, or may not, arise from Lord Penrose's report. We have learned the lessons—
  It being Three hours after the commencement of proceedings, the motion for the Adjournment of the House lapsed, without Question put, pursuant to Order [17 March].

  DELEGATED LEGISLATION
  Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

  FEES AND CHARGES
  That the draft Police Act 1997 (Criminal Records) (Fees) Order 2004, which was laid before this House on 23rd February, be approved.—[Margaret Moran.]
  Question agreed to.

  PUBLIC ACCOUNTS
  Ordered,
  That Mrs Cheryl Gillan be discharged from the Committee of Public Accounts and Mrs Angela Browning be added.—[Margaret Moran.]

PETITION

  Quiggins, Liverpool
  8.59 pm
  Mrs. Claire Curtis-Thomas: If you have never had the opportunity to visit Liverpool, Mr. Deputy Speaker, I suggest you try and get to see us as soon as possible. Liverpool is a great city of kindhearted, spirited people. We have marvellous museums, theatres and buildings that rival anything in the UK. After years of underinvestment, since 1997 Labour Government money has been helping to transform our city. In 2002 our glorious city received the ultimate accolade when it was awarded the status of European city of culture 2008.
  What a wonderful array of goodies we have to offer our visitors, including Quiggins, a marvellous retail mix with something for everyone. Motorbikes, antique furniture and the best 60s clothes on the planet are all available in this retail unit. But Quiggins is facing compulsory purchase as the mega Grosvenor empire seeks to close one of the best shopping experiences that Liverpool offers.
  I present to the House tonight a petition signed by 50,000 people, which includes the names of thousands of my constituents who are both customers and retailers of that lovely emporium. I ask the House to urge the Deputy Prime Minister to consider carefully the recommendations placed before him by the planning inspectorate, to support the retention of a great Liverpool institution and to support Quiggins.
  To lie upon the Table.

Participation in Elections
Motion made, and Question proposed, That this House do now adjourn.—[Margaret Moran.]
9.1 pm
Mark Tami: In the 2001 general election, voter turnout dropped to its lowest level since the advent of universal suffrage: just over half of those eligible to vote did so. There has been much discussion about low turnout and declining participation in elections. I am sure it is an issue that concerns us all. We speak and seek to govern for the majority, but we are fast approaching a situation in which the majority may not bother to vote at all.
The last general election saw a turnout of some 59.4 per cent.—a new record low, surpassing the previous low of 71.3 per cent. achieved in 1997. In local elections, particularly in local by-elections, we can only dream of such turnouts, as actual turnouts often average less than 40 per cent. In local authority by-elections, participation levels that were once unheard of, between 10 and 15 per cent., are pretty much run of the mill. The predictions for the future are that this trend of decline is set to continue, with pitiful turnouts predicted for the forthcoming European elections, which might be saved only by the fact that they are being held on the same day as the local elections, and probably a new low in the next general election.
We may well look back to the 1997 election, when 30 per cent. of the electorate did not vote, as some kind of golden age. That is a sad indictment of our current system, as we seem content that such a large proportion of our electorate did not take part in the process. We also seem content that a large and growing number of people do not even register in the first place. No doubt many hon. Members have looked at the electoral registers, as I have done, and seen examples of properties that we know are occupied, but which do not appear on the register. Some colleagues have seen quite sizeable drops in their electorate.
We require individuals by law to fill out registration forms and give correct information, yet we appear to do nothing about it if they do not. Arguably, we have never recovered from the effects of the poll tax and the huge numbers of people, particularly younger people, who left the register in an attempt to avoid the tax. A cynic might argue that that was one of the main aims of that Conservative policy.
What are we doing to encourage registration? Not a lot, I would say. Yes, the Electoral Commission has had poster campaigns and some councils are more diligent than others, but the reality is that we are only scratching the surface. Furthermore, when I asked the Department for Constitutional Affairs for an estimate of the extent of the problems that we face and what is being done about them, I was told that in the main, it does not keep such information. Why not? Unless we know the extent of the problem, we will never tackle it effectively.
Our last experience of elections in Wales was the Assembly elections last year. My party and I were pleased with the result, but I do not think that anyone could, or indeed should, find the turnout acceptable. My own seat held the unenviable record of the lowest turnout in Wales, of some 24.9 per cent.—less than a quarter of the electorate.
1028
Why was the turnout so poor? I am sure that we could all find reasons to explain away the lack of participation. In areas such as the north-east and the south-east of Wales, which voted against devolution in the first place, turnout was certainly lower than in the pro-devolution areas. Anglesey, Ynys Mon, had the highest turnout of just over 50 per cent., but still hardly a level that we can be pleased with.
The Assembly has an uphill battle to convince many people in the north that it is not just a Cardiff-based institution, and without doubt there is still a lack of understanding among the electorate as to exactly what its powers and responsibilities are. The method of election did not help, either, with a bizarre system of proportional representation that in many cases gave the losing candidates in the constituency election a seat in the Assembly through a back-door method of selection via the regional list.
In addition, there was the ludicrous situation of Clwyd, West, where the only candidate who stood a chance of not getting elected to the Assembly was the sitting Labour Member, as the Tory, Liberal Democrat and Plaid Cymru candidates were all No. 1 on their party lists, and barring some miracle were certain to be elected. Despite rejecting those three candidates at the ballot box, the voters of Clwyd, West—and, indeed, the rest of north Wales—find themselves supposedly represented by those individuals in the Assembly. Furthermore, despite the fact that people voted by a clear majority for Labour on the party list in north Wales, not a single Labour list member was elected. Apparently, that is democracy in action, but I think that most people find it rather difficult to understand—or, more to the point, to justify.
There are lessons that we can learn from the Assembly elections, but we would be making a grave mistake if we believed that simply addressing those factors would make a meaningful difference to turnout. The problem is that we look to explain away poor turnouts on an election-by-election basis, and do not look at the long-term trend, which is getting worse. We are in denial, and like anybody in denial we look for excuses rather than addressing the problem.
In the 1997 general election, turnout was apparently low because Tory voters stayed at home. In 2001 they apparently did it again, and many Labour voters thought it was a foregone conclusion, so they did not vote either. That may or may not be true, but it does nothing to address the problem that we face. Likewise, we find further comfort in blaming the press and the media for encouraging cynicism and complacency among the electorate.
We have all become used to the accusations—"They're all the same. It doesn't matter which lot get elected, because they won't change anything. It's hardly worth bothering. They're not interested in ordinary people. They can't relate to you, particularly if you're young, and they don't care about the old. They're only in it for themselves." Oh, and by the way, we all spend at least 95 per cent. of our time on holiday, as Nicky Campbell never tires of telling us on Radio 5. Again, with the press that we have, I cannot see that changing in the foreseeable future. We will not return to the reverence with which the media used to treat politicians in the 1950s, and we should not do so. We must live with that situation; we must get on with it.

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We face a simple choice: either we accept the growing disengagement with the political process or we do something about it. The situation will not change by itself, and all the evidence points to its getting worse in the future. As individual politicians, we can only do so much. We can make ourselves more accessible, hold more surgeries, knock on more doors, consult more and listen more, but that does not necessarily mean that we can improve matters on our own. Because of their hard work and public standing, some hon. Members may be able to count on higher levels of personal support than others, which may enable them to hold their seats in difficult times and difficult elections for their parties. However, there is little evidence that individual politicians have any real impact on turnout itself—at least in a positive way.
Our attempts to improve turnout have therefore focused on changes to the mechanism of voting itself. Experiments with postal voting have, without doubt, proved successful, and I welcome the changes that have made postal voting easier. Where we have had all-out postal voting in local elections, there have been sharp increases in turnout, and I personally regret that we will not have postal votes in Wales this year. However, it will be some time before we can judge whether that is a short-term change in voting patterns or a significant breakthrough.
With postal voting, there is also concern among us, as politicians, that we will somehow lose control of the election process and that our traditional forms of campaigning must change. We would no doubt all have sleepless nights at the thought of voters filling out ballot papers and sending them off before we have had a chance to canvass them. However, would that not be a price worth paying if we could significantly improve participation in our elections?
I am further encouraged and drawn to postal voting by the opposition of the Conservative party—there must be something in it, if the Conservative party is against it. It therefore comes as little surprise that Conservatives in the other place are doing their best to derail our proposals.
Some would argue that all we must do is change the method of election from first past the post to some form of proportional representation, and suddenly large numbers of people would flock to polling stations and take part in the democratic process. Our experience in Wales, and indeed in Scotland, demonstrates that that is unlikely to be the case.
Arguments over voting systems have always tended to be carried out among academics rather than among people. I have never come across a dedicated non-voter who quotes the electoral system as their reason for not voting. Equally, reform of the other place, and some of our other hobby-horses in this House, are low down on their lists too. Ultimately, we must decide whether we are serious about increasing voter participation. If we are not, we must carry on as we are—perhaps we can tinker a bit here and there, with voting on Sundays, using the internet, voting at supermarkets and votes at 16, but we are still likely to see decline.
If we are serious about making a change, we must consider compulsion. To some, that would be an acceptance that we have failed in all other means of voter re-engagement—perhaps it would—and no doubt
1030
it will upset the liberal elite. However, are we really comfortable with a situation in which turnouts for future general elections may be less than 50 per cent, and perhaps in the long term even less than 40 per cent.? Are we really saying that it is too much to expect and require the citizens of this country to go out and vote once every four or five years to take part in the political process? Even if they choose ultimately to vote for "none of the above" and spoil their vote, is it such a great infringement of civil liberties? I think not.
Experience from around the world shows us that compulsory voting works, and is accepted by the citizens of countries where it operates. Voting is regarded not only as a right, but as a civic duty. For example, Australia has had compulsory voting for many years. There is a small fine for those who do not take part without a valid reason, but the numbers are not great. Nobody would argue that Australia is anything other than an open and democratic country, yet over the past 30 years it has consistently achieved turnouts of around 95 per cent. of the electorate. Australia's lowest turnout since 1972 was 94.2 per cent.—a level that we have never achieved, and will never achieve, unless we are prepared to change our present system.
America, on the other hand, illustrates the dangers of the direction in which we may be heading. Turnout in the congressional elections in 2002 was just 52 per cent. of the registered electorate; but when one looks at the percentage of voting age population—an estimate of those eligible to register to vote—the percentage drops to a staggering 36.5 per cent.
Requiring people to take part in the democratic process is not the thin end of the wedge of a totalitarian society—on the contrary, it engages people who would otherwise not take part in, and be ignored by, the political process. Importantly, it makes politicians and political parties seek to engage with the electorate as a whole, rather than only with those who vote. We need only look to America, where in certain states whole sections of the population are effectively disfranchised and ignored by the political parties. After all, why appeal, or have policies that appeal, to people who are not on the register and do not vote?
Even in this country, the employed are twice as likely to vote as the unemployed, the old more likely than the young, and the middle class more likely than the working class. There is a real danger that we in Britain could go down that road. We need seriously to explore and study the options surrounding compulsory voting, including incentive-based and penalty-based systems. The international evidence is there. We must find a reliable and workable solution to this long-term problem.
The Government rightly talk about the rights and responsibilities of our citizens. It is a right—a precious right—to be able to vote. In many countries, people are still fighting and dying in the pursuit of that right, yet many in this country simply cast it aside. With rights come responsibilities, and the time is now right for us to enshrine that responsibility in law.
9.17 pm
The Parliamentary Under-Secretary of State for Constitutional Affairs: I congratulate my hon. Friend the Member for Alyn and

1031
Deeside (Mark Tami) on securing this opportunity to debate a vital issue that is essential to this Parliament namely, the degree to which we secure participation in our democratic system and in our elections. All hon. Members accept as a top priority the fact that if we do not have good levels of participation, that reflects ill on the nature of our society. A civilised society is one that has active citizenship and where, if elected representatives are to act with a strong mandate and to be held accountable for their actions, as many citizens as possible must be active and participating.
As my hon. Friend notes, turnout and participation varies enormously in many different ways. It varies from area to area and in terms of ethnicity, social class, educational background, occupational background and age. No matter which way one cuts the cake, there are different lessons to learn about the extent to which people are willing to participate. Of course, we as politicians have a key role—perhaps it is a burden on us all—in stimulating debate, making politics more interesting and presenting a real choice to the electorate. When we near general election periods, we naturally find that there is more interest among the population as they feel that their choice is more obvious. We do not do too badly in Britain in that respect.
By coincidence—or perhaps not, if my hon. Friend has timed his request for this Adjournment debate very well—the Electoral Commission and the Hansard Society launched a joint audit of political engagement today in Portcullis House. In it, they looked at a whole series of influences among the general population. A survey was undertaken, and my hon. Friend will be delighted to learn that the audit demonstrated that, for example, people who have recently had contact with their local Member of Parliament are much more likely to be satisfied with their performance than those who have not-62 per cent. were satisfied, as against 38 per cent. who were not. That is a nice thing to note. In fact, the audit report comments that
"familiarity with politicians…breeds favourability, not contempt."
That is something of which we can all be proud.
Among the good things in the audit was the finding that 41 per cent. of people were satisfied with their own Member of Parliament, while just 13 per cent. were dissatisfied. It also found that people view individual Members of Parliament more favourably than MPs as a collective, and that 74 per cent. agree that voting is a duty, while 75 per cent. said that they wanted to have a say in how the country was run. There were, however, less good aspects to the findings. Only 50 per cent. of people said that they were interested in politics, and less than half the public say that they are well informed about politics, in terms of both their perceived and assessed knowledge. So the audit presents a mixed picture. I pay tribute to the Hansard Society and the Electoral Commission for their work on it.
I think that my hon. Friend would be the first to acknowledge that first-time voters are especially important in ensuring that we maintain the momentum in democratic participation. Research has shown that those who vote at the first opportunity tend to continue to participate on later occasions. Conversely, those who
1032
do not bother see no reason to change that habit, and tend to stay away from the ballot box on a more permanent basis.
Our approach has therefore been to attack this issue in a number of different ways, not least through schools. Citizenship education is just one of the mechanisms for raising awareness and educating people about how decisions are made, who makes them, why decision makers make their decisions and how they can be influenced. In England, we already have a good level of compulsory citizenship education for 11 to 14-year-olds. That has been the case since Sept 2002. There is no statutory curriculum in Scotland, but I understand that the Scottish Executive have produced guidance to ensure that the breadth of the curriculum includes social and democratic responsibilities. In Wales, my hon. Friend will know that citizenship education forms part of the personal and social education framework that was implemented in September 2000. In regard to Northern Ireland, I understand that our ministerial colleagues are considering their own proposals for citizenship education.
Other useful initiatives have taken place in recent years. The creation of the Electoral Commission has been useful, as it has helped to lead and innovate in participatory democracy policy. It was set up in November 2000, and its remit includes voter education as well as keeping electoral law and processes under review. It also develops publicity and awareness materials, and there have been television advertisements to encourage registration in elections. The commission's innovations are constantly being proposed, and it is quite prodigious in producing reports, to which we are keen to respond as best we can.
There are other ways in which we can improve participation. Technically and administratively, through the mechanics of the electoral system, we can remove barriers to participation and we are trying to take action in many different ways in that regard. My hon. Friend mentioned the electoral registration process, and we have had a great deal more accuracy recently in that regard, although when certain population changes have come into play, they have made it appear as though the registers have shrunk in some areas. Obviously, such changes will always have an effect on the quantum of the register, but we now have increasingly accurate electoral registers. They are locally administered, and rightly so.
We also have new help for voters with disabilities. We are piloting electronic voting, and telephone voting has been piloted in local elections. There has also been postal voting on demand in the ordinary run of elections. Earlier today we debated yet again our attempt to achieve piloting of all-postal voting, which we know for a fact has a positive effect on turnout in general—there tends to be a considerable increase. Depending on the passage of that legislation, we hope that as many regions as possible of the four that we have identified can benefit from that.
My hon. Friend referred specifically to the experience in his locality of the 2003 Welsh Assembly elections. I know that the turnout, which was only 38 per cent., disappointed him and other colleagues. That is obviously a challenge, predominantly for the Welsh Assembly, and many of the remedies rest in its own hands. However, the Electoral Commission usefully

1033
published an official report commenting on turnout. While it says that this is not wholly a Welsh issue, it highlights specific areas in which it may be able to undertake extra activity. For example, it feels that there was an information deficit on the nature of the Welsh Assembly. Clearly, that is a matter for the Assembly to address.
The Electoral Commission feels that voters had particular views on the Welsh Assembly that did not necessarily encourage them to turn out and vote. However, the Government support the current devolution settlement and we do not think that there is any particular evidence that changing the settlement at that level would affect public engagement. The Electoral Commission also says that the election campaign was too low key. All the political parties have a role to play in ensuring that we pep things up a little to make the campaign more interesting for all concerned.
As usual, enthusiasm among younger voters was at a relatively low level, but the citizenship efforts being undertaken by the Welsh Assembly Government will help with that. In Wales, particularly for the Assembly elections, there may also be a need for more convenient voting methods. I assure my hon. Friend that we will discuss with the Welsh Assembly Government whether any powers are needed to enable innovation in voting mechanisms for Welsh Assembly elections. I hope that he will monitor that and keep a close eye on developments.
My hon. Friend also concludes that it is perhaps time that we started to consider the age-old question of compulsion—compulsory voting and whether the attraction of being able to remove at a stroke worries about turnout should come upon us. I see aspects of the attraction, but, as he knows—I read the Fabian Society pamphlet he wrote some time ago with a colleague of ours—there are disadvantages. I would worry about the sense of the voting process being criminalised. If people did not attend the polling station, would they be
1034
behaving in a criminal manner? That would be a big step for us to take in our civilised society. There are serious issues that need considering.
Turnout, of course, involves more than attendance at the polling station. Political disengagement is the deeper problem and failure to turn out is merely a symptom of it. As one of my officials helpfully pointed out when we were talking about the debate, "You can force school children to do cross-country running, but you cannot make them enjoy it." I do not think that compulsory voting would necessarily force everybody to engage with the political process. It is not wholly a solution. Of course, enforcing the process of compulsory voting would also be a mammoth task, and perhaps disproportionate to the nature of the offence. Therefore, while I hear what my hon. Friend says, some potential disadvantages would need to be overcome.
Nevertheless, I do not want to rain on my hon. Friend's parade completely. In 1998, the Home Affairs Committee reported that while compulsory voting might not be desirable, there should be a public debate on it. I gather that the Electoral Commission has said subsequently that it wants to examine the issue in more detail, and it may well be researching some of the wider international experience. He should therefore watch that space. In the meantime, however, I am afraid that the Government have no plans to pursue the possibility of compulsory voting.
Parliament is sensitive to the need to act to improve participation in the electoral process, however. As a Government, we have taken significant steps forward, and are working hard to take further steps. The more fundamental question is how we as politicians can enthuse the public and engage their interest further to make that political process work, but I at least congratulate my hon. Friend on raising the subject today.
Question put and agreed to.
Adjourned accordingly at half-past Nine o'clock.

Deferred Division

  FISHERIES: CATCH QUOTAS AND EFFORT LIMITATION 2004
  That this House takes note of European Union Document No. 15388/03, draft Regulation fixing for 2004 the fishing opportunities and associated conditions for certain fish stocks and groups of fish stocks, applicable in Community waters and, for Community vessels, in waters where catch limitations are required; and notes that the Government was successful in negotiating Total Allowance Catches which take full account of scientific advice while securing the best possible fishing opportunities for United Kingdom fishermen.
  The House divided: Ayes 255. Noes 149.

  Division No. 106]

  AYES

  Ainger, Nick

  Darling, rh Alistair

  Ainsworth, Bob (Cov'try NE)

  David, Wayne

  Alexander, Douglas

  Davidson, Ian

  Allen, Graham

  Dhanda, Parmjit

  Anderson, Janet (Rossendale &

  Dismore, Andrew

  Darwen)

  Dobbin, Jim (Heywood)

  Armstrong, rh Ms Hilary

  Dobson, rh Frank

  Atherton, Ms Candy

  Donohoe, Brian H.

  Atkins, Charlotte

  Doran, Frank

  Austin, John

  Dowd, Jim (Lewisham W)

  Bailey, Adrian

  Drown, Ms Julia

  Barnes, Harry

  Eagle, Angela (Wallasey)

  Barron, rh Kevin

  Eagle, Maria (L'pool Garston)

  Battle, John

  Edwards, Huw

  Bayley, Hugh

  Efford, Clive

  Beard, Nigel

  Ellman, Mrs Louise

  Benton, Joe (Bootle)

  Farrelly, Paul

  Berry, Roger

  Field, rh Frank (Birkenhead)

  Blackman, Liz

  Fitzpatrick, Jim

  Blizzard, Bob

  Fitzsimons, Mrs Lorna

  Blunkett, rh David

  Flynn, Paul (Newport W)

  Bradley, rh Keith (Withington)

  Follett, Barbara

  Bradley, Peter (The Wrekin)

  Foster, Michael (Worcester)

  Bradshaw, Ben

  Francis, Dr. Hywel

  Brennan, Kevin

  Gapes, Mike (llford S)

  Brown, Russell (Dumfries)

  Gardiner, Barry

  Browne, Desmond

  Gerrard, Neil

  Burnham, Andy

  Byers, rh Stephen

  Gibson, Dr. Ian

  Cairns, David

  Goggins, Paul

  Campbell, Alan (Tynemouth)

  Griffiths, Jane (Reading E)

  Campbell, Mrs Anne (C'bridge)

  Griffiths, Win (Bridgend)

  Caplin, Ivor

  Grogan, John

  Casale, Roger

  Hain, rh Peter

  Caton, Martin

  Hall, Patrick (Bedford)

  Cawsey, Ian (Brigg)

  Hanson, David

  Challen, Colin

  Harris, Tom (Glasgow Cathcart)

  Chapman, Ben (Wirral S)

  Havard, Dai (Merthyr Tydfil &

  Clark, Mrs Helen (Peterborough)

  Rhymney)

  Clark, Paul (Gillingham)

  Henderson, Doug (Newcastle N)

  Clarke, rh Tom (Coatbridge &

  Henderson, Ivan (Harwich)

  Chryston)

  Hendrick, Mark

  Clarke, Tony (Northampton S)

  Hepburn, Stephen

  Clelland, David

  Heppell, John

  Coaker, Vernon

  Hesford, Stephen

  Coffey, Ms Ann

  Hewitt, rh Ms Patricia

  Coleman, Iain

  Heyes, David

  Colman, Tony

  Hill, Keith (Streatham)

  Connarty, Michael

  Hinchliffe, David

  Corston, Jean

  Hodge, Margaret

  Cousins, Jim

  Hoey, Kate (Vauxhall)

  Cranston, Ross

  Hope, Phil (Corby)

  Crausby, David

  Hopkins, Kelvin

  Cruddas, Jon

  Howarth, rh Alan (Newport E)

  Cummings, John

  Howarth, George (Knowsley N &

  Cunningham, Jim (Coventry S)

  Sefton E)

  Cunningham, Tony (Workington)

  Hoyle, Lindsay

  1036

  Hughes, Beverley (Stretford &

  Naysmith, Dr. Doug

  Urmston)

  Norris, Dan (Wansdyke)

  Hughes, Kevin (Doncaster N)

  O'Brien, Bill (Normanton)

  Humble, Mrs Joan

  O'Hara, Edward

  Hurst, Alan (Braintree)

  Organ, Diana

  Iddon, Dr. Brian

  Osborne, Sandra (Ayr)

  Ingram, rh Adam

  Owen, Albert

  Irranca-Davies, Huw

  Palmer, Dr. Nick

  Jamieson, David

  Perham, Linda

  Johnson, Miss Melanie (Welwyn

  Picking, Anne

  Hatfield)

  Pike, Peter (Burnley)

  Jones, Jon Owen (Cardiff C)

  Plaskitt, James

  Jones, Kevan (N Durham)

  Pond, Chris (Gravesham)

  Jones, Lynne (Selly Oak)

  Pope, Greg (Hyndburn)

  Jones, Martyn (Clwyd S)

  Pound, Stephen

  Keeble, Ms Sally

  Prentice, Ms Bridget (Lewisham

  Kelly, Ruth (Bolton W)

  E)

  Kemp, Fraser

  Prescott, rh John

  Khabra, Piara S.

  Prosser, Gwyn

  Kidney, David

  Purchase, Ken

  King, Andy (Rugby)

  Purnell, James

  King, Ms Oona (Bethnal Green &

  Quinn, Lawrie

  Bow)

  Rapson, Syd (Portsmouth N)

  Knight, Jim (S Dorset)

  Reed, Andy (Loughborough)

  Kumar, Dr. Ashok

  Robertson, John (Glasgow

  Ladyman, Dr. Stephen

  Anniesland)

  Lawrence, Mrs Jackie

  Roche, Mrs Barbara

  Laxton, Bob (Derby N)

  Ross, Ernie (Dundee W)

  Lazarowicz, Mark

  Ruane, Chris

  Lepper, David

  Ryan, Joan (Enfield N)

  Leslie, Christopher

  Salter, Martin

  Levitt, Tom (High Peak)

  Savidge, Malcolm

  Lewis, Ivan (Bury S)

  Sawford, Phil

  Lewis, Terry (Worsley)

  Sheridan, Jim

  Liddell, rh Mrs Helen

  Simpson, Alan (Nottingham S)

  Linton, Martin

  Singh, Marsha

  Lloyd, Tony (Manchester C)

  Smith, Geraldine (Morecambe &

  Love, Andrew

  Lunesdale)

  Lucas, Ian (Wrexham)

  Smith, Jacqui (Redditch)

  Luke, Iain (Dundee E)

  Soley, Clive

  Lyons, John (Strathkelvin)

  Squire, Rachel

  McAvoy, Thomas

  Steinberg, Gerry

  McCabe, Stephen

  Stewart, David (Inverness E &

  McCartney, rh Ian

  Lochaber)

  McDonagh, Siobhain

  Stewart, Ian (Eccles)

  McDonnell, John

  Stoate, Dr. Howard

  MacDougall, John

  Strang, rh Dr. Gavin

  McFall, John

  Straw, rh Jack

  McGuire, Mrs Anne

  Stringer, Graham

  Mclsaac, Shona

  Stuart, Ms Gisela

  McKechin, Ann

  Sutcliffe, Gerry

  McKenna, Rosemary

  Tami, Mark (Alyn)

  Mackinlay, Andrew

  Taylor, David (NW Leics)

  McNulty, Tony

  Thomas, Gareth (Clwyd W)

  McWalter, Tony

  Timms, Stephen

  McWilliam, John

  Touhig, Don (Islwyn)

  Mahmood, Khalid

  Trickett, Jon

  Mahon, Mrs Alice

  Truswell, Paul

  Mallaber, Judy

  Turner, Dr. Desmond (Brighton

  Mendelson, rh Peter

  Kemptown)

  Mann, John (Bassetlaw)

  Twigg, Derek (Halton)

  Marris, Rob (Wolverh'ton SW)

  Twigg, Stephen (Enfield)

  Marsden, Gordon (Blackpool S)

  Tynan, Bill (Hamilton S)

  Marshall-Andrews, Robert

  Walley, Ms Joan

  Martlew, Eric

  Ward, Claire

  Merron, Gillian

  Wareing, Robert N.

  Michael, rh Alun

  Watts, David

  Miliband, David

  White, Brian

  Miller, Andrew

  Whitehead, Dr. Alan

  Moffatt, Laura

  Wicks, Malcolm

  Moran, Margaret

  Williams, rh Alan (Swansea W)

  Morgan, Julie

  Williams, Betty (Conwy)

  Morley, Elliot

  Winnick, David

  Mountford, Kali

  Winterton, Ms Rosie (Doncaster

  Munn, Ms Meg

  C)

  Murphy, Jim (Eastwood)

  Woolas, Phil

  1037

  Wright, Anthony D. (Gt

  Wright, David (Telford)

  Yarmouth)

  Wright, Tony (Cannock)

  NOES

  Ainsworth, Peter (E Surrey)

  Davey, Edward (Kingston)

  Amess, David

  Djanogly, Jonathan

  Arbuthnot, rh James

  Dodds, Nigel

  Atkinson, David (Bour'mth E)

  Donaldson, Jeffrey M.

  Atkinson, Peter (Hexham)

  Duncan, Alan (Rutland)

  Bacon, Richard

  Evans, Nigel

  Baker, Norman

  Ewing, Annabelle

  Baldry, Tony

  Field, Mark (Cities of London &

  Barker, Gregory

  Westminster)

  Baron, John (Billericay)

  Foster, Don (Bath)

  Beggs, Roy (E Antrim)

  Francois, Mark

  Bellingham, Henry

  Gale, Roger (N Thanet)

  Blunt Crispin

  Garnier, Edward

  Boswell, Tim

  George, Andrew (St. Ives)

  Bottomley, Peter (Worthing W)

  Gidley, Sandra

  Brady, Graham

  Gillen, Mrs Cheryl

  Brake, Tom (Carshalton)

  Goodman, Paul

  Brazier, Julian

  Gray, James (N Wilts)

  Breed, Colin

  Green, Damian (Ashford)

  Brooke, Mrs Annette L.

  Green, Matthew (Ludlow)

  Browning, Mrs Angela

  Greenway, John

  Burns, Simon

  Gummer, rh John

  Burnside, David

  Hague, rh William

  Burstow, Paul

  Hammond, Philip

  Burt, Alistair

  Harris, Dr. Evan (Oxford W &

  Cable, Dr. Vincent

  Abingdon)

  Calton, Mrs Patsy

  Hawkins, Nick

  Campbell, Gregory (E Lond'y)

  Heath, David

  Campbell, rh Sir Menzies (NE

  Heathcoat-Amory, rh David

  Fife)

  Hermon, Lady

  Carmichael, Alistair

  Hoban, Mark (Fareham)

  Chapman, Sir Sydney (Chipping

  Hughes, Simon (Southwark N)

  Barnet)

  Jones, Nigel (Cheltenham)

  Clifton-Brown, Geoffrey

  Key, Robert (Salisbury)

  Collins, Tim

  Kirkbride, Miss Julie

  Cormack, Sir Patrick

  Kirkwood, Sir Archy

  Cotter, Brian

  Knight, rh Greg (E Yorkshire)

  Cran, James (Beverley)

  Laing, Mrs Eleanor

  1038

  Lait, Mrs Jacqui

  Shephard, rh Mrs Gillian

  Lamb, Norman

  Shepherd, Richard

  Laws, David (Yeovil)

  Simmonds, Mark

  Liddell-Grainger, Ian

  Simpson, Keith (M-Norfolk)

  Lilley, rh Peter

  Skinner, Dennis

  Llwyd, Elfyn

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

  Loughton, Tim

  Kincardine)

  Luff, Peter (M-Worcs)

  Smyth, Rev. Martin (Belfast S)

  McIntosh, Miss Anne

  Spicer, Sir Michael

  Mackay, rh Andrew

  Spink, Bob (Castle Point)

  McLoughlin, Patrick

  Spring, Richard

  Malins, Humfrey

  Streeter, Gary

  Marsden, Paul (Shrewsbury &

  Stunell, Andrew

  Atcham)

  Swayne, Desmond

  Maude, rh Francis

  Swire, Hugo (E Devon)

  Mitchell, Andrew (Sutton

  Tapsell, Sir Peter

  Coldfield)

  Taylor, John (Solihull)

  Moss, Malcolm

  Taylor, Sir Teddy

  Murrison, Dr. Andrew

  Teather, Sarah

  Norman, Archie

  Thomas, Simon (Ceredigion)

  Opik, Lembit

  Tonge, Dr. Jenny

  Osborne, George (Tatton)

  Trend, Michael

  Ottaway, Richard

  Trimble, rh David

  Paterson, Owen

  Turner, Andrew (Isle of Wight)

  Pickles, Eric

  Tyler, Paul (N Cornwall)

  Portillo, rh Michael

  Tyrie, Andrew

  Pugh, Dr. John

  Walter, Robert

  Randall, John

  Waterson, Nigel

  Reid, Alan (Argyll &Bute)

  Watkinson, Angela

  Rendel, David

  Webb, Steve (Northavon)

  Robathan, Andrew

  Weir, Michael

  Robertson, Angus (Moray)

  Wiggin, Bill

  Robertson, Hugh (Faversham &

  Willetts, David

  M-Kent)

  Williams, Hywel (Caernarfon)

  Robertson, Laurence (Tewk'b'ry)

  Willis, Phil

  Robinson, Peter (Belfast E)

  Wilshire, David

  Rosindell, Andrew

  Winterton, Ann (Congleton)

  Ruffley, David

  Winterton, Sir Nicholas

  Russell, Bob (Colchester)

  (Macclesfield)

  Sanders, Adrian

  Wishart, Pete

  Selous, Andrew

  Younger-Ross, Richard

  Question accordingly agreed to.

Preamble
[MR. JOHN MCWILLIAM in the Chair]

Reserve Forces
Motion made, and Question proposed, That the sitting be now adjourned.—[Gillian Merron.]
9.30 am
Mr. Desmond Swayne: May I begin by congratulating the Minister on his announcement earlier this year of the appointment of the Duke of Westminster as assistant chief of the general staff with responsibility for reserves? We welcome that appointment unreservedly; indeed, my hon. Friend the Member for Canterbury (Mr. Brazier) has long argued for such an appointment. It will have a great beneficial effect on the reserves, and we thank the Minister for the action that he has taken.
When I was mobilised last June, there was a spate of articles in some of the quality broadsheets that seemed to imply that the mobilisation of so many reservists for Operation Telic had been little short of a disaster—no kit, no pay and the regulars pushed off early leaving the Territorial Army with disproportionately longer tours in the theatre of operations. Nothing is quite as it appears in the newspapers. My experience at the reserve training and mobilisation centre at Chilwell was that it was a slick process. I would be pushed to think of any improvements that could have been made to the organisation, and I said so when I wrote to the Secretary of State at the time.
That is not to say that there were not significant teething problems with what I presume was the first large-scale mobilisation of reservists since Suez or the Korean war. Undoubtedly, there were several problems, and we should have sympathy for those who were at the rough end of them. A great deal has been said about kit, for example. The issue for us in the reserves was whether we were disproportionately affected by problems that arose with the kit. I do not believe that we were, or that there was any question of discrimination. By the time that I arrived in Iraq in early July, there were no shortages of kit.
On the question of pay, those people who found that they were not being paid properly must have felt enormous anxiety, which we should not underestimate. We should ask whether the overwhelming of the system could have been predicted. That problem was solved virtually overnight by allowing the reserve training and mobilisation centre at Chilwell to create pay accounts, but I would like the Minister to address the outstanding issue of the reserve standard allowance. My understanding in the Army was that a decision had been taken to remove the rank-imposed ceilings on the reserve standard allowance. When I questioned Ministers about that, they were rather less than categorical about whether a decision had been taken. What is the current state of play? Such a decision would, at a stroke, remove the most significant grievance that reservists have when they are mobilised and find that the
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pay that they can secure from the reserve standard allowance is less than their civilian pay because of a rank-imposed constraint that is inappropriate for modern civilian life.
On the question of lengths of tours, I do not think that there was any intended discrimination; there was simply the lack of a policy on how long reservists should serve. Now, there is a UK land-imposed policy. The policy is that a person mobilised as an augmentee will serve six months, and a person who goes out in a unit will serve and come home with that unit. That gives reservists what is so important to them: an indicative end-of-tour date, which is vital for those who have jobs and civilian careers.
There were many teething problems, but the key lesson that we have learned is that the system worked. It delivered the number of reservists required at a time when there were a million people protesting on our streets against the mission, and it did so at an administratively acceptable rate—certainly for the Territorial Army—of 1.5 call-outs for every reservist mobilised. That is significantly different from the rates for the regular Army reserve, which were some eight call-outs for every mobilisation. The Select Committee looked into that issue a couple of years ago, and Ministers need to revisit it. In fact, the system performed better than expected at the strategic defence review; it was able to deliver formed infantry companies, and that was never the expectation.
How did the reserves do? I do not think that they could have done better. They performed magnificently. Although I was based in Nasiriyah, largely with Italian forces, I made a point of visiting as many units as I could every time that I was in Basra. The measure of reservists is that one cannot tell the difference between them and regulars in any unit that one visits. That was my experience, and what I would have expected.
There was clear evidence of creative use by commanders of the skill sets held by reservists; those skill sets were used very effectively, although undoubtedly there were examples when that was not the case. It is alleged that the new FORGE software will give commanders an even better understanding of the skills of the reservists that they will command, so that they can make even better use of them.
I have always been somewhat sceptical about software solutions, and I urge Ministers to consider a rather more important issue: whether reservists should train much more frequently with the regular formations with which they are likely to be mobilised. That would ensure a much better use of reservists when they come to be mobilised.
Undoubtedly, there are jobs that are less desirable in any theatre of military operations. Some people will find themselves on static guard duty or manning permanent vehicle checkpoints. People coming back will have different experiences. They may go into their local pub and tell friends, "Yes, it was great; I really enjoyed my experience", or may complain that they spent six months stagging on and stagging off in a ghastly climate with pretty poor food. However, the difference between those two reactions is often not so much a measure of the jobs that the soldiers were doing as of the men themselves and the units that they were in. It is difficult to change human nature, and people respond to situations differently.

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To come back to the coverage afforded by the newspapers, a spate of articles in late August seemed to imply that the large-scale mobilisation of our reservists amounted to conscription on a scale not seen since the Korean war. That is nonsense. I do not believe that, when any reservist is attested, takes the oath and signs up to the commitment, they believe that they are joining the boy scouts or the girl guides. Furthermore, I do not believe that anyone joins either the reserve or the regular forces without some hope of seeing operations at some time during their service.
It is said that there is at least one operational tour to be had from every reservist, and certainly from every member of the Territorial Army, but often the limitations of our careers and family circumstances prevent us from volunteering for a tour of full-time reserve service, for example. Therefore, compulsory mobilisation can be something of a liberation. A couple of years ago, about this time of year, I had been serving for three years as an assessor at the Territorial Army Commissioning Board in Westbury, watching candidates come through who wanted to secure a Territorial Army commission. I received a rather snooty letter from records in Glasgow, pointing out that I was coming to the end of my appointment at the Territorial Commissioning Board and that, as I was above the normal retirement age for my rank, I would be unlikely to secure another appointment in the Territorial Army.
Mr. Julian Brazier: Shame.
Mr. Swayne:I thank my hon. Friend. The letter was saying, "Thank you very much, but push off." I was prepared to accept that, but a number of colleagues insisted that I should struggle to stay in, so I wrote to the Duke of Westminster. He wrote back and explained that there was a pool of watch keepers and liaison officers at Woolwich. He suggested that I applied there. I did, I was interviewed and I secured a place there. I understand that I can remain there until I am 55.
After one training weekend, a brown envelope arrived on my breakfast table containing a compulsory call-out notice. That is what my wife thinks and, more important, that is what the Opposition Chief Whip thinks. The reality is that we have a system of intelligent mobilisation, and about four weeks before I had received a yellow piece of paper in a brown envelope headed, "This is not a compulsory call-out notice". However, it asked me whether my employer would be likely to appeal if I received one. I eagerly ticked both boxes in the "no" column and awaited my call-out notice expectantly. I was delighted to receive it. A compulsory call-out notice for a reservist who is eager to serve can be a liberating experience. Of course, I had to feign complete surprise and horror when the real thing arrived on the breakfast table and my wife saw it for the first time: "Gosh! What will we do?"
I said that the system worked. It delivered the number of reservists that were required at the time required. Employers have been very understanding, and I know that Ministers have been aware of that. The Ministry of Defence, in conducting employer appeals, has been very understanding, allowing the greater proportion of them.
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The system worked, but I urge Ministers to be cautious. I would like to quote from the essays that supported the recent White Paper. Paragraph 3.3 of essay No. 3 on developing reserves states:
"This policy sees the Reserves providing an integrated, ready and capable component of Defence, capable of being mobilised for any type and scale of operation."
I am nervous about that. I make no bones about it; I was in favour of compulsory mobilisation for Afghanistan and the campaign in Iraq. One ought not to be in the Territorial Army if one does not accept or even welcome the chance of being called up. Conversely, I do not think that the reserves should be called up on a regular basis for continuing low-intensity operations. To do so runs the risk of destroying the reserves, not least by giving employers the impression that they are being taken for a ride and that it is defence on the cheap.
Dr. Andrew Murrison: I apologise to my hon. Friend that I cannot stay for the whole of the debate. Does he agree, despite his earlier remarks, that a large number of reservists join the Territorials, the Royal Naval Reserve or the Air Force Reserve to defend the homeland? That is implicit in the term "territorial". A small but significant number of them have some difficulty in being just an arm of the Government's foreign policy.
Mr. Swayne:That is right, and there is room for both. The Government have formed civil contingency reaction forces, which would specifically accommodate those who wish to serve in the way that my hon. Friend describes. A significant number of the troops allocated to those reaction forces have actually been mobilised for service in Afghanistan and elsewhere overseas. That raises the question of what would have happened if such an emergency had occurred here during the height of the mobilisation that took place for Operation Telic.
Mr. Paul Keetch: I certainly agree with the hon. Gentleman. Is he suggesting—I would not be critical if he were—that there should be two kinds of reservist? Some should be dedicated and trained specifically for home defence—dealing with the aftermath of a terrorist attack, for example—and some should have a role in the overseas theatre. Does he agree that, if that were the case, it would not only deal with the problem raised by the hon. Member for Westbury (Dr. Murrison) but would give more intense training in either type of operation so that those used on the home front were a more deployable force?
Mr. Swayne:I do not want to be tempted into making a policy statement from the Back Benches, but I think that there is sense in what the hon. Gentleman said. That was how matters were configured when I joined the Territorial Army. There were units with roles in the British Army of the Rhine and there were units with home defence roles. There was no distinction in terms of the quality of training and readiness required, but they had distinct and clear roles. It was possible to move between the two; nevertheless there were different roles.
Dr. Murrison:My hon. Friend is very generous. Does he recall the Royal Observer Corps, which was, in many ways, similar to the civil contingency reaction forces

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that Ministers are considering? Their role was purely in the homeland and they were not part of the Territorial Army or other reserve forces.
Mr. Swayne:I am sure that there is a role for such a model. Indeed my hon. Friend the Member for Newark (Patrick Mercer) made proposals about the use of volunteer reserves.
Brigadier Richard Holmes once said that the Territorial Army should be kept safe for married men with jobs. Those are the folk who will happily go to Iraq and Afghanistan, putting their civilian identities on the backburner because their country needs them. If we keep putting the bucket into the same well, the water is likely to become very muddy and we will run the risk of having a reserve composed largely of folk without proper jobs who are happy to go on operations whenever they get the chance. A proportion of those are, of course, necessary and welcome. However, it would be a great shame if membership of the reserves became a badge of unemployment.
I believe that it was folly to cut the Territorial Army in the strategic defence review. A bigger Territorial Army would have provided a deeper mobilisation well. I do not believe that, at their current size, the reserves can sustain recent levels of mobilisation for long. We must beware of the suggestion that peace in Northern Ireland, or the advance of "networked-enabled capability"—which is the buzzword for the introduction of new technology that will do away with attrition warfare and enable us to get by with what the jargon says is "fewer platforms", whatever those platforms may be—allows us to get by with fewer infantry.
If we couple together the continuing reduction in the number of soldiers with the continued high-tempo use of reservists, we have a recipe for disaster. The public simply will not understand how we can afford to have fewer regular soldiers and yet need to call up reservists more regularly. As Brigadier Holmes said to me last November, the reserves are a reserve for use but not for overuse. Things that are overused, such as fast cars and fine shotguns, wear out even if they are made by Mercedes or Purdy.
9.49 am
Mr. Paul Keetch: I am delighted to have been called somewhat earlier than anticipated.
Mr. Deputy SpeakerThe hon. Member for Canterbury (Mr. Brazier) mislaid his glasses.
Mr. Keetch:I am grateful for that advice, Mr. Deputy Speaker. I did not think that the hon. Member for Canterbury ever mislaid anything, and I am sure that he will be back to make a contribution.
I congratulate the hon. and gallant Member for New Forest, West (Mr. Swayne) on what he said. He is a man of great gallantry and has a remarkable position in the House. He speaks with great passion on many subjects, especially on defence and his deployment to Iraq. Whatever the concerns in all political parties about the Iraq war, there is no doubt that Her Majesty's forces performed incredibly well. The role that the Territorial
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Army played was significant. I visited Iraq shortly after the conflict. I did not see the hon. Gentleman, but I did see Earl Attlee, who had also been called up and was doing a fantastic job in Basra.
I pay tribute to everyone in both Houses and in the Territorial Army who were called up for the Iraq war and for other operations. The hon. Gentleman is absolutely right in saying that when our forces are deployed—in the Balkans, Iraq or wherever—no distinction is made between reservists or regulars. At first sight, it is not possible to tell which they are, and that should be the case.
The reservists in Afghanistan are, perhaps, forgotten. Perhaps the conflict in which they serve is a forgotten war. The hon. Gentleman referred just once to that country. A significant number of forces, including special forces, are still in Afghanistan, as I know from my constituency work. Territorial Army units are also there.
I pay tribute in particular to the members of the Hereford reconnaissance troop of light infantry TA, who were recently deployed to Afghanistan. I met them when they returned and they felt that because of the understandable weight of publicity and the spotlight on Iraq, the valuable work done by regular and reserve forces in Afghanistan was being forgotten. We should record our continued contribution in that campaign, which was broadly supported by all political parties for good reasons.
Those young men brought an issue to my attention that the hon. Gentleman did riot raise council tax rebates. What are the Minister's thoughts on that? Members of our reserve forces are deployed for months on end—six months is not unusual. As the hon. Gentleman said, they may well be redeployed relatively quickly after returning. It is extremely unfair of local authorities to continue to charge them a full council tax rate.
I understand that some councils would have a problem with that because of the large number of people deployed, and I am always careful about making any spending commitment. However, relatively few people from Herefordshire were deployed, and my local council could have made an exception, as some other councils do. The Government may want to consider whether a more nationally unified form of support could be given.
The hon. Gentleman made some important points, several of which I want to highlight. The most important was the way in which the formed units worked incredibly well. He rightly said that it was never the idea that TA units should be part of that. They were supposed to support and top up regular units. However, the formed units that have worked, including the reconnaissance troop that I mentioned, have done extremely well.
I entirely agree with what the hon. Gentleman said about members of the reserve forces not wanting to be called up or being reluctant to serve. The suggestion that there was conscription is frankly ridiculous. We know from our armed forces—both the regulars and the reservists—that they all understand that they may be called on to be deployed on active duty. As the hon. Gentleman said, many of them relish that opportunity; it is one reason why they joined the armed forces, either as regulars or reservists.

255WH
It is a sad but chilling fact that there has been, I think, only one year since the end of the second world war in which a member of our armed forces has not been killed on active duty. It would therefore be disingenuous for any member of the regular or reservist forces to say that they did not want or expect to go to war. I have never heard any of them say that and think that such statements have been put into their mouths by others. However, although our reserve forces are prepared, ready and often eager to be called up, they did not expect to be called up on a regular basis. That was never envisaged. We need to consider that carefully to establish whether the practice is right.
I share some of the hon. Gentleman's concerns about the TA being reduced from around 55,000 to 40,000 at the time of the strategic defence review. Looking back, even the Government would probably accept that that was not wise. We could all say that with hindsight. However, we know that events have moved on significantly from the SDR, which was broadly supported by all parties in the House in 1998. We must look at some of the lessons that have been learned.
Reservists have been under intense pressure as a result of the increased demands of the operations in Iraq. There are serious concerns about the recruitment and retention of some reservists, especially the more specialist reservists, such as medics. Can the Minister confirm the fact reported by the The Daily Telegraph that 27 medics are leaving the Territorial Army following demobilisation? I hope that that is not so because Defence Medical Services relies heavily on reserve forces and is under extreme pressure.
I have tabled a number of questions—most recently on 15 March—on the reasons why people are leaving the Territorial Army and how many are doing so. I was amazed to be told by the Minister in a written answer that
"Reliable inflow and outflow data for the TA are not currently available and for the same reason it is not possible to provide reasons for departure."—[Official Report, 15 March 2004; Vol. 419, c. 49W.]
In an environment in which we rely more and more on our reserve forces, surely we all accept that a situation in which we do not know why people leave needs to be improved. We rely on our reserve forces. I would have hoped that we had a much better understanding of who they are, why they leave and how we can stop others leaving. There is a growing trend for people to leave as soon as they have been demobilised, which is why we need the information.
Lessons can be learned from the Iraq operation. For example, the hon. Gentleman referred to the divergent pay rates for TA and regular medics. We need to consider that and be aware that some TA soldiers have returned and lost their jobs. The Ministry of Defence should rightly be concerned about that.
The TA has had an active defence role in many theatres, not just in Iraq. Specialist units have been deployed to theatres in the Balkans and Afghanistan, where other regular Army units have been deployed. For example, TA infantry personnel have played a significant role in the Balkans, for which approximately 4,000 soldiers have been mobilised for duty since 1995.
256WH
Undoubtedly, since the emergence of the new threat of international terrorism directed at UK territory, it is important to continue to explore and reconsider how the reserve forces might contribute to security at home. As my exchange with the hon. Gentleman demonstrated, we could benefit from some of the reserve forces being dedicated to homeland security and defence—call it what you like, Mr. Deputy Speaker—trained for that, and being aware that that is their role. Of course, they would not be trained any less than those units that might be sent to Afghanistan or Iraq, but they might be trained and equipped differently and be ready for a different role or job.
I think that all hon. Members from all parties support the excellent role that our armed forces have played. It is not for them to decide whether they should be deployed on active service; that is for the Government. However, when they are deployed on active service, they perform with great heroism and bravery and do credit to our country. We should support them. I have often said that the best piece of equipment or kit that the armed forces possess is the men and women who serve in them. That is as true of the reserve forces as it is of the regular forces. I join the hon. Gentleman in supporting that unit.
9.59 am
Mr. Julian Brazier: I meant no discourtesy to the hon. Member for Hereford (Mr. Keetch) by being absent for most of his speech. I left my glasses on my desk and the blurriness in front of me was not the result of a convivial evening.
I congratulate my hon. Friend the Member for New Forest, West (Mr. Swayne), on securing the debate and, more important, on the way in which he has encapsulated the views of many Territorials. He based that especially on his recent six-month deployment to Iraq on Operation Telic. I should like to echo many of the things that he said, but I shall spare hon. Members a repetition of the points that he has already made.
I shall briefly consider three areas: first, the mobilisation process, in which there are some strong positives, but also one or two negatives; secondly, the principles behind the use of reserves; thirdly, I want to spend a large proportion of my time on the present size and peacetime structure of the combat elements of the TA.
On mobilisation, one generalisation says it all, but, like all generalisations, this does not apply to every case. Most of the aspects of mobilisation that had to be handled by the individual reservist when their units, employers and families were involved—and, credit where it is due, when Chilwell was involved—were well handled. Chilwell came through very strongly on that. Most of the things that went wrong were in areas in which the personnel staff in the Ministry of Defence were involved.
The medical screening went well. As the Defence Select Committee observed, the gaps that showed up did so precisely because the medical screening was done well. There were paperwork problems in one or two areas, such as pay, but they were on a much smaller scale than they were, for example, during the first Balkans deployment. Again, that is a good reflection on Chilwell. Above all, the vast majority of recruits felt that the

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assessment and training at Chilwell were well done and was adequate. The Select Committee made that clear. Therefore, Chilwell has come out very strongly. As my hon. Friend the Member for New Forest, West said, the reserves came through extremely well and the feedback on them has invariably been good.
I do not want to dwell on the negative details because the system is changing, and rightly so. However, it is clear from some of the remarks in the Select Committee report, from comments made to me by Territorials and from the tetchiness of the some of the exchanges with the personnel staff in the Select Committee hearings—the main one in particular—that all did not go well with the central staff in the Ministry of Defence. The failure to give adequate notice is excusable up to a point when there is a war to fight, but we had a lot of notice on this occasion. The disgraceful mailshotting—like a travel company—of individual mobilisation instructions sent direct from the centre to individuals completely bypassed the TA chain of command in exactly the way that the Defence Select Committee objected to over the Balkans deployments. It is extraordinary that nothing had been learned; it was worse this time than it was the previous time.
All that convinces me that the Government are right to take such responsibilities away from the personnel staff in the MOD—who, I am sure, are hard-working and overstretched—and to give them to a directorate headed by a part-time reservist, himself a civilian, and reporting direct to the vice-chief of defence staff. That is better than using an organisation that is not used to dealing with people such as employers and where the focus of its attentions is bound to be principally the regular forces.
On the issue of the philosophy behind the employment of reserves, my hon. Friend put it so well that I do not want to repeat his points in detail. However, a macro-point and a micro-point must be made. The micro-point applies to each soldier, and the macro-point applies to policy as a whole.
People joined with an understanding of serving in action and a desire to do so. My great regret from the 13 years that I spent in the Territorial Army is that I never did an operational deployment. Some of us were particularly angry in 1982. We were in an airborne unit, which we were continually told was old-fashioned because we kept on parachuting on to Scottish islands. The Falklands war happened, but we were not called up. A willingness to give up one's weekends and evenings to work and train hard during peacetime, and the enthusiasm to get stuck in when there is a war or a national crisis does not equate, as my hon. Friend said, to repeated, compulsory deployments after the immediate crisis is over simply to ease regular overstretch. However, there will always be Territorials and reservists who welcome the opportunity to do that bit extra during peacetime.
At the macro level, the fundamental strategic point is that a reserve, by definition, is not normally used but is available when a crisis strikes. If reserves are used so heavily that units are pillaged of their best people because they are all off on deployment somewhere, there is no reserve for when things really go wrong and there is a major conflict. We are coming dangerously close to that.
258WH
That brings me to the peacetime structure and the size of reserves. In our English-speaking counterpart countries that do not have conscription, the general rule is that their reserve land forces are broadly comparable in size to the regular army. In Canada it is about three quarters; in Australia it is a little smaller; in America the two volunteer organisations—the US army reserve and, more importantly, the national guard—are, together, one and one third times the size of its regular army. In Britain, our Territorial Army is only one third the size of the regular Army and that disproportion is a great mistake. The wider community is playing a much smaller role and those in the volunteer reserve are sometimes severely overstretched. Above all, we do not have much to rely on when things go wrong.
Moving from size to structure, it is clear to almost everyone I speak to in combat units in the Territorial Army that the present structure is not working, particularly in the infantry. One of the most often quoted and widely accepted defence assumptions is that units can go from high-intensity warfare training to effective low-intensity deployment, but the reverse is impossible. Units that have been trained only for low-intensity work cannot do high-intensity work. There is a parallel with the reserve forces. Units that have been trained to work well together as units and have understood what it is to be part of a company and a battalion and to operate within an all-arms brigade can provide highly effective individual reinforcement, but people who have done only individual training cannot be deployed effectively in units or sub-units, nor in the long term are they much use as individual replacements, even at a level as lowly as a corporal commanding a section, let alone a platoon or company commander.
It is a fact that training must take place within a unit structure. Our present infantry battalion structure does not offer that and I shall illustrate why with two examples. First, it is simply too small. For a battalion headquarters to function, it must have an intelligence function. Information must come in to enable a battalion commander to make decisions and so on. In the recent add back and get well package, a very small welcome addition was made to infantry battalions and the post of intelligence officer was re-created, but he has been given no staff and the man clearly cannot stay awake 24 hours a day in an operational situation. He cannot work on his own. Infantry battalion headquarters cannot function properly even to provide a proper training aid for company commanders, individuals, sub-units, officers and NCOs, and so on, let alone to command the new rapid reaction force unit that is envisaged in the Government's White Papers.
My other example is the structure within the companies themselves. A proper rifle company should have three rifle platoons in it. Many people argue that it should have four such platoons. Three platoons are needed to have a good exercise. If there are three, and there are some people away training recruits, some people abroad on deployment and so on, two platoons can probably be cobbled together on a weekend exercise. Under the present structure, there are only two platoons in a rifle company. There is usually also a specialist platoon, but it is obviously not part of

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company rifle infantry training. It has other jobs to do. Another set of problems is raised by the fact that allocations across the infantry battalions are perverse when it comes to training purposes, but I will not go into that now.
On paper, the company commander has two rifle platoons. He has no establishment for training recruits, and no establishment for recruits at all, beyond one NCO. The NCO needs two or three helpers to train recruits. The recruits that he has got are on the books of those two platoons, so they cannot go on a company exercise with the company. Effectively, by the time the recruits, the people training them and anyone who is away on deployment is taken out of the equation, we are left with barely one platoon's worth of people in a company. That is not a meaningful structure in which to provide an interesting exercise. As one commanding officer put it to me the other day, it simply means that he knows that his company commanders, company sergeant majors and even his platoon commanders themselves are not being properly trained. That will show through in a fall in quality in the long run.
Let us consider the issue in its recent historical context. Ministers rightly responded to the desperate concern around the country about the footprint. There was a requirement to keep sub-units—TA locations normally involve sub-units—in as many locations as possible. The result was to achieve a reasonable-sized footprint within a terribly small total TA size. The size of the sub-units was reduced and they are simply no longer big enough to train people properly. That will gradually show through in declining standards, although every commanding officer, company commander and member of the permanent staff is struggling to prevent that.
The Secretary of State made some very positive remarks a few months ago. He said that he regretted the size of the reductions. I was sorry to see that the Deputy Chief of the Defence Staff (Personnel) appeared directly to contradict those remarks, but that is another story. I strongly agree with my hon. Friend the Member for New Forest, West that we need larger reserve forces. The crying need that has to be met to make the forces that we have got work is not for extra units but for extra posts within the units and sub-units so that they have a meaningful structure and that real training can be carried out.
I end where I began—by congratulating my hon. Friend. He has brought his valuable experience to the House. I urge the Minister to listen carefully to what he said about the overuse of reserves. The TA, and its counterparts the Royal Naval Reserve, the Royal Marine Reserve and the Royal Auxiliary Air Force, did this country proud in Operation Telic. It is essential that we consider the issues o I structure, size and mobilisation arrangements if we are to do them proud and if they are going to be able to do us equally well in the future.
Mr. Deputy Speaker:Before I call the hon. Member for Mid-Norfolk (Mr. Simpson), I want to thank the hon. Member for Hereford (Mr. Keetch) for allowing me to call him early. It helped us out of a hole.
10.14 am
Mr. Keith Simpson: I congratulate my hon. Friend the Member for New Forest, West (Mr. Swayne) on securing a debate that is timely not only in terms of the discussion of the reserve forces, but because of its implications for the defence White Paper, which will be rolled out over the next few months.
As other hon. Members have said, we are conscious of the service of—and sacrifices made by—members of the reserve forces who are currently serving in Iraq, the former Yugoslavia, Afghanistan and other overseas postings. Given the fact that, in my previous existence, I was a military historian, I am conscious of the role of the reserve forces in two world wars, for example. We tend to forget that, in the first world war, more than 50 per cent. of Field Marshall Haig's Army were Territorials. Many of the young pilots in fighter command, bomber command and those in the ground forces who supported them were from the Royal Air Force Volunteer Reserve and hundreds of men and women served in the wavy navy in the second world war on escort duties, and many of them were killed or injured.
There is a long, voluntary tradition in our armed forces. Recent figures speak for themselves. Since NATO operations in the former Yugoslav republic began in December 1995, reserves have consistently provided between 10 per cent. and 14 per cent. of the United Kingdom manpower. Operation Telic involved the largest compulsory call-out of reserve forces since the 1956 Suez crisis. It is safe to say that, had the reserve forces involved in the United Kingdom contribution not been there, our contribution would have been—to say the least—seriously constrained. They were not just an add-on option.
The defence White Paper published in December 2003 emphasised that the Government had planned and structured the United Kingdom armed forces on the basis that any major war-fighting operation would draw on the support of the reserve forces. Furthermore, it says that
"the utility of Reserves will be used to evolve further to meet the need for compressed planning and preparation time-scales and more rapid transition to expeditionary war fighting. In future, Reserve forces may be required for a greater number of more frequent, short notice operations".
The issues that have been flagged up must be taken seriously. I hope that the Minister will recognise that the contributions to the debate have been made constructively. There may have been some criticisms, but they are more in terms of lessons learned and what we must do in the future. We must bear in mind what the defence White Paper has argued and, in particular, the speeches that the Prime Minister has rightly made about the threat of international terrorism, the role of our armed forces in proactively attempting to deter terrorists worldwide, the role of the reserve forces and home security.
Since the strategic defence review in 1998, the changing role of the reservists raises several important matters. We know that the number of reservists was over-cut under the SDR to provide funds for the necessary changes in organisation and the equipment of

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the regulars. Such action was not new. Previous Governments have tended to rob the small amount of money that was allocated to the reservists to provide front-line regulars. It is interesting that those days have gone and, in a strange way, I suspect that the funding and equipment of the reservists will have to be better in the future because they are now so tightly integrated into the regulars. Thank goodness that the days of the old method used by Ministers and senior regular officers, when faced with cutting the TA and reducing its equipment, have gone.
The Secretary of State has acknowledged that the planned cuts of the TA and the SDR were wrong. On 20 February 2002, in an interview in The Daily Telegraph, he said that he was
"glad that the TA had not been fully cut from the previous strength of 56,000 to 41,000 set by the defence review . . . if its recommendations had been put into effect, TA numbers would have been so low that reservists would be unable to fulfil the tasks envisaged for them in the defence of the homeland".
I believe that such recognition was good.
The reserve forces are no longer the old-fashioned, second-line Saturday night soldiers—as they were often contemptuously referred to by some regulars and much of the media. They are now an integral part of the modern armed forces, and they are frequently used worldwide. Without the reserve forces, the regular forces would be unable to meet many of the Government's commitments.
Ministers will have to examine carefully the organisation and structure of the reservists, how they are recruited and retained, and whether we will need to dedicate certain reservists just to home defence and others only to operations overseas. I am merely an amateur in this, but my gut reaction is that I would be against that. We must have built-in flexibility. My friends in the military always say to me that soldiers, sailors and airmen have to be trained for full war-fighting capability and for being deployed anywhere.
Servicemen and women who have taken part in operations in Afghanistan or Iraq might subsequently, because of their age for example, serve in a civil contingency unit. They would bring considerable experience to such units, but we can debate that matter later.
Mr. Brazier:I entirely agree with my hon. Friend. One way of squaring the circle and meeting some of the points that have been made would be to reintroduce the home service force—a company of older soldiers listed on to each TA unit. That would provide a low-cost supplement for domestic use only.
Mr. Simpson:More details can be fleshed out as the debate continues and as we discuss the defence White Paper and the interesting matter of the allocation of resources.
The hon. Member for Hereford (Mr. Keetch) made a point that the Minister will not want to address in detail. Our special forces have undertaken important roles in the past as they do at present and, according to the defence White Paper, they will play an increasingly important role in the future. Our regular special forces would be unable to operate on their current scale without the full and active involvement of the TA and reserve element; that is crucial.
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The critical mass is in danger of being stretched very thin; I do not expect the Minister to comment on that. We should bear it in mind that our special forces, unlike those of other countries, are not elite units whose members are recruited straight from civilian life. They are drawn across the board from our regular armed forces and there comes a point when, if the size of those regular forces are reduced below a certain critical mass, the quality and quantity of the people who can get into our special forces will be affected.
Mr. Keetch rose—
Mr. Simpson:I think that the hon. Gentleman wants to intervene.
Mr. Keetch:I certainly do. We do not expect the Minister to comment directly on the special forces issues, but there is another key matter, which I am sure that the hon. Gentleman is aware of. Increasing numbers of private security companies now exist; they are used in places such as Iraq and Afghanistan. There is a huge temptation for former members of the special forces to go and earn considerable sums working for such private companies rather than stay on or move into the Territorial special forces. We must recognise that that is an additional draw on former special forces personnel. That is why the hon. Gentleman's comments about ensuring that the regular Army and the Marines are large enough to bring forward special forces people is doubly important.
Mr. Simpson:The hon. Gentleman makes a good point. As the Minister knows, the expansion of the Home Office budget to deal with home security has led to many chief constables trying to recruit experienced men and women from both the regular and reserve forces to fulfil certain roles. That is an issue for the Government as a whole to address.
My hon. Friend the Member for New Forest, West and others mentioned that some reserve forces effectively play a dual role. I have mentioned that people have been earmarked to serve in the civil contingency reaction forces but have ended up having to serve in Iraq and Afghanistan. Will the Minister discuss the organisation, training and preparation of the civil contingency reaction forces? Are they in formed units? Have they received adequate training? In the event of a large-scale incident in the United Kingdom, could they act quickly and effectively?
As my hon. Friend said, the increased activity and service of the reserve forces cause real problems for certain reservists and their families as well as for their employers. He graphically described the situation, as did my hon. Friend the Member for Westbury (Dr. Murrison). The MOD says in its report, "Operations in Iraq—Lessons for the Future", that it is addressing the problem. The matter was also taken up in the Defence Committee's report, "Lessons of Iraq". As my hon. Friend the Member for New Forest, West said, and as my former colleague and old friend Brigadier Richard Holmes intimated, we face the danger of running out of reserves if the Government maintain the tempo of operations, some of which are concurrent. Does the Minister agree with that?

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Ministers may be confident that such is not the case, but, if operations continue at the present tempo, I fear that some employers may look with reluctance upon people seeking employment with them who have a reserve liability. For example, most businesses in my constituency employ fewer than eight people. A large business that employs 250 or 300 people can take a hit of two or three people serving as reservists. It is different if one or possibly two reservists leave a business that employs only five or six people. However patriotic one is, such a business may decide that that is a liability too far.
Like other hon. Members, I warmly welcome the MOD's strengthening of the higher management of the reservists and the appointment of His Grace the Duke of Westminster, who also works in civil life as the director of reserve forces and cadets. He is to come directly under the vice-chief of the defence staff. That is a powerful initiative for putting the reserve forces at the centre of MOD planning. However, will it result in an allocation of extra resources and reserve forces being strengthened in every possible way?
Will people in the regular armed forces no longer think that serving with the reserve forces is a potential career blockage? It was always the case in the past that someone who was sent to serve as adjutant of a TA unit or to command a TA battalion was considered a member of the second eleven. The current Chief of the General Staff, General Sir Mike Jackson, would say that he is a living example of that not being so, having experience as a young captain as adjutant to a Scottish TA para-battalion, which, unfortunately, ruined his liver—at least, that is what he claims. However, in the past, an association with the reservists was not considered a good career move. I am sure that the Minister will say that that is no longer so, and I would like to think that, with reservists so integrated into the regular forces, appointments to the reserve forces will be considered a very good career move.
The second issue is the impression that reserve forces are given cast-off, virtually obsolete kit and equipment from the regular forces, primarily because of pressures on the defence budget. My hon. Friend the Member for New Forest, West said that reservists who were integrated into regular units had exactly the same equipment and kit as the regulars. It is more an issue for the formed reserve units that were sent out. There were criticisms that they did not have the best kit and equipment and that there were shortages. Perhaps the Minister would comment on that.
Over the past year many hon. Members on both sides of the House have raised questions about pay, allowances and the pensions of reservists and the security of civilian employment. All were touched on by the Select Committee report, and the MOD is undertaking a review of those matters. The Minister has approached the issue constructively but, as a matter of urgency, I ask him to make a statement in the House about how far the Ministry of Defence has got with addressing the problems.
I was particularly interested to see the MOD announcement on 3 February, about administrative changes to the recruitment and re-engagement
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procedures for volunteer reserve forces, which touches on an issue that I raised earlier. The Select Committee noted that from 1 April new recruits from the volunteer reserve forces and applicants for re-engagement will be required to agree to their unit contacting their employer about their membership. The MOD says that the changes will
"enable employers to be in a better position to plan for the absence of employees who are reservists and also to be better informed about their rights and obligations."
The Select Committee said that it was concerned that those changes seemed to have been announced ahead of the findings of the MOD's own study on employer support, and that there seems to have been no prior consultation with members of the reserves. Will the Minister comment on that?
The debate has been short but, due to the contribution of my colleagues, it has been very constructive. I pay tribute once again to my hon. Friend the Member for New Forest, West and other hon. Members and members of the House staff, who in the past two or three years have served in the reserve forces and been, as they used to say, twice a citizen.
Mr. Deputy Speaker:Before I call the Minister, I shall just reflect on the fact that only last month I paid my last ever mess bill.
10.33 am
The Parliamentary Under-Secretary of State for Defence (Mr. Ivor Caplin): I will not ask how large the mess bill was, Mr. Deputy Speaker.
Mr. Deputy Speaker:It was £42.36.
Mr. Caplin:I want to begin on a sombre note by paying tribute to Brigadier Lord Vivian, the Conservative party's defence spokesman in the House of Lords, who passed away on 28 February. He had a distinguished military career before entering the House of Lords in 1991, where, if I may say to Opposition Members, he was among the most active peers in the Conservative party. He wrote me a very nice note on my appointment to this position in June last year, to which I responded. It is also worth saying, in light of today's debate, that Lord Vivian was an honorary colonel to 306 Field Hospital in the Territorial Army. I pay the respects of the whole House to his family at this difficult time.
I also want to pay tribute to the five reservists who have lost their lives in action in the past year. Private Smith of the 52 Lowland Regiment; Corporal Pritchard, 116 Provost company; Fusilier Beeston, also of 52 Lowland Regiment; Sergeant Nightingale of 150 Transport company attached to the 27th Regiment, Royal Logistic Corps; and Private Kitulagoda of the Royal Rifle Volunteers. We are indebted to all of them and their families for the efforts that they made on behalf of the United Kingdom here and abroad.
I congratulate the hon. Member for New Forest, West (Mr. Swayne) on securing the debate. I was expecting a few more of his hon. Friends to be here and, indeed, some of mine, but that is how it sometimes happens early on a Wednesday morning. I have been reflecting on how constructive the debate has been and contemplating one of my previous roles as

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Parliamentary Private Secretary to my right hon. Friend the then the Leader of the House—she is now the Secretary of State for Environment, Food and Rural Affairs—in the 1997 to 2001 Parliament at which time Westminster Hall debates were created. The view was that we could have consensual constructive debates about the issues of the day, and today has shown the benefit of this debating Chamber even though there has been only a small attendance.
Everyone knows that the hon. Member for New Forest, West is a major in the Territorial Army. During the passage of the Armed Forces (Pensions and Compensation) Bill, he insisted on not being referred to as a galloping major. One Conservative Member tried to refer to him as such, quite unfairly from the Government's point of view. I thoroughly enjoyed reading his story "From Westminster to Iraq" in the in-house magazine for the Ministry of Defence, which was published recently, and about his experiences of being in active service and working as a liaison officer to the Italian joint taskforce in Nasiriyah in Iraq for six months. We are pleased to see him back.
The Government hold the reserve forces in the highest possible esteem, and I fully endorse all the praise and accolades that have been bestowed on them this morning. We agree that the reserves form a key part of the United Kingdom armed forces. The reason for the appointment of the Duke of Westminster to the position of assistant chief of the defence staff, reserves and cadets was to demonstrate publicly that we regard the reserves as an important and integral part of what we do. I was delighted to be at Chilwell last month to announce his appointment. He will report directly to the vice-chief of defence staff, and, as hon. Members know, I take a direct interest in all reserve matters and talk regularly to the vice-chief and others in the organisation.
I am not sure what the Chief Whip will make of today's debate when he reads tomorrow morning about the secrets that the hon. Member for New Forest, West has given away. Mrs. Swayne, too, might have something to say when she sees tomorrow'sHansard.
Mr. Swayne:The Minister will know the truism that any speech made in Parliament is likely to remain a secret.
Mr. Caplin:That is probably true. After making announcements on defence issues, I have asked people, "Did you know that we were going to do this or that?" They say, "No. Where did you announce that?" I say, "Only in the House of Commons."
Until a few years ago, call-out for reservists seemed only a remote possibility. In the past 10 years, there has been a major strategic evolution, and I accept, as the Secretary of State made clear, that that started with the 1998 strategic defence review. We have moved from a large and little-used reserve force to a smaller, more effective one that is constantly in use. That has been a tremendous challenge for our reservists, and the Ministry of Defence has good reason to be grateful for the positive response from both the reservists and their employers. I shall try to deal with all the issues raised this morning, but I am more than happy to take interventions if I do not answer all the questions; we have plenty of time after all.
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In line with the tenet of the strategic defence review, the Government plan and structure the armed forces on the basis that any major war-fighting operation would draw on support from the reserve forces. Namely, we have more usable, integrated and relevant reserve forces that support their regular counterparts in operations at home and overseas. That is a prudent approach that allows the maintenance of full-time armed forces in no greater strength than is needed for normal peacetime activity, and that can meet a limited range of contingencies. In addition, the more flexible use of reservists gives the Government the opportunity to harness skills appropriate for operations, which are not needed regularly or frequently in peacetime and therefore not readily found in the regular armed forces. Although we have a lot of time this morning, the defence medical service would probably take up the whole of the rest of my speech, so perhaps hon. Members would like to return to that matter on a separate occasion.
As the hon. Member for New Forest, West told us, and as the hon. Member for Westbury (Dr. Murrison) who was called out shortly afterwards knows, the call-out is the use of a legal power to bring reservists into permanent service—in effect, to mobilise them. It is authorised by the making of an order under the Reserve Forces Act 1996. The call-out order for Operation Telic was made under section 54 of that Act by my right hon. Friend the Secretary of State on 7 January 2003. We renewed that order on 6 January 2004 to enable reservists to continue to support operations in Iraq and also in Afghanistan and the Balkans. As the hon. Member for Mid-Norfolk (Mr. Simpson) rightly said, more than 10 per cent. of those in the Balkans are reservists.
In broad terms, Operation Telic required about 5,600 reservists—about 3,600 from the Territorial Army, 1,500 from the RAF and 500 from the Royal Navy and Royal Marine reserves. That was the largest call-out of members of the reserve forces since 1956. In determining the number of people who would be sent call-out notices, allowance was made for possible wastage rates resulting from those who would not meet medical or dental standards. Medical failures and applications for exemption or deferment from reservists or their employers were also taken into consideration where possible.
I do not intend to respond directly to the Select Committee report, if for no other reason than that I think it right and proper that the Ministry of Defence should give a proper, considered response to all parts of the report to the House in the usual way.
In the event, more than 8,000 reservists were called out and more than 5,000 taken into service in sufficient time to be deployed and participate in the war-fighting phase of the operation at this time last year. The majority were drawn from the volunteer reserve forces. A smaller number came from the Army and RAF ex-regular reserve forces. Members of the sponsored reserves were also called out. Once war-fighting operations were over, there was—and is—a continuing role for reservists in the reconstruction of Iraq. To date, more than 9,300 reserve forces have supported, or are supporting, operations in Iraq.
At this stage, perhaps I should tell the House about my recent visit to the Gulf and to Basra. Two things were interesting and significant. First, I spent part of an

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evening with the London TA, which is out there at present. We did a question-and-answer session for the members of the unit. One of the young soldiers asked me whether the members of the TA could be referred to as part-time soldiers. I have heard that phrase a number of times. My response, which I am pretty sure is not only right but important, was that I did not consider him a part-time soldier, particularly when he is on an operation in a dangerous theatre such as Basra in southern Iraq. I said to him, "For all intents and purposes, you are a soldier not a part-time soldier". Over the coming months, it is imperative that we get that message across, and I hope that we will do so.
The hon. Member for New Forest, West referred to intelligent mobilisation, which is the other interesting thing. It is an important way forward for the Territorial Army and reserve forces in the future. When I was in Al Amarah, I came across a unit commander who is a chief inspector of police in the UK. He had been redeployed from his normal TA duties to mentor the new chief of police in that town. That is having a direct impact on an area where we have had problems over the last 12 months. That area is much calmer now and part of the reason for that is the mentoring process that that Iraqi police force is undertaking. That is also an area of policy that we want to consider.
There is a continuing need for us to use reservists and to call them out in Iraq, Afghanistan and other areas. I made the most recent call-out order on 1 March 2004, which will allow the continued support of operations in Sierra Leone and the Congo. I assure hon. Members that the new order was routine, and will allow reservists to be called out should we need them.
Mr. Keetch:Mr. Keetch: Given the Minister's experience with the chief inspector that he met in Iraq, is it not the case—as it has always been—that the skills that members of the reserve forces have in their civilian occupations can often add enormously to the contribution that they give in training and active service? Has some thought been given to identifying particular individuals who may provide huge additional benefits to deployed regular forces in a peace-building situation or reconstruction phase? That might be a constructive way of getting the most out of those who have served in our reserve forces.
Mr. Caplin:The hon. Gentleman raises an interesting point. Perhaps I can respond to it by quoting Peter Morgan, a business unit leader at GlaxoSmithKline. He said on the SaBRE—Supporting Britain's Reservists and Employers—website in November 2003:
"After visiting Kabul in July, I now fully understand why the Reserve Forces are such a vital part of the UK's overall Armed Services strategy. I am in complete support of employees who join the Territorial Army. There is no doubt that the TA benefits individuals, particularly when skills learned in the military can be transferred to civilian jobs."
I fully concur with that view and I am grateful for the support of the hon. Gentleman.
It is important to say in response to the points made by the hon. Member for Mid-Norfolk that we do not, will not and cannot take the support of employers for granted. That would be the wrong thing to do. As hon. Members will know, SaBRE was set up about 18
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months ago to bring about greater focus on employer issues and to work with employers during call-outs. SaBRE has been a success. That does not mean that there is nothing more that it can do, or that there is no more work to do, but given the period of time since it was set up and what it had to face during that period, it has been successful.
We are constantly thanking employers. I have been to three regional receptions, and attended one in London at which the Secretary of State and the Chief of the Defence Staff publicly thanked the national employers for their support during the past 12 months. It is also important to recognise that the chain of command has been very supportive in delivering employers' support where necessary. I pay tribute to the National Employer Advisory Board, chaired by the Conservative peer Lord Glenarthur, which plays a crucial role in advising the Ministry of Defence on employer issues.
Perhaps I can talk a little about the announcement that I made to the House on 3 February on employer notification. After our earlier exchange about secrets, I am grateful that so many hon. Members are aware of that notification. It was rather an achievement to be recognised in that way in a Select Committee report. The subject was the topic of much debate both in the Ministry of Defence and with reservists and employers before I arrived at the Ministry in June 2003. Surveys undertaken by the MOD have shown that a large majority of reservists have already told their employers that they are members of the volunteer reserve. In addition, when reservists are mobilised, their employers are automatically informed of their membership of the reserve forces. We do not expect that routine employer notification to have a significant impact on employers' support. I believe that that is an important step forward.
I decided that we should tell the House as soon as we took that decision rather than wait for further periods of consultation because it has been talked about for so long. It is an important step forward for the long-term strategic future of the reserve forces and the employers who support us. I should place on record the Ministry of Defence's thanks to employers from both the public and private sectors for the outstanding support that they have provided to our armed forces in the past 18 months. In the past, it has been suggested that we have had difficulties with employers. That is not my experience from going around the United Kingdom talking to them; by far the majority of reservists' employers have been tremendously supportive. What the hon. Member for Mid-Norfolk said is right; operations would not have been as successful as they were if employers had not offered that level of support.
Questions were asked about reinstatement and other issues, and I shall deal with some of them. Under the Reserve Forces (Safeguard of Employment) Act 1985, an employer is required to take back former employees who have completed call-out service. The Act also deals with the terms and conditions of reservists when they are reinstated to civilian employment. If an employer fails to take reservists back into his employment or infringes any of his rights under the 1985 Act, the reservist may apply to a reinstatement committee, which will decide on the matter. That committee has the power to require employment to be made available to the reservist or to order the employer to pay compensation, or both. I

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mentioned that there were more than 9,000 call-outs. However, since 1 January 2003, we know of only 19 applications to reinstatement committees. That shows that the legislation is working well and the level of support that there is between employers and their reservists.
The MOD does not provide legal advice or representation to reservists seeking reinstatement to their civilian employment under the terms of that Act. However, it provides advice to reservists on their legal right to reclaim their civilian employment and on how to seek reinstatement. Each reservist receives a copy of JSP 532; I am sure that the major—the hon. Member for New Forest, West—is aware of that document which is entitled "Guidance for reservists returning to civilian employment following a period of mobilised service". The campaign team of SaBRE provides a helpline and a website that give additional information and advice. Each of the reserve forces and cadet associations in all of the regions has an employer support executive, which can offer advice and assistance to reservists who are experiencing problems returning to their civilian employment. We are also introducing unit employer support officers who will be able to assist reservists with employer issues. The Secretary of State made it clear that we will look again at those issues during the course of the White Paper debate, which will start on Thursday in the main Chamber.
There has also been discussion about financial assistance for reservists. It is right that I inform the House about that this morning so as to bring hon. Members up to date on this, rather than make yet another statement that no one sees. There has been some criticism of the financial package that is in place for reservists. The current banded rates that we use came into effect in 1997 and, as they currently stand, they do not reflect the increase in civilian earnings since that time. That does not necessarily mean that reservists lose out. They are entitled to make a hardship claim if their standard award does not match their civilian earnings. Nevertheless, we recognise that this situation is not ideal. As we announced in the White Paper, work is in hand to produce new regulations governing the award of both the reservist standard award and the reservist hardship award.
The new regulations will take into account the lessons arising from the mobilisation into Iraq. While that work is being undertaken as a priority, it is not yet possible to state what the finalised proposals will be. However, once we have completed our deliberations, we plan to publish a consultation document to seek the views of interested parties prior to the final regulations.
Mr. Swayne:I am grateful for the Minister's undertaking to consult on that. He will be aware that, in a flexible modern economy such as ours, a scaffolder may earn considerably more than a Member of Parliament. However, when mobilised, the scaffolder may be a corporal, and the Member of Parliament a major, so significant hardship would be imposed on the corporal under existing rank constraints.
Mr. Caplin:I accept the hon. Gentleman's points, and others have made them, too. I shall conclude my update
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on the issue by telling the Chamber that the aim is to bring the matter before Parliament in the autumn. We will then have an opportunity to debate the subject.
Mr. Brazier:The Minister has given us the welcome prospect of future announcements. Could he come back to issues of unit structure, perhaps in correspondence? Inevitably, the bulk of today's debate has been on the mobilisation process. There is a real worry in the command structure of the Territorial Army that the present unit structures, particularly within combat units, are simply not delivering the training needed to continue the effort needed.
Mr. Caplin:I certainly can come back on that issue. I was going to make a few points about training in the last couple of minutes available, but if that does not satisfy the hon. Gentleman, I will, as always, be more than happy to write to him on the matter.
I want to reflect a little on Chilwell and Grantham, because the hon. Member for New Forest, West mentioned them today and in his letter to the Secretary of State in June. I welcome the support that he and others have given to the people who run Chilwell and Grantham. As hon. Members will know, last month I spent a day with the assistant chief of the defence staff, as he is now known. Chilwell and Grantham show how we have moved forward training for those reservists who go through that process. I certainly had the opportunity to discuss with many of the people being mobilised the training that they were about to undertake. That was very good, and I was pleased to see the progress made there.
I come to the point on council tax, which is a perennial for the Liberal Democrat spokesman, the hon. Member for Hereford (Mr. Keetch). He must have a chip that makes him say, "I must mention council tax in every speech, whenever I can get it in." I do not mind him doing that. As he will know, council tax concessions are a matter for local authorities rather than the Ministry of Defence. All regular and reserve service personnel who own or rent private property remain liable to pay council tax while they are absent from that property, as that normally remains their sole or main residence. Members of the armed forces stationed in the United Kingdom or overseas are treated in the same way as any civilian who is required to live and work away from home. That is a consistent approach.
I want to update the House on the civil contingency reaction forces, which I am pleased to say have now achieved full operating capability, in accordance with the timetable set out in the new chapter of the strategic defence review. The House will be aware that they have been designed to enhance our ability to support the civil police and other civil authorities. Some 14 CCRFs will be available for deployment at short notice to support the civil authorities at the scene of an incident—whether it be a terrorist attack, a major accident or a natural disaster—should they request it.
Currently, 852 members of the CCRFs are mobilised overseas or are on active service in the UK, but that does not affect the operational capability of those forces

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Steps have been taken, where necessary, to fill those temporary vacancies. I know that training is ongoing because I discussed the training programme with one of the commanding officers when I was in Cardiff recently.
I conclude by welcoming today's debate, and joining all Members of the Chamber in paying the right and fulsome tribute to the work of all our reserve forces, wherever they are deployed. They have done, and will continue to do, a first-class job as part of the United Kingdom armed forces.

Disabled People (Assistance Dogs)
11 am
Mr. Edward Davey: May I thank Mr. Speaker, through you, Mr. Deputy Speaker, for giving us the chance to hold this debate? I hope that the Minister is pleased at the prospect of this debate, because I am giving her the chance to make herself even more popular with both disabled people and the Chancellor. I believe that I have a win-win-win set of proposals: winning for the taxpayer, because savings can be made, winning for animal lovers and for the dogs involved, and, most important of all, winning for people with disabilities who can, through the use of an assistance dog in the circumstances that I shall describe, regain their independence and—in some circumstances—even return to work. Put simply, we can, through the sorts of actions in my proposal, make more assistance dogs available for more people.
We are all used to seeing guide dogs helping people who are blind or have severe visual impairments. Guide Dogs for the Blind has done tremendous work over the years. It has received support from previous Governments, from this Government and from Members from all parties in the House. It does a tremendous job and is popular with the public and the people whom they help. Canine partners—dogs—help many more people than just those with severe visual impairments and blind people. They can be used to help people with hearing difficulties and people with epilepsy—they can detect an oncoming fit, sometimes half an hour before it happens. The focus today is on assistance dogs that can help people with physical disabilities and often people in wheelchairs.
The charitable sector has developed these services and trained many dogs over the years. In this area, as in many others, the charitable sector is becoming much more organised than it has been in the past. There is now an umbrella organisation called Assistance Dogs (UK), which represents the five main constituent charities: Guide Dogs for the Blind, Canine Partners, Hearing Dogs for Deaf People, Dogs for the Disabled and Support Dogs. They are all registered charities and they receive no direct funding from the Government. However, I think that we all agree that they do a fabulous job in developing innovative approaches to canine partnerships. The Minister will have seen and will know about how these dogs can transform people's lives, help them expand their life choices, experience a different quality of life, and very often enable them to take up education and work opportunities. They can make a complete difference.
It is appropriate to mention one real life case. The Wiltshire Gazette & Herald of 24 December 2003 contained an article about a lady who had been suffering from multiple sclerosis and was increasingly dependent on carers. However, with some support from Wiltshire county council with payments for dog food, vet bills, insurance, and so on, she was able to benefit from her black labrador, Naomi, which transformed her life. The sorts of things that Naomi did for her owner included waking her in the morning, bringing her clothes, picking up items that were dropped, opening and closing drawers and doors, taking clothes out of the washing machine and, when they were out and about in the

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street, pushing the button on pelican crossings. That huge number of tasks brings a smile to everyone's face when they hear about them and makes a difference to the individual concerned.
I hope that the Minister is pleased that I have secured this debate, because I know that she already supports these charities. I have heard from the charities that she has shown a great interest and is keen to help. Both she and her predecessor were helpful in ensuring that the direct payment scheme could be used and that the local care packages could be developed. I should like to say a little bit more about that in a second.
I am sure that the Minister is aware, through her work, that the opportunities provided by canine partners do not just help disabled people; they help their families, too—particularly young and elderly carers—giving them respite and helping them to get on with their lives. This is a compelling case. I could use most of my time describing how wonderful the opportunities are but, rather than doing that, I want to get down to brass tacks. What could the Government do to expand this great sector?
The Government have already been helpful on direct payments. I think that it was the Minister's predecessor who confirmed in writing a year or so ago—perhaps even two—that direct payments could be used for paying food and vet bills. Charities have presented the letter that I received from the then Minister to social service departments to show them that payments could be used for that purpose. The letter was very helpful. I ask the Minister today to reinforce that previous guidance through all the links that she and her officials have with social service departments throughout the country in order to ensure that the concept of allowing direct payments to support assistance dogs is given the full weight of her Department so that more social service departments consider that option. It would also be worth while if assistance dogs were included in the local care packages of people who are not necessarily eligible for direct payments. That would help disabled people, but it would also help their carers and the social service departments to understand the full potential benefits of assistance dogs.
Housing is a difficult issue. People who would like a dog and could benefit from one often find that they live in inappropriate housing. A dog has certain physical needs that tend to require a garden. Many people who are potential beneficiaries do not have a garden and therefore cannot benefit from a dog for obvious reasons. The idea of local authorities being required to have accessible housing registers was debated in respect of disabilities more generally in the Standing Committee on the Housing Bill on 24 February. There was support from both sides. Good practice guidance, which has been published by the Office of the Deputy Prime Minister and its predecessors, supports the development of registers listing the adaptive homes that are suitable for disabled people and the names of the people who are looking for such properties. The Minister's colleague in the ODPM was very positive in her reply to that Standing Committee debate. She had some concerns that new registers would result in the opposite of what the Government have been doing in respect of choice-based lettings schemes, but I wonder whether such schemes could be adapted to ensure the availability of
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properties that would be the most appropriate choice for disabled people—in this case, for disabled people who would benefit from the use of a dog.
Current legislation enables dogs that are trained with their human partner to go into most public places, but dogs under training do not have that protection. Someone who is training a dog to be used by someone with a disability is not able to take it into all public premises. I hope that the Minister will undertake to review the legislation and ensure that dogs under training are permitted to enter public places.
I said earlier that there would be huge cost savings for the Government. That is not the rationale for my proposal; instead, it is to give independence back to disabled people. However, because the cost savings would be so significant, it would make sense for the Government to consider more carefully whether this cutting-edge approach would have benefits for councils throughout the country as well as the Exchequer. I suggest that the Government undertake a feasibility study to determine more clearly the relative costs and potential savings.
I understand that the savings could be huge. In effect, a dog would be on duty 24 hours a day, seven days a week. The cost of its food and vet bills would be rather less than the costs of a human carer. An assistance dogs charity prepared a costing for this debate, which I would be happy to give to the Minister. Using extremely modest assumptions, it suggests cost savings of more than £65,000 for the eight-year period of the working life of a dog. If some of those savings were ploughed back into expanding the number of dogs available and improving access to such dogs, particularly for people on low incomes, substantial savings could still be left for social services departments and the Exchequer and the quality of life for many disabled people could be massively improved.
I do not ask the Government to commit huge sums of money, and the Minister is clearly not in a position to do that today. I ask them to give interested parties and me the assurance that they will examine the cost savings potential. That would not require a huge amount of work on the part of her Department or officials, but it might bring home to them the fact that the Government could be far more active in that area.
The Government could help with costs in one initial area. It is in line with many of their policies, particularly the access-to-work programme, and involves defraying the costs of the training courses for the disabled people who are beginning their placement with an assistance dog. Canine Partners, an assistance dog charity that has helped me prepare for the debate, runs its training sessions from a centre in Holton Lee near Poole in Dorset. It rents part of the centre from another charity for eight weeks of the year and, in that period, it provides four two-week training courses with about six candidates on each course. They are very intensive: the human and the dog get to know each other and learn to use the basic 100 commands that each dog is taught, and then the human learns to teach new commands specific to the individual's needs. The course can dramatically change someone's life as the partnership develops.
The cost of the course per partnership is £3,700. That is quite a small price for dramatically changing a life. In many cases, it results in the person being able to access

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education and work, so it fits in with the Government's thinking on those issues. However, I hope that they will be more generous and not only link the course to access to work but help all disabled people to benefit by subsidising or defraying the cost of the course.
In discussions with the assistance dog charities, I had a slightly more esoteric idea to involve minor offenders in open and other prisons with the training of the dogs. There is a lot of evidence of the therapeutic benefits for offenders of working with animals, and I do not see why one could not have a virtuous circle of benefits for those involved and savings for the taxpayer if there was a way in which a scheme could be piloted at an open prison. The offenders could enjoy the friendship of a dog, learn positive things about a relationship with a dog and learn that, through their actions, they have helped a disabled person. That could reduce the training costs for charities and, if we cut reoffending, the costs to society more widely.
I have outlined a modest package of measures. If the Minister were to take them and run with them, they could make a significant difference to the availability of assistance dogs. I could have taken a different approach and argued that the Government should step in; that charities have shown the way forward and now the Government should run a national scheme and spend millions of pounds setting up their own dog training centres and provide assistance dogs to any disabled person who wanted one. It might be ideal, but it would be unwise to take that sort of service into the public sector. The state can get a bigger bang for its buck by working with and supporting charities and finding ways to develop the work that they are already doing.
There is huge potential. One charity has estimated that there may be as many 850,000 disabled people for whom assistance dogs would be beneficial. We know that there are millions of disabled people, but just under a million could benefit. Not all of them would want to benefit, and perhaps some people would baulk at the idea of 850,000 black or golden labradors going up and down the streets.
I think, however, that we could do an awful lot better than the 6,800 such dogs that are out there in the country at the moment. I am sure that there is massive untapped potential; this is a win-win situation, and the Government should grasp the opportunity with both hands. The Minister has a great record. I hope that she can expand on that and on her growing reputation.
11.15 am
The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle): First and foremost, I congratulate the hon. Member for Kingston and Surbiton (Mr. Davey) on securing the debate. One of the benefits of this Chamber is that it gives us the opportunity to raise such issues, which although not always at the top of the political agenda, are none the less very important to many of our constituents. As he thoughtfully set out, it is possible to raise people's awareness of such important issues, and I congratulate him on choosing to do that.
I fully recognise the important role that assistance dogs play in enabling many disabled people, especially those with visual and hearing impairments, and
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increasingly those with more complex care needs, to lead independent lives. I am pleased to endorse everything that the hon. Gentleman said about the value that those animals and the charities that train them have in improving the lives of disabled people.
It is important that we debate such issues because I do not think that there is a general awareness among the public, who do not deal with such things on a daily basis, about what assistance dogs can do. Many people still think of guide dogs for the blind. They do not realise that dogs can help hearing-impaired people and that others, like Naomi, can assist people who live with MS. A dog can deal well with things that those people may find hard to cope with.
When people read our debate in Hansard, many will be amazed to learn that dogs can already help to pay for shopping at the supermarket. That is one of the innovative new services on which the charity sector and Canine Partners in particular have taken the lead. I am pleased to pay tribute to their work and to say publicly that the dogs' work is valuable.
The hon. Gentleman referred to direct payments. There is no doubt that the advent and increasing use of direct payments has been a big stimulus in assisting disabled people to take full control of their own care needs and how they are provided. Such payments have also stimulated local authority social services departments to think more innovatively about how to fulfil their obligation to provide care services to disabled people in their areas.
I congratulate local authorities such as Wiltshire, which helped with Naomi, and Surrey on realising that the role of dogs can go beyond simply helping those with a visual or hearing impairment. Such authorities appreciate that dogs can provide the care that in the past we thought could only be provided by humans. I congratulate them on their innovative approach.
Direct payments were introduced to give people control over how their care is delivered. Our intention is that they should be flexible and designed around the individual. Disabled people themselves suggested the idea of direct payments, which enable imaginative and novel solutions that are suited to the individual. Such payments mean that practical common sense can triumph over bureaucracy, form filling and processing, and the idea that we must continue to deal with things in the same old way.
The example of assistance dogs shows how innovative direct payments can be. They will not always be appropriate, as the hon. Gentleman acknowledged. However, when the council is satisfied that a person's needs can be met by using a direct payment in that way, there is no reason why it should not enable that payment to go ahead. The important consideration is the outcome for the disabled person. It is outcomes rather than processes that local councils should be focusing on, as the best and most innovative of them are.
The Government are committed to the increased use of direct payments for all disabled people, which is why we have changed the law to give councils a duty to make a direct payment to everyone who is eligible and wants one. In the past, there was a permissive power, which was not taken up with as much enthusiasm and speed as we might have hoped. We have now changed the law to

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impose a duty on local authorities. That means that that approach to direct payments should be discussed at every assessment and review of a disabled person's circumstances. We will also include direct payments in how we assess performance. Hopefully that will get across to local councils—I am sure that it will—the importance with which the Government view the success of direct payments.
The Government have also put money into the support services that we know are essential in helping people to get on to and to stay on direct payments. The direct payments development fund is putting £9 million over three years into voluntary and community sector organisations, which can then work with the councils to promote and increase the take-up of direct payments. There is an opportunity to raise awareness about the potential role of assistance dogs in appropriate cases. For example, the Royal National Institute of the Blind is working in Rotherham to increase the take-up among people who are blind, partially sighted or have low vision by offering a quality of life check. At that point, it can raise awareness about possible solutions.
The provision of assistance dogs is not just confined to the direct payment system. As the hon. Gentleman made clear, some local councils and social services departments are taking an even more enlightened approach to the care packages that they provide and to finance that is outside direct payments. They have recognised the extent to which assistance dogs can be an integral part of care packages for some individuals.
I am grateful to the hon. Gentleman for his kind remarks about my role in the Government, but I have to tell him that my responsibilities in the Department for Work and Pensions do not extend to dealing with social services departments. They are led directly by the Department of Health. That said, we are all believers in joined-up government and my ministerial colleagues in that Department and I look closely at such issues together. There is no reason why I cannot talk to those who have direct responsibility for social services, stress to them the points that have been made and draw his ideas to their attention.
I have, of course, some responses to make to the hon. Gentleman, but he will understand that I also have to approach my colleagues in other Departments. Perhaps I can deal with some of his points in correspondence. He asked me to reinforce the direction that the Government have taken to ensure that full weight is given to the concept of allowing direct payments to support an assistance dog. We have done that. He cited a letter from an ex-Minister at, I think, the Department of Health. There is no doubt that the Department has already issued guidance for councils and that we are committed to making it clear to them that we are looking for a creative and flexible approach to direct payments, built around the individual's needs. It is outcomes for the individual disabled person that are important, not a quota relating to how, and on what, money should be spent.
The hon. Gentleman asked about housing schemes supporting those with assistance dogs. He referred to the essential needs of dogs, such as a private area or a small piece of garden—somewhere where the dog can exercise and have a bit of space. As he said, that falls within the remit of the Office of the Deputy Prime Minister. He said that there had been some discussions on legislation,
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led by that Department. He will know that there is no requirement to provide private space, but registered social landlords are encouraged to provide suitable private or common space whenever possible. Under the housing quality indicator system, a registered social landlord receives better recognition for providing a larger open space. So there is encouragement for those who provide housing to think about needs that are not first on the list, including private garden space or communal space, which would be suitable for dog-owners.
I shall pass on the hon. Gentleman's comments on registers of adapted homes, choice-based lettings and the implication of making changes, and I am sure that Ministers will give them due consideration.
The hon. Gentleman suggested looking at legislation to see whether it is possible to enable dogs in training to enter public premises. The policy of the Health and Safety Executive, which is within my Department, is that rather than implementing blanket bans, health and safety controls should be sensibly applied. The goal is not to try to eliminate all risks in public buildings—that would not be sensible—but to have a system under which risk is properly managed. We aim to have inclusive two-way communication with stakeholders, and he is aware of specific problems arising from the attempt to take dogs in training into public places. I would be very happy for the hon. Gentleman to write to me with some examples. I shall ask the Health and Safety Executive about its approach and ask whether something can be done to ensure that current rules are not applied unnecessarily rigorously.
I am sure that what the hon. Gentleman said about cost savings would be of great interest to the local authorities, which often bear the cost. No doubt, they will take notice because, if they have additional resources that are not being spent on the sort of support that someone with an assistance dog might otherwise need, they could not only provide a more efficient local service but have some spare money to do something for someone else in their area. I am sure that when local authorities start to think about the wider benefit of assistance dogs, they will recognise the potential.
On defraying the cost of training courses for disabled people as they learn to work with their assistance dog, the hon. Gentleman will know that the Department for Work and Pensions arranges vocational training—he referred to the access to work scheme, which is a little different—for long-term unemployed adults, many of whom have disabilities and are visually impaired, and for whom suitable vocational training provision is not available. On our courses, we ensure that any specialist support that is necessary for someone to make progress, including that relating to assistance dogs, is met. That does not deal with his concern about the cost of learning to work with the dog. I shall have to return to that, which I undertake to do.
The hon. Gentleman made an interesting suggestion about prisoners. He will be aware that, along with all the other matters for which I am not responsible, I am not responsible for prisoners. However, I shall take his idea to my colleague in the Home Office and return to him with an answer. It is not something on which I want to stick my neck out at the moment.

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The hon. Gentleman had a number of interesting ideas and I am pleased to see his enthusiasm, which I can well understand, having met many of the charities that provide assistance dogs. The great value of his comments, which extends beyond simply the issues raised and his ideas, is the opportunity to raise awareness among us all about the potential of assistance dogs. We need to make it clear to the public that their use goes beyond guide dogs for the blind and that they can provide much help and support for disabled people. It is clear that disabled people value their help widely.
11.30 am
Sitting suspended until Two o'clock.

Non-proliferation Treaty Review
2 pm
Mr. Deputy Speaker (Mr. John McWilliam):We have no Hansard reporter in the Chamber at present. However, the debate is being transcribed, so the position is not as bad as people might think.
Jeremy Corbyn: I welcome the opportunity to introduce a debate on the nonproliferation treaty and its five-yearly review next year. The PrepCom will take place in April this year. I wish to declare an interest. I joined the Campaign for Nuclear Disarmament at the age of 16 and I have no plans to resign from it. I do not recant anything that I have done within CND and I am a member of its national council. I am proud to be a member. I thank the CND and the House of Commons Library for their help in preparing for the debate.
Last week, my hon. Friend the Member for Blaenau Gwent (Llew Smith) initiated an interesting half-hour Adjournment debate on the acceptance or otherwise of nuclear weapons by the British Government. The Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Harlow (Mr. Rammell), replied to the discussions. I shall set the debate in context. We live in an incredibly dangerous world. Since 1945, there has been a huge number of wars. Many people have died as a result of those conflicts, yet we are still arming ourselves with nuclear weapons. While the purpose of the NPT is to prevent the proliferation of nuclear weapons, we must recognise the heroic efforts of peace campaigners since nuclear weapons were first invented. People have bravely laid down their lives or devoted their whole lives to peace campaigns, such as the Nobel peace prize winner, Joseph Rotblat, who was part of the Manhattan project. There are many others, of course, such as the brave women of Greenham common who did so much to bring home to the world the dangers of the proliferation of nuclear weapons, and a hero, Mordecai Vanunu, who is deserving of the Nobel peace prize and who is shortly to be released from prison. He has spent 14 years in an Israeli prison for having the temerity to tell the world that Israel was illegally developing nuclear weapons.
The case against nuclear weapons is strong. Each year, in Tavistock square in London—as in many other countries throughout the world—we remember Hiroshima day. We commemorate what happened on 6 August 1945 when nuclear weapons were dropped on Hiroshima and Nagasaki, as a result of which 60,000 people died immediately. The effects of the cancers at that time are still with us and people are still dying as a result of those explosions. They were no more than fireworks compared with the nuclear weapons that are now available to us. We should reflect for a moment on what has been achieved since 1945 in respect of even more nuclear weapons and greater dangers.
In his speech on 16 March 2004, my hon. Friend the Member for Blaenau Gwent rightly quoted at column number 293 something that former President Jimmy Carter said about nuclear weapons. I shall repeat the quote because it is very apt. The former President argued:

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"In an all-out nuclear war, more destructive power than in all of World War II would be unleashed every second during the long afternoon it would take for all the missiles and bombs to fall.
A World War II every second—more people killed in the first few hours than all the wars of history put together. The survivors, if any, would live in despair amid the poisoned ruins of a civilisation that had committed suicide."
My hon. Friend also quoted former Soviet leader Khrushchev, who expressed similar sentiments when he said that
"the survivors would envy the dead."
Before we go into the minutiae of treaty negotiations and the technicalities of the issue, we must reflect on why we are trying to achieve nuclear disarmament and why many people have dedicated their lives to that end. The review conference in 2005 is important. It is the five-yearly review. When the Minister replies to the debate, I hope that he will give us some idea of what the Government's position will be and how he intends to involve Parliament in discussions about that so that MPs can make known their views on the matter.
The NPT review will take place as a result of the treaty that was first signed in 1970. It involved all the signatory states in the definition of what nuclear weapons were and in how they would get rid of them. The five declared nuclear weapon states undertook to get rid of their own nuclear weapons eventually. There was a commitment to total nuclear disarmament. That commitment remains, but it is a long way from being achieved.
I will list the declared nuclear weapon states. The United States developed nuclear weapons during the second world war in response to the true perception that Nazi Germany was also developing them, and it is the only country to explode them in anger. The Soviet Union followed by developing them in the immediate post-war period. Both the superpowers relied heavily in the development of their programmes on the expertise of Nazi weapons experts captured in 1945. Britain and France followed suit, but they developed smaller weapons. Then, dramatically, in 1964 China declared that it had nuclear weapons and exploded one.
The non-declared states that we know hold nuclear weapons are India, Pakistan and Israel. None of them has signed up to the NPT. That they should do so must remain a central demand of everyone involved in the peace movement. Another country that was well known to have nuclear weapons but was not a declared nuclear power was South Africa. Nelson Mandela and the African National Congress have achieved many great things; we should thank them for revealing to the world the existence of South African nuclear weapons when they took power, and for renouncing their use and abolishing them. That allowed Africa to become a nuclear-free continent. We should remember that it is possible unilaterally to declare oneself to be nuclear disarmed and not to suffer immediate invasion from somewhere else.
Mr. Simon Thomas: Does the hon. Gentleman agree that it would be useful if today or in the near future the Government were to make clear their intention not to continue with Trident when it reaches the end of its natural life? That would be a huge step forward in ensuring that the treaty becomes workable and effective throughout the world.
Jeremy Corbyn:I agree. I was going to mention Trident later.
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The other countries that are believed to have nuclear weapons—or, at least, the capability of developing them—are Iran, Libya and North Korea. However, it is conceivable that most countries that have access to nuclear power could, in the right circumstances, develop nuclear weapons as well, although considerable technological knowledge would be required to achieve that.
We have NPTs and bans on the export of nuclear material and the technology that goes with it, but the limitations of all of that have been exposed by the statements of Abdul Qadeer Khan of Pakistan, who told the world about the large quantities of nuclear material that he had been involved in exporting to North Korea and other countries and the danger that goes with that.
So far, 188 have signed up to the NPT. The latest three to join are Cuba and East Timor. The only three states that remain outside the NPT process are India, Israel and Pakistan. I appeal to the Government to do everything that they can to persuade those countries to sign up to the NPT and to accept that the world must get rid of nuclear weapons altogether. If we are serious about persuading them to nuclear disarm, we should question why we are providing them with such a vast amount of conventional arms, which can be used in a localised war between India and Pakistan, and in the case of Israel can be, and are, used against the Palestinian people in the continued occupation of Palestine. The 2000 review agreed on 13 steps, all of which led towards a nuclear-free world, but the associated comprehensive test ban treaty has been signed by only 180 countries. Twenty-one countries have not signed it. I urge the Government to do everything that they can to persuade those countries to sign the treaty.
We should remember that the atmospheric testing of nuclear weapons that took place routinely during the 1950s and early 1960s caused enormous environmental damage throughout the Pacific and in Australia. People, including British soldiers, are still dying who are nuclear test veterans. That is the reality of nuclear weapons and explosions.
In The Economist in October 2003, Muhammed El Baradei, the UN nuclear weapons expert, wrote an interesting and long article called "Towards a safer world" as head of the UN's investigation team. I shall quote briefly from it. He wrote that
"controlling access to nuclear-weapons technology has grown increasingly difficult. The technical barriers to designing weapons and to mastering the processing steps have eroded with time ... Uranium enrichment is sophisticated and expensive, but it is not proscribed under the NPT. Most designs for civilian nuclear-power reactors require fuel that has been 'low-enriched', and many research reactors operate with 'high-enriched' uranium. It is not uncommon, therefore, for non-nuclear-weapon states with developed nuclear infrastructures to seek enrichment capabilities and to possess sizeable amounts of uranium that could, if desired, be enriched to weapons-grade."
He continued:
"In 1970, it was assumed that relatively few countries knew how to acquire nuclear weapons. Now, with 35 to 40 countries in the know by some estimates, the margin of security under the current non-proliferation regime is becoming too slim for comfort."
He calls for a new approach and gives three proposals. The first is
"to limit the processing of weapon-usable material (separated plutonium and high-enriched uranium) in civilian nuclear programmes, as well as the production of new material through reprocessing and enrichment."

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His other two proposals are that
"nuclear-energy systems should be deployed that, by design, avoid the use of materials that may be applied directly to making nuclear weapons"
and that
"we should consider multinational approaches to the management and disposal of spent fuel and radioactive waste. More than 50 countries have spent fuel stored in temporary sites, awaiting processing or disposal. Not all countries have the right geology to store waste underground and, for many countries with small nuclear programmes for electricity generation or for research,"
the cost of facilities is prohibitive. By bringing his considerable expertise to bear on the subject, he has pointed out some of the technical problems and limitations that one hopes that the NPT review conference will address.
The British Government will be participating in the PrepCom in April and May 2004 and in the full review conference next year. There are a number of issues that the British Government must address and I hope that we can discuss them briefly this afternoon. The first issue is that, if we are serious about nuclear disarmament, we must say that we are not prepared to use nuclear weapons. However, the Secretary of State for Defence made a number of statements throughout the run-up to the Iraq war and since—which were repeated by the Minister last week in a debate in the House—that the British Government would not rule out the use of nuclear weapons. I find it inconceivable that this country would ever use nuclear weapons. I want to hear the Minister say that, so that we can declare ourselves serious about disarmament and the non-use of nuclear weapons. I know that a number of facilities have been taken out of use and a number of submarines taken off patrol and that the number of active nuclear warheads is much reduced. Nevertheless, it takes only one warhead to go off to set off a nuclear conflict.
The second issue is the proliferation of nuclear weapons, which I believe is part and parcel of the US proposals for national missile defence, and Britain's signing up to the initial part of the NMD process. If we are to lecture the rest of the world on the need for nuclear disarmament, it ill behoves us to develop national missile defence, given the danger of proliferation.
The third issue is the one raised by my friend, the hon. Member for Ceredigion (Mr. Thomas), in his intervention concerning the replacement for Trident, which is becoming more or less obsolete, as did Polaris before that. It would be nice to hear that there are no plans to replace that nuclear facility, and that we are committed to the statement to which we readily signed up in 1970 for the eventual elimination of nuclear weapons.
There is also the question of rigorous inspections in Iran, Korea and Libya. Although such inspections are taking place in Libya and, to some extent, Iran, and although negotiations are going on in Korea, one hopes that the NPT conference will be an opportunity to ensure effective inspections. As I pointed out, we should also continue to put pressure on Israel, India and Pakistan to rid themselves of nuclear weapons.
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In 2000, my old friend, the sadly recently deceased Lord Jenkins of Putney, asked in the House of Lords whether the Government were
"hoping to make substantial progress towards world nuclear disarmament at the coming United Nations NPT Review Conference in New York"—
that is, PrepCom—
"and how they propose to avoid the procedural discussions which are reported to have nullified the recent Geneva Conference."
That was four years ago. In reply, the Minister said:
"We are looking for the conference to result in a balanced review which takes account of the positive steps which both we and other nuclear weapon states have taken over the past five years and which also sets a realistic agenda for the next five years."—[Official Report, House of Lords, 28 February 2000; Vol. 610, c. 323 and 324.]
Those were nice words well put, but unfortunately the problem remains that that conference, although important in itself, did not achieve the desired breakthrough. One hopes that there will be a breakthrough in the conference this April and May.
I hope that the Minister will answer the points that I—and, no doubt, other hon. Members—will raise this afternoon concerning the existence and use of nuclear weapons and, above all, the possibility of nuclear disarmament that comes from the NPT process. I also hope that he will seriously consult with the many bodies of opinion and expertise in this country, including those in the peace movement and various defence analysts and experts, so that there is popular understanding of what the NPT process is about, and of the possibility of our achieving nuclear disarmament.
The 1970 treaty envisaged that all states would eventually rid themselves completely of all nuclear weapons. In 1998, at the United Nations, the "new agenda" coalition of countries—Brazil, Egypt, Ireland, Mexico, New Zealand, Slovenia, South Africa and Sweden—proposed that we should get rid of all nuclear weapons, and saw that as a way forward. Why did the United Kingdom vote against the resolution put by those very honourable countries, all of which were very clearly saying something about nuclear weapons? Why was the opportunity of the 1998 strategic defence review not used to allow us to go a little bit further than we did in reducing the number of nuclear weapons on patrol? Why did we not use that opportunity to try to bring about the aspirations of the 1970 treaty?
I conclude—so that others may speak—by saying that the world has the ability to destroy itself many times over. Many people are dying because of conventional weapons, and many more would die if nuclear weapons were used. Many countries want to get hold of nuclear weapons because they see that the five permanent members of the Security Council are members of the nuclear club, and are the people with the power. deciding how the world is run. If the example is set by those five powers, who are expanding their nuclear capability through national missile defence, or a regeneration of Trident, or whatever, that does not make the world a safer place; in fact, it makes it infinitely more dangerous. The non-proliferation treaty debate—the conference next year—is an opportunity to step towards peace and use our skill, expertise and wealth for peaceful purposes, rather than for the development of weapons of mass destruction, which we hold in this country.

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I have been in the CND all my life, and I am in a party with my hon. Friend the Member for Blaenau Gwent, who has met many Members who are very committed to nuclear disarmament. This is a live issue in political debate, and I hope that today's debate goes some way towards encouraging further public discussion, with the hope and aspiration that there can be a world completely rid of nuclear weapons and their consequences.
2.19 pm
Mr. Simon Thomas: I should like to begin by congratulating the hon. Member for Islington, North (Jeremy Corbyn) on securing this important debate on a subject that we do not spend enough time discussing in Parliament. Although he has used the opportunity of the forthcoming review to hang his ideas on, those ideas flow throughout the security of this country and, more important, they underpin our dealings with other countries. We only have to look to our debate in Prime Minister's—or should I say Deputy Prime Minister's—questions on Libya and our relationship with that country to see how important it is to work on disarmament, rather than armament. I fully support and concur with the hon. Gentleman's ideas.
I want to concentrate first on the concept of a strategic deterrent in the form of nuclear weapons, which it seems that we have in this country at the moment, and secondly, on the proliferation security initiative, about which I should like to ask the Minister a few questions.
I begin with the defence White Paper of December 2003, which reiterated that
"our minimum nuclear deterrent capability, currently represented by Trident, is likely to remain a necessary element of our security."
People tend to get somewhat disheartened on reading such words, because they are a de facto acceptance of a retention of a permanent policy commitment to nuclear weapons, in defiance of the international commitments and treaty obligations that the hon. Member for Islington, North outlined and which, incidentally, are not mentioned in the defence White Paper. In other words, the White Paper does not set out how the Government are setting about meeting their international treaty obligations to disarm and undergo nuclear disarmament, or how we square our treaty obligations with an ongoing commitment to Trident.
The White Paper also states that the UK faces "no major conventional military" threat. I think that that is still so. The threat that is identified, and which we have seen all too clearly over the past couple of weeks, is that of terrorism and of proliferation in terrorist methods. We must ask ourselves, "What possible use is our nuclear deterrent against that real threat to our daily lives in the United Kingdom, which is not in any way related to the issues of proliferation of nuclear weapons?" I shall deal with the proliferation of weapons of mass destruction in a moment. If we believe that the reliance on nuclear weapons as a strategic deterrent is of no relevance in the war on terror, that prompts the question of why we, as a nation, are holding back from moving forward on nuclear disarmament and particularly, why the defence White Paper says:
"Decisions on whether to replace Trident"
or not are not decisions to be made in
"this Parliament but are likely to be required in the next".
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I regard that as a clear indication that the Government have in mind a timetable for a replacement for Trident. That is why I was grateful to the hon. Member for Islington, North for allowing my intervention and for his remarks. It is clear from the White Paper that the Government have in mind a replacement for Trident. It would be useful if the Minister were able to say something today about any research that may be going on in nuclear installations in this country regarding such a replacement. That situation also underpins the need for parliamentary debate on such matters, to prevent our being bounced, as we were with the strategic defence initiative, into agreement with other countries about their defence and nuclear-based defence capabilities.
We were initially told that there would be upgrading work at Fylingdales for the strategic defence initiative during this month. It would be useful if the Minister said something today at least to confirm what is happening at Fylingdales at the moment and to give us the current state of play of that initiative.
We need to consider where the Government's policy is on this matter. The hon. Member for Islington, North set out clearly the international obligations and the way that he would wish the Government to address them, but we need to consider what they are actually saying on these matters. I reiterate—it is important to say this on the record—that the Government have not ruled out the use of nuclear weapons. On 20 March 2002 the Secretary of State for Defence told the Defence Select Committee that
"in the right conditions"
the UK
"would be willing to use our nuclear weapons."
There are no right conditions in which to use nuclear weapons—that is the central question. However, we need to know what those right conditions are. Under what conditions do the Government foresee that it would be permissible or allowable to use nuclear weapons? The White Paper dismisses the idea of a major conventional threat to this country and identifies terrorism as the threat to our daily lives. That prompts the question, what are the Government doing about the issue?
On 2 February 2003, I asked the Prime Minister about the pre-emptive use of nuclear weapons in the context of what was then the forthcoming war on Iraq. Once again, the Prime Minister refused to rule out the pre-emptive use of nuclear weapons and simply said that there was a traditional British doctrine. However, we do not know what that is because we have no explanation of what the right conditions would be for the use of nuclear weapons.
There was another interesting response in a parliamentary answer to the hon. Member for Hereford (Mr. Keetch). He asked the Defence Secretary about the nuclear weapons programmes and there was the same reply:
"Under the terms of the nuclear non-proliferation treaty, the United Kingdom, the United States, France, China and Russia are legally entitled to possess nuclear weapons."—[Official Report, 30 October 2003; Vol. 412, c. 320 W.]
That is not what the treaty says at all; it does not give a legal entitlement to the ongoing possession of nuclear weapons. The purpose of that treaty is to control the proliferation of nuclear weapons and to facilitate their

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total elimination. It does not give a legal remit to hold on to nuclear weapons at all. Article VI of the treaty states:
"Each of the Parties to the Treaty undertakes to pursue negotiations in good faith on effective measures relating to cessation of the nuclear arms race at an early date"
to a certain extent, the treaty has been successful on that—
"and on a Treaty on general and complete disarmament under strict and effective international control."
The only conclusion that I can draw from the Minister's reply to the hon. Member for Hereford is that the UK is trying to rewrite ipso facto the nuclear non-proliferation treaty to give the present nuclear weapon states, including the UK, some sort of legal basis on which to own nuclear weapons. I return to what the Secretary of State for Defence told the House of Commons on 5 June 2000. He said that
"the non-proliferation treaty as an agreement is an aspiration; it is not likely to produce results in the short term."—[Official Report, 5 June 2000; Vol. 351, c. 12.]
I would say that the treaty has produced results. Whatever argument one may use about the history of the arms race, the treaty was useful in introducing effective measures to bring about the cessation of the nuclear arms race and can be effective for the future—this is the important thing for the review—for general and complete disarmament and a strict and effective international control. It is very unfortunate that the Secretary of State seems to have dismissed that as an aspiration when that aspiration has, partly at least, come about. The Government have obviously worked along those lines and I would like to see them work much harder to make the non-proliferation treaty work in that regard.
Finally, I should like to note in passing that the department in the Foreign and Commonwealth Office that deals with such matters has changed its name from the non-proliferation unit to the proliferation prevention unit. There is a subtlety of meaning there. "Non-proliferation" tied in the work of that department to the treaty, which was not just about non-proliferation but about nuclear disarmament. "Proliferation prevention" ties the department in much more to the current agenda of the nuclear states and the United States in particular. That agenda is about stopping other countries getting the weapons that we have and about keeping the weapons that we have. That is a very basic, rude and crude way of putting it, I know. However, that is what the United States policy is; I should be delighted if the Minister would put some more flesh on that from the United Kingdom policy point of view.
I want to mention the proliferation security initiative. We have not heard much about that in Parliament, and in general the issue has gone quiet during the past few months. However, hon. Members may remember that it was a United States State Department initiative. As it put it, it was set up
"as a response to the growing challenge posed by the proliferation of weapons of mass destruction".
We know that such weapons are proliferating in Pakistan and North Korea. They may not be proliferating in Iraq, of course; that is a different matter.
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The idea was that there could be an international seizure of the trade in weapons of mass destruction, particularly on the high seas. There were attempts just before the Gulf war to seize a shipment of missiles en route to Yemen from the Republic of North Korea. That turned out to be perfectly legal, in general international terms at least.
I remind the Chamber of what the proliferation security initiative says that it intends to achieve. Its interdiction principles state that it intends
"to establish a more coordinated and effective basis through which to impede and stop shipments of WMD, delivery systems, and related materials flowing to and from states and non-state actors of proliferation concern, consistent with national legal authorities and relevant international law and frameworks, including the UN Security Council."
I have some brief questions to put to the Minister and I hope that he can respond to some of them. One question is about the relationship between international law and frameworks and the United Nations Security Council. The US State Department has seized on a 1992 presidential statement of the UN Security Council to give it the authority to exercise the use of force to interdict ships on the high seas and check them. It does that in the name of non-proliferation. However, there are some serious questions as to whether that presidential statement gives it legal authority, and as to whether the international law and frameworks of maritime law, which are pretty well developed, run counter to that.
My second question relates to how any cases of such interdiction would be brought before the UN by the participants in the proliferation security initiative. The UK is a core part of that initiative. We also need to note that that initiative is a coalition of the willing—to use a phrase from another context—rather than an organisation based on an international treaty. We must ask ourselves how "states of concern"—that is the wording of the initiative—will be identified. Does the phrase have a legal definition or, as we have seen in the case of Iraq, does it allow one country to decide that another country is of concern and that action must be taken against it?
What mechanism will be adopted in the case of interdiction? Finally, what is to prevent any nation from adopting the same criteria and boarding any ship that it believes to be of concern, thereby thwarting legitimate trade between nations? Such measures could be used to put pressure on countries that do not fit in with the ideals of the nation concerned. We have only to think about what the US State Department thinks about Cuba, which internationally is a perfectly legal and recognised entity, to see how a proliferation security initiative could be misused by one country if it identified a concern in another country and took action on that. I hope that the Minister can bring the House up to date about the proliferation security initiative and how he intends that to work in relation to international legislation and the workings of the UN Security Council.
I conclude with a simple quote that I came across recently. It underlines my feelings on the matter and the conclusions of the hon. Member for Islington, North. It is as follows:

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"We must abandon the unworkable notion that it is morally reprehensible for some countries to pursue weapons of mass destruction yet morally acceptable for others to rely on them for security—and indeed to continue to refine their capacities and postulate plans for their use."
The United Kingdom is in that situation. We hold weapons of mass destruction. What is more, we continue to develop them and refine their capacities, and we have plans for their use. If the Government say that there are situations in which they would use nuclear weapons, obviously they postulate plans for their use. That quote came from the same person that the hon. Gentleman quoted in a different context: Muhammed El Baradei, the director general of the International Atomic Energy Agency. The quotation was published on 13 February 2004 in the International Herald Tribune.
We are talking about the key question for the review of the non-proliferation treaty. How will the Government approach that review? Will they build on the successes of the treaty so far in at least bringing about the cessation of a particular type of horrid arms race, or will they perpetuate the cold war in another guise? It is time for us as a nation to take the step not only of rejecting the use of nuclear weapons, but of saying positively that we will disarm. The replacement for Trident is the ideal opportunity to take that first step. I hope that the Minister will say—I do not think that he will—that we will not have a replacement for Trident and that we will be taking those steps.
Several hon. Members rose—
Mr. Deputy Speaker:Order. I see two hon. Members rising to speak. We should remember that the purpose of the debate is to enable the hon. Member raising it to get an adequate reply from the Minister. If both hon. Gentlemen are brief, they will be able to speak before the Minister starts his winding-up speech.
2.35 pm
Mr. Kelvin Hopkins: Thank you, Mr. Deputy Speaker. I shall speak only for a few minutes. First, I congratulate my hon. Friend the Member for Islington, North (Jeremy Corbyn) on securing this debate on a most important issue—arguably the most important that faces us. I entirely agree with the two fine speeches that have already been made so I do not need to repeat them, but some of what I say may reinforce them.
The cold war between the Soviet world and the west is now over. Weapons such as Trident were designed for that situation, but even then, I did not accept the necessity of nuclear weapons. I was a member of CND for many years, I marched all the way from Aldermaston in 1962, and many years later I became chair of Trade Union CND, so I have a record in these matters. It is time to decommission Trident and not to replace it—that point has been made. It was designed for a world in which major powers faced each other, not for a world that is dealing with terrorism carried out by persons unknown working within societies. Trident is out of date, irrelevant, extremely expensive and potentially very dangerous.
I agree entirely that we should decommission Trident and become a non-nuclear power. If we did, we would be seen to be the first major power to be moving in a
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peaceful direction, rather than a warlike one. We would derive great moral respect in the world, and we would then be in a position to speak about peace to the rest of the world. I am not suggesting that we disarm conventionally, because we have a strong role to play using conventional arms—working under the auspices of the UN for peaceful purposes in various parts of the world is a very fine thing. Indeed, some interventions were not made that I think should have been made. Rwanda is one such case: if the UN had got in quickly, and we had sent troops to stop the genocide in Rwanda, that would have been a humane purpose for military activity, and I would have supported it. However, that has nothing to do with nuclear weapons, which have no role to play.
Britain has another role because we were a colonial power—the colonial power, with a footprint in more parts of the world than anyone else. We have links that can be useful. In my constituency are many thousands of constituents from Kashmir, Pakistan and India. The situation in that part of the world is tense and very delicate. It is starting to improve, but Britain could and should have a role. If we take sides in a strong and aggressive way, as we are at the moment, it is more difficult for us to play a conciliation role in those parts of the world.
In Africa, too, there are serious tensions in many states, and some have become non-states because of appalling internal civil wars and violence. We could play a role in Africa under the auspices of the United Nations, because we understand Africa—we have had a greater presence in Africa than any other colonial power. We could play a positive role for peace across the whole of Africa, but we cannot do that if we have a partisan, militaristic role in the world and retain nuclear weapons. We look like a country that is going to wage war, rather than a country that is going to end wars.
I wanted to make those brief points to support my hon. Friend the Member for Islington, North and the other hon. Members who have spoken today. The UK has respect in the world—perhaps more respect than we deserve sometimes. Britain still commands respect from many people in the continent of Europe, and the many people from all over the world who live in my constituency. That could be massively enhanced if we chose to be the first major nation to get rid of its nuclear weapons and start to work for peace.
2.39 pm
Mr. Malcolm Savidge: I congratulate my hon. Friend the Member for Islington, North (Jeremy Corbyn) on securing this very timely debate, and on his own excellent and comprehensive speech. I also complement the other speakers and agree with much that has been said.
I believe that the nuclear non-proliferation treaty is the basis of a stable future for our world. I praise the work that the United Kingdom Government played in the 2000 negotiations in bringing countries together in a successful negotiation. If we are to have a safe future, it is vital that the treaty be strengthened. It has been much more successful than many people had anticipated. If one examines the forecasts that experts made in past decades, one finds that they predicted that by now far more countries would have nuclear weapons than has turned out to be the case.

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When we debated this issue in January 2000, we were aware that there was a risk of materials passing from states not only to other states but to terrorists. In the light of 11 September, the awareness has become much stronger. Materials may pass not only from states but from black market or independent agents. There are various concerns about materials remaining in the former Soviet Union and the danger from Pakistan. When we were embarking on the campaign against al-Qaeda, there were fears that it could have obtained personnel or weapons material from Pakistan, through ideological or financial links. The general impression is that, although al-Qaeda attempted to do that, fortunately, it did not succeed. Where terrorism is concerned, we must concentrate on al-Qaeda and related organisations, but we must never forget that the threat is not simply from Islamic fundamentalism. As one can see from the Aum Shinri Kyo sect in Japan, it is possible for other organisations to adopt the sort of extremist terrorism that aims to kill vast numbers of people.
One should be cautious about what one says about Iraq. The present evidence is that Iraq abandoned its nuclear programme, and probably all its weapons of mass destruction, in the 1990s. If that was the case, it suggests that the International Atomic Energy Agency, the NNPT and international pressure were more successful than most of us—myself included—realised. That shows that there are terrible dangers in the neo-conservative concept of resolving such matters through pre-emptive war based on uncertain intelligence. Detestable as it must be to the Prime Minister and many others, I praise his decision to deal with Libya. We have to resolve such matters by negotiation.
On 11 February, President Bush made an important speech on weapons of mass destruction proliferation. I yield to most people in my respect for President Bush, but I admit he said some things that are deserving of special attention. Every civilised nation, he says, has a stake in preventing the spread of weapons of mass destruction. We could go further and say that the whole of humanity has a stake in that. His statement that we should do everything we can to prevent the criminal proliferation of weapons of mass destruction is clearly correct. However, I share the concern that was expressed by the hon. Member for Ceredigion (Mr. Thomas) that such a policy can include intercepting vessels one thinks are carrying materials. Because of the attitude of some members of the Bush administration, I am concerned that such action could become a cause of war if it were carried out in a cavalier fashion.
We should strengthen national laws, and I am pleased that we have been one of the first countries to take on the additional protocol. I am also pleased that President Bush is now talking about strengthening the Nunn-Lugar arrangements to control and reduce nuclear materials in the former Soviet Union. It was disappointing that he moved away from it at the start of his presidency, but I am pleased that he has moved it back up his agenda and that the world community has fallen into line behind it. We must recognise that civil
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nuclear production can be diverted to making nuclear weapons: in particular, processes such as enrichment and reprocessing must be controlled.
Llew Smith: My hon. Friend says that national and international laws must be strengthened, but is it not a fact that the United Kingdom is breaking the current law in nonproliferation treaty articles VI and I, and the United States is breaking another international treaty, the chemical weapons convention? He spoke of the willingness of terrorists to carry out mass killings. It is difficult for us to comprehend the horror of some of those events, but, in response to a question of mine, the Government said that in extreme circumstances they would be willing to press the nuclear button—surely the ultimate act of madness. Does my hon. Friend agree, or can he think of a more extreme act of madness than involvement in nuclear conflict?
Mr. Deputy Speaker:Order. I remind the hon. Member for Aberdeen, North (Mr. Savidge) of the time constraints.
Mr. Savidge:I believe that all of us would devote ourselves to trying to ensure that nuclear weapons are never used again. Having visited Hiroshima, I have no doubt about that.
It is important that the International Atomic Energy Agency be strengthened. Suspected violators should not be on the board and we should strengthen the additional protocol. However, the points made by Mr. El Baradei in response to the President must also be considered. The nuclear non-proliferation treaty should be made binding, and we should treat withdrawal far more seriously. There should be no permission for withdrawal from the treaty or, at least, there should be an immediate report to the United Nations Security Council in such an event. We must also recognise the dangers of diversion from the civil nuclear industry and ask whether the spread of that industry increases the safety of our world.
As my hon. Friend the Member for Islington, North said, we must consider the non-signatory powers, including India and Pakistan. Obviously, we are very pleased that Mr. Vajpayee and Mr. Musharraf are pursuing a peace process—we hope that it will be successful. Clearly, they should be involved. As has been said, the situation of Israel is a problem, and it is unacceptable for Sharon to say that he is waiting for success in the middle east peace negotiations if he himself is a major block to progress. We should also consider Kofi Annan's proposal for a UN conference on nuclear weapons in which the status of the unofficial nuclear weapons states would be avoided in order to bring them into discussions.
We cannot disregard questions about the nuclear weapons states themselves. I follow the hon. Member for Ceredigion in quoting Mr. El Baradei, who said that we must abandon the notion that
"it is morally reprehensible for some countries to pursue weapons of mass destruction yet morally acceptable for others to rely on them".
We must follow the 13 steps drawn up in New York. We promised that we would support a comprehensive test ban treaty and stop testing. The US must adhere to its

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current moratorium and we must press our ally to consider and sign the comprehensive test ban treaty. It is unacceptable that, although we have said that we will have a missile cut-off treaty, China and the US are blocking it over the issue of weapons in space. It is unacceptable that, although we agreed to strengthen the anti-ballistic missile treaty, it is being abandoned. Missile defence is not helpful to the process that we need.
We must realistically reduce nuclear weapons. We need something far stronger than the Moscow treaty—something that includes irreversibility, is binding, and acts much faster to remove the vast quantities of nuclear weapons materials that no one needs. We therefore need a process that moves fast enough to bring in China, Britain and France.
The Bush Administration should cease talking of breaking negative security guarantees and devising programmes to make nuclear weapons useable. It is unthinkable that they should be talking about mini-nukes for bunker-busting, especially if one remembers poor Colin Powell being pushed out to say that the Administration knew about vast underground bunkers and weapons of mass destruction in Iraq, and how none has so far been found.
We must work together to strengthen the nuclear non-proliferation treaty to reduce the threat of nuclear terrorism and nuclear war and create a safe future. There is no future safety in national military invulnerability. There is safety only in the common security of all states.
2.51 pm
Mr. Michael Moore: I, too, pay tribute to the hon. Member for Islington, North (Jeremy Corbyn) for securing a debate on a very important topic. As he pointed out, it is rarely afforded the opportunity of proper discussion in the main Chamber. I also pay tribute to all others who have contributed. They, in their different ways, have long and established campaigning records on these issues, and bring much expertise to the debate.
A recurring theme this afternoon has been the self-evident truth that the nuclear non-proliferation treaty is the cornerstone of international arrangements to reduce the threat of nuclear war and keep the world secure. For a period after the end of the cold war, people thought that the dangers had passed. The events of the past few years have indicated that the world is not as safe a place as we hoped. An element of complacency in the 1990s has been replaced with real fears about the spread of nuclear weapons and a new risk that, in time, terrorists or other non-state actors will get hold of the technology and capability for nuclear weapons.
When we examine the context in which the non-proliferation treaty will be reviewed in a year's time—as the hon. Member for Islington, North said, there is an important conference in a few weeks' time—we can see that there has been a mixed set of circumstances on the non-proliferation issue in the past year. There has been a mixture of some delight and a great deal of concern. In Libya, we have seen a real breakthrough. As the hon. Member for Aberdeen, North (Mr. Savidge) commented, there is some difficulty with the concept of
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dealing with Gaddafi and his regime and never losing sight of the terrible events of Lockerbie. On the other hand, we have seen the rewards of a patient process in which the Government and others have participated, and the events of the past year, with missiles being shipped safely away from Libya, represent real progress.
Equally, there have been real concerns. The good news in Libya stripped away some of the difficulties of seeing the modern nuclear reality. We quickly saw the situation in Pakistan and the revelation of the virtual international bazaar that Dr. Abdul Qadeer Khan was operating, spreading nuclear know-how around the world. We should be very worried to see many of the countries that he was dealing with in the possession of such knowledge. Know-how and technology are moving around, and there are parallel concerns in Pakistan about the safety and security of its nuclear arsenal. As has been mentioned, Pakistan, India and Israel are not members of the non-proliferation treaty regime. Given the new context in which we operate, it would be useful if the Minister told us what steps might be taken to allow Pakistan and others to come closer to membership of and compliance with the nuclear non-proliferation treaty.
Alongside Pakistan, we have concerns about North Korea, which is perhaps the most dangerous situation that is facing us. In the past year there have been threats, counter-threats and many periods of stand-off. Last year's announcement that North Korea was withdrawing from the NPT was worrying, but we must hope that, once again, multi-lateral diplomacy will be successful in drawing it into compliance with the treaty.
Events closer to the domestic political agenda of the past year have put a focus on the middle east. I will not rehearse again the questions and points that have been raised about Iraq. However, the prospect of a nuclear war that is started somewhere in the middle east remains real. It is vital that we get Israel signing up to the non-proliferation treaty as a non-nuclear state, allowing us to move towards the creation of a middle east that is free from such weapons.
Iran, in its own way, has brought itself to the public's attention. I shall return to that in a moment. There has been a series of responses from the world community. One of the key areas that needs further examination is counter-proliferation and the role of our intelligence services; they are the subject of severe scrutiny in the United Kingdom at the moment. We need to see their role in working with other international agencies strengthened. The hon. Member for Ceredigion (Mr. Thomas) mentioned the proliferation security initiative. We would welcome anything that will enhance security, although I recognise some of the dangers to which he alluded. The Foreign Secretary, in his written statement to the House of Commons in February, referred, in the context of the global partnership against nuclear proliferation, about the prospect of establishing a UN Security Council committee along the lines of the Counter-Terrorism Committee. Has that particular initiative been taken forward and what progress has been made on it? Similarly, there was mention in that statement of the desirability of a new United Nations Security Council resolution. We would support such an initiative and I hope that the Minister will have something to report to us about it.

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I mentioned Iran. The peaceful use of a nuclear capability is something that is important to many countries. The agonising about the status of Iran's nuclear capabilities has been causing much concern in the past few months; there must be genuine concerns about the nature of its nuclear programme. Its announcement that it has suspended enrichment activities is welcome, but it is equally worrying that it has been unwilling to agree to the inspections that were requested by the international community. I pay tribute to the Government, who were working in league with France and Germany, for the way in which their diplomatic efforts have made progress in the past few months. I hope that, working in tandem with the United States, we may yet see an early resolution of that issue.
Previous speakers have made contributions about disarmament. I would merely say that we welcome the steps that have been taken. Serious progress has been made since 1997. However, we must hope that there will be further progress under this Government. In particular, we must hope for a recognition that if no further steps are taken by the existing nuclear powers, our credibility with those who have them illegally—in the context of the treaty—or with those who aspire to have them will not be great.
This is a brief debate and many serious issues have yet to be fully discussed, but I hope that the Minister will give a strong signal that the Government remain committed to pressing the non-proliferation agenda and that in the coming review of the treaty they will take a lead in making the world a safe place.
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Mr. Richard Spring: I also congratulate the hon. Member for Islington, North (Jeremy Corbyn) on securing the debate. He and I may not always agree, but with great passion and conviction he brings to the attention of the House important issues on a variety of subjects and, as a Conservative Member of Parliament, I freely acknowledge that.
I also congratulate all the speakers who have contributed to this afternoon's debate. As others have said, it is important that at this time, in the light of recent revelations about proliferation and a month before the final preparatory committee meeting for the 2005 review, we debate the issue, which is crucial for global security and stability. The proliferation of weapons of mass destruction is a vast issue, so I shall concentrate on the narrower subject before us today in a broader context.
The fact is that some countries possess nuclear weapons or other weapons of mass destruction and the apparent inequality of such a situation inevitably generates a desire for others to possess them also, whether to establish their status in a global or regional context or to possess so-called deterrents against other countries already in possession of them. Those are two often-cited factors when considering Iran's nuclear activities.
Recent revelations about the activities of Abdul Qadeer Khan in Pakistan, Libya and North Korea have caused questions to be asked about the suitability of the 1970 non-proliferation treaty for the proliferations
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challenges of the 21st century. The N PT legitimised the five nuclear powers' arsenals and forbade further proliferation, but does not contain provisions to penalise those who would not sign and who are technically not subject to treaty rules, such as India, Pakistan and Israel. It also allowed any signatory the right to use nuclear materials for peaceful purposes, and that is very grey territory because the development of a nuclear capability for some purposes can be transferred to a more aggressive posture in other circumstances.
The objective of the treaty, which was originally agreed for 25 years but was extended indefinitely in 1995, was full nuclear disarmament. That remains its ultimate objective and was reaffirmed in the 1995 review and extension conference, at the 2000 review conference and in preparatory committee sessions for the 2005 review. The NPT was the essential foundation for the pursuit of nuclear disarmament, and ideas such as nuclear-free or weapons of mass destruction-free regions are being advanced at the moment, particularly in respect of the middle east; they deserve careful consideration.
The NPT has achieved successes and we should not downplay the role that it has played in limiting proliferation. However, while the need to counter the proliferation of weapons of mass destruction has always been great, it has never been more important than it is today. Historically, potentially belligerent states in possession of large nuclear arsenals were the main problem; today it is failed states, rogue states run by unaccountable regimes that do not always act rationally, and terrorist groups that represent the most potent threat to global security. The so-called traditional risk has not gone away—witness the near-nuclear conflict in Kashmir only a few years ago—but the treaty must seek effectively to address the new threats as well.
Recent developments in Libya have been alluded to and the decision to reveal and dismantle its programme is welcome although, as my right hon. and learned Friend the Member for Devizes (Mr. Ancram) stated, experience teaches us to be wary of Colonel Gaddafi's promises until they are delivered. Many unresolved issues remain between the United Kingdom and Libya. Important facts have been brought to light that highlight the complexity of the global proliferation networks, of which we were unaware, and the ways that the NPT has been circumvented.
The activities of Abdul Qadeer Khan have done a lot of damage to non-proliferation efforts. With a web of contacts and middlemen spreading throughout the middle east, parts of Europe, across the Indian subcontinent and into Asia, it is imperative that we now draw together all the available intelligence so that we can identify and pursue every contact in the web and form an accurate picture of what technology and knowledge has been passed on to which countries, regimes or even terrorist groups. The risks posed by the new proliferators, including those from the former Soviet Union, are real.
Iran's nuclear programme remains a concern to us. It is clear that Iran has breached nuclear safeguards and rules; that has been going on for 18 years. It has also refused to disclose important aspects of its nuclear programme. Those breaches are serious, and it is right

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that the IAEA passed a resolution reflecting that. However, Iran has now started co-operating with the IAEA, and I hope that that continues and is built upon.
The situation in North Korea has been mentioned. It is arguably the most worrying consequence of proliferation that a totalitarian regime making very bellicose noises should possess nuclear capability. That is beyond the scope of the NPT to remedy. A firm stance coupled with the prospect of talks to remove the problem must be pursued. China's efforts to defuse the situation and tackle North Korea's nuclear status deserve our gratitude and support.
In the light of recent events, many people, including Mr. El Baradei of the IAEA, have begun to raise serious questions about whether the NPT is as effective and well suited to modern needs as it should be. He recently alluded to that in an article in The Economist. He stated that many countries that signed the NPT have yet to effect the safeguard agreement with the IAEA; fewer than 20 per cent. of them have finalised the 1997 additional protocol allowing for broader inspections and, seemingly. a culture of a reluctance to move first has developed. As he notes, hardware for nuclear energy production is at present often dual-use, which makes monitoring difficult.
With such proliferation of knowledge, does the Minister agree that the current framework for verification and regulation requires updating? Does he also agree that the processing of weapons-usable material, such as separated plutonium, in civilian nuclear programmes should now be restricted? Does he believe that proliferation-resistant energy system technology has been sufficiently developed to be considered for inclusion in all civilian nuclear programmes? Will he be pressing for the development of such processes to be a priority?
Much of what I have said is about how to prevent future proliferation rather than how to tackle proliferation that has already occurred, as this debate focuses on the treaty review. It is not about tackling new, or near, nuclear states, which are subjects in themselves. I hope that the Minister can assure us that the UK will play a full and active role in the 2005 review, as it did in past ones, and that it will give serious consideration to the views expressed here today.
In many ways today's world is more unpredictable than that of the cold war era in which the NPT was conceived. Proliferation is one of the causes of that unpredictability. We must ensure that the NPT adequately addresses the proliferation challenges of today.
3.9 pm
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Bill Rammell): I congratulate my hon. Friend the Member for Islington, North (Jeremy Corbyn) on securing the debate; the hon. Member for West Suffolk (Mr. Spring) stole the words that I was going to use in responding to him. What I have to say is not diplomatic flannel, although that is a necessity from time to time for Foreign Office Ministers; although there are disagreements on issues, there is wide regard and respect for the integrity with which my hon. Friend pursues his views on these matters. 1 was struck by the comments
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that he and other hon. Members made about the appalling horrors that could accompany nuclear configuration, and in that context the important debate is about how we ensure that we avoid that situation. Those judgments are not easy, and that is what divides the debate. It is important that we take this opportunity to discuss those issues, particularly within the context of the non-proliferation treaty, its review and British participation.
We believe that the NPT is the corner-stone of the non-proliferation regime, and we are committed to working towards a world safer from global terrorism and weapons of mass destruction. The NPT has been, is and should be in future a crucial tool for helping us to do that. We remain fully committed to the treaty and look forward to participating in the review.
The NPT is already a strong treaty. As the hon. Member for Ceredigion (Mr. Thomas) said, it already has a good track record in thwarting the proliferation of nuclear weapons. It has the widest membership of any arms control treaty and it retains the wholehearted support of the United Kingdom and the vast majority of the international community. We are committed to strengthening it in the face of the challenges posed by the new security environment.
I am somewhat younger than I look. I am a child of the cold war and I grew up with the real and constant fear of nuclear war. Some of the challenges that we face today are even more terrifying than those that we faced during that divide between east and west.
We must look to all international instruments and treaties at our disposal. With that in mind, the UK's main goal for the forthcoming 2004 PrepCom and the 2005 review conference will be to emphasise the need for greater efforts in the non-proliferation and compliance areas of the treaty. The events of the past year have shown that several states continue to seek clandestine nuclear weapons programmes and that individuals are willing to assist them in the proliferation of sensitive materials and technology. The treaty must therefore be strengthened and the political will generated to prevent that.
Before I go any further, it is worth putting on the record the considerable progress that we have made in nuclear disarmament. People involved in the debate do not often acknowledge it, but our record is good. We played a key role in achieving international agreement to the final document that was produced at the previous NPT review conference in 2000.
The UK has made considerable progress on the "13 practical steps towards nuclear disarmament" set out in the document. For example, we have begun a programme to develop UK expertise in verifying the reduction and elimination of nuclear weapons internationally. At the second meeting of the preparatory committee for the 2005 review conference, held in Geneva during April and May last year, we issued a working paper on the authentication of warheads and their components. At the third meeting of the committee in New York this year, we will present the next part of the study, which looks at verification

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technologies and their potential use in warhead dismantling. Those are some of the critical areas in which we must make progress.
Llew Smith:Could the Minister explain how Trident fits into those steps towards nuclear disarmament?
Mr. Rammell:If my hon. Friend will wait, I will happily address Trident, as I did directly to him in the Chamber last week.
At the 2005 review conference we will summarise the range of technologies and approaches that have been researched over the five-year programme. The work will provide the basis for methodologies that might be used in the verification regime of any future disarmament treaty.
I will address the issues that have been raised by hon. Members before I return to the central thrust of my speech. My hon. Friend the Member for Islington, North rightly raised concerns about those states that do not operate in the auspices of the non-proliferation treaty in which there is a concern about nuclear weapons capability. We continue strongly to urge Israel, India and Pakistan to accede to the NPT as non-nuclear weapon states. There is no equivocation about that. It is a view that we constantly put forward.
Both my hon. Friend and the hon. Member for Ceredigion raised concerns about national missile defence. It is important to make it abundantly clear what we have, and have not, agreed to. In February 2003, after significant public and parliamentary discussion, the United Kingdom agreed to the United States' request to upgrade and use RAF Fylingdales' early warning radar for missile defence. That upgrade keeps open the prospect of our acquiring missile defence capabilities should we desire such protection in future. However, we have not decided to join the US missile defence programme. That is a decision that is still open to us and there should be ample opportunities for it to continue to be discussed.
There has been significant questioning, which was similar to the questioning from my hon. Friend the Member for Blaenau Gwent (Llew Smith), on the issue of the circumstances in which we would be prepared to use the nuclear weapons that we possess. It is important to make it clear that the circumstances in which any use of nuclear weapons might have to be contemplated are extremely remote. That is consistent with what the Secretary of State for Defence said. We would use nuclear weapons only in extreme circumstances of self-defence and in accordance with our obligations under international law. I think that that is a reassurance that should go forward.
Mr. Simon Thomas:Can the hon. Gentleman confirm that those circumstances categorically rule out a preemptive use of nuclear weapons?
Mr. Rammell:We need there to be some uncertainty on the part of those states that might seek to attack us about our disposal in defending ourselves. Nevertheless, as I have made clear, we would use nuclear weapons
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only in extreme circumstances of self-defence and strictly in accordance with our obligations under international law.
A question that has been put forward this afternoon concerns our stance on a comprehensive test ban treaty and whether we are in favour of other countries signing up to it. Emphatically, yes that is the case. My noble Friend Baroness Symons spoke at the CTBT conference held in Vienna in September 2003. She took the opportunity to urge all states that had not yet signed and ratified the treaty to do so. That is the position that we maintain today.
The issue of the proliferation security initiative was also raised by the hon. Member for Ceredigion, who asked how that related to existing non-proliferation treaties and regimes. That is an important area for discussion and clarification. There are a number of tools at our disposal to prevent the spread of weapons of mass destruction. The aim of the proliferation security initiative is to build on and reinforce those existing tools, not—explicitly—to supplant them. The PSI builds on the 1992 UN Security Council declaration on proliferation of WMD, which states that the proliferation of all WMD constitutes a threat to international peace and security and underlines the need for member states of the UN to prevent proliferation.
The hon. Member for Ceredigion also raised the legal basis of the issue. The statement of interdiction principles that was agreed at the Paris PSI meeting on 4 September 2003 makes it clear that all action will be consistent with existing national legal authorities and the international legal framework. There is a large body of authority for undertaking interdiction operations, such as those involving actions in territorial waters, airspace or land or by flag states against vessels operating under their flags.
To those people who have a strong track record of campaigning against nuclear weapons, I say that I respect their integrity and motives but am sometimes puzzled as to why, given that commitment, there are concerns about initiatives such as the PSI, which is a legitimate and justifiable move to stop the proliferation of nuclear capability and its spread, both to states that could use it extremely irresponsibly and to non-state actors and terrorists who could greatly increase the risks that we face.
Jeremy Corbyn:I think, if I may say so, that the concerns that many of us have are about unilateral actions by nuclear powers, such as the US intercepting the vessel travelling from Korea to Yemen. We would much prefer an international inspection agency and interception process, and Muhammed El Baradei would confirm that.
Mr. Rammell:I think that case can be argued. To refer to the comments of the hon. Member for Ceredigion, we are certainly talking about a coalition of the willing who are rightly prepared to move forward on the issue. In time, the matter may well come under the auspices of wider international agreement. However, the fundamental point must be made that the proliferation security initiative is based on the sound principle of trying to stop the spread of nuclear weapons and other WMD capability, and preventing it from getting into the

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hands of people who would have absolutely no compunction in using it and causing disaster to the whole world in a genuinely horrifying way.
I return to some of the broad issues and the UK's progress on disarmament under NPT article VI. We remain fully committed to all aspects of the NPT, including global and verifiable nuclear disarmament. We have an excellent record in fulfilling our NPT obligations. In some senses, as my hon. Friend the Member for Luton, North (Mr. Hopkins) acknowledged, we are the most forward-leaning of the nuclear weapon states.
Specifically. we have undertaken a number of actions, particularly in the past six and a half years, that have made significant progress. First, we have withdrawn and dismantled the RAF's freeform nuclear bomb, so that Trident is now our only nuclear weapons system. We dismantled the last Chevaline warhead in 2002, demonstrating our commitment to irreversibility in the reduction of the UK's nuclear weapons. We have reduced our operationally available stockpile to fewer than 200 warheads. That is a reduction of more than 70 per cent. in the potential explosive power of our nuclear forces since the end of the cold war—a significant development, in my view.
We have also rightly reduced the readiness of our nuclear forces. A single Trident submarine is now on deterrent patrol, carrying 48 warheads. The submarine on patrol is normally on several days' "notice to fire", and its missiles are de-targeted. That, too, is a significant de-escalatory move. We have rightly signed and ratified the comprehensive nuclear test ban treaty. As I said, we continue to promote its early entry into force.
The Government's policy on nuclear weapons remains as it was when it was set out in the 1998 strategic defence review and the 2003 defence White Paper. We are committed to working towards a safer world in which there is no requirement for nuclear weapons, and we continue to play a full role in international efforts to strengthen arms control and prevent the proliferation of chemical, biological and nuclear weapons.
However, the continuing risk from the proliferation of nuclear weapons, and the certainty that a number of other countries will retain substantial nuclear arsenals, means that our minimum deterrent capability, currently represented by Trident, is likely to remain a necessary element of our security for the present. Nevertheless, we will continue to support multilateral negotiations towards mutual, balanced and verifiable reductions in nuclear weapons worldwide. When we are satisfied that sufficient progress has been made to allow us to include British nuclear weapons in any negotiations without endangering our security interests, we will certainly do so.
We live in an uncertain world, and the NPT certainly faces challenges from states of concern such as Iran. We believe that the global community needs to strengthen the NPT by ensuring full compliance by such states. The UK is continuing to work in collaboration with the international community to ensure that Iran operates within its obligations under the NPT. We have also worked with the United States to secure a significant and historic agreement with Libya to renounce its clandestine nuclear weapons programme. Both those efforts demonstrate our clear commitment to strengthening the non-proliferation regime.
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Let me take up the proposals on strengthening the international non-proliferation regime, which were laid before the House by the Foreign Secretary on 25 February. In addressing these issues I should like to begin by considering the NPT and the IAEA. Non-nuclear weapon states that are party to the NPT are obliged to enter into safeguard agreements with the IAEA to verify that there is no diversion of nuclear activities from peaceful uses to nuclear weapons, or other nuclear explosive devices. States that fail to comply with their safeguard obligations inevitably lose the confidence of the international community—which is a concern for all of us—and the bargain that is at the heart of the treaty is fundamentally called into question. We should consider whether such states should forfeit the right to develop the nuclear fuel cycle, particularly the enrichment and reprocessing capabilities, which are of such proliferation sensitivity. That does not mean that they would be deprived of the possibility of constructing and running civil nuclear power stations, which could still operate with fuel supplied by countries that honoured their safeguard obligations.
Experience in recent years has shown the need for more wide-ranging IAEA inspections of national nuclear industries. The agency's additional protocol provides the basis for carrying out such inspections. It is important that all members of the international community adopt one. Suppliers of nuclear technology should increasingly regard that as a key commitment when they judge export licence applications.
As I said, international security is jeopardised by the risks of the proliferation of nuclear materials and expertise. The recent exposure of the A. Q. Khan network has fundamentally highlighted those serious risks and concerns. We must remain focused on that threat, which is why we are committed to initiatives such as the global partnership, which is an important step forward, and the proliferation security initiative, which was launched in May 2003. That has an important and fundamental role to play in preventing the trafficking in weapons of mass destruction and related technology by state and non-state actors, such as terrorist groups or criminal networks, through increased interdiction efforts.
I said earlier that those who campaign, rightly, against nuclear weapons should take up the cause of the proliferation security initiative. There is also an argument that can be made in respect of some of those regimes, such as North Korea, that may possess nuclear weapons and are not—or claim that they are not—party to the NPT. I agree with a number of the comments that have been made about the serious concerns that exist within North Korea. I am puzzled sometimes by the way in which anti-nuclear campaigners rightly challenge, criticise and scrutinise this and other Governments, yet when there is an example of a country—such as North Korea in the past 18 months—that is seeking completely to disregard its non-proliferation obligations I do not hear the same voices raised in protest.
Jeremy Corbyn:I would like the Minister to be fully aware that those who campaign for nuclear disarmament and nuclear peace do so in every country around the world, including North Korea.
Mr. Rammell:I respect the integrity of my hon. Friend's position, but perhaps he will go back through

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the record of parliamentary questions, both oral and written, on this issue in the past 18 months. I have not heard the level of concern on proliferation in North Korea that I have heard in other areas of the world. There must be some even-handedness and balance on these issues.
There is a fundamental concern, which is that the UN Security Council has not discussed proliferation since 1992—a period of 12 years, during which these processes have been ongoing. I warmly welcome the debate that is currently taking place about a draft resolution on proliferation, which would seek the adoption of tough national legislation to criminalise the possession, manufacture and trafficking of weapons of mass destruction. Our discussion is very timely. I hope that the Security Council will be in a position to pass that resolution very soon.
This has been an exceedingly good debate. We have had an opportunity to air these issues fully. There are real, genuine concerns that we need to continue to address. We need to go forward multilaterally and seek the nuclear disarmament to which every Member of this House aspires.
Mr. Deputy Speaker:I thank hon. Member for co-operating and enabling every Member who wished to take part in the debate to do so.

UK Citizens (Guantanamo Bay)
3.30 pm
David Winnick: I am pleased to have the opportunity to raise this subject. It is not my argument that the four British citizens held by the United States at Guantanamo bay are necessarily innocent of terrorism—I am in no position to know. We do know, however, that the five who were released, who had been held for some time by the United States, have not been charged for any offence since returning here. I accept that that, in itself, does not mean that the four in question are innocent of any involvement in terrorism. The point is that if the four United Kingdom citizens are to be tried in the United States, the legal process should be in accordance with the recognised law and international standards of democratic countries. Our Foreign Office Ministers and Law Officers should continue to pursue that in talks with the US authorities.
I share the concern that if any or all four of the detainees are charged, they will, as things stand, be tried before a military commission. Apparently, that method of trying people in America applies only to non-US citizens. For instance, members of the US armed services have the right to appeal against a sentence imposed by a court martial to an independent civilian court. Those tried before a military commission, including the British citizens, have no such right of appeal. What happens in such cases is that any guilty verdict is reviewed by a panel of military officers. Once a decision of guilt has been established, such findings go to the Defence Secretary and either he or the President of the United States gives the final confirmation of the decision. There is no right to any kind of independent court.
Moreover, if the four were to be found not guilty, would they automatically be released and allowed to come out of detention? If they are tried before a military commission and found not guilty, will they be released and allowed to leave the United States? It will be interesting to hear the answer to that.
After representations made by the British Government, will the four will be able to choose their own lawyers? That is an important point. The right to choose one's lawyer is a feature of any democratic society. In the United States, for example, those from the armed services who are charged and appear before a court martial have some choice. If the four detainees are to have their own lawyers, what about payment? I understand that it would be necessary for defendants in those circumstances to pay lawyers who, certainly in the United States, do not come cheap. What will happen if they are free to choose their own lawyers, but are not in the position to fund such services?
There is another question about lawyers. Lawyers who appear before the military commission need security clearance and difficulties could arise in such circumstances. If security clearance is very restrictive, would the lawyers acting for the four—if they are allowed to have lawyers of their own choosing?be so restricted that they would not have the information that defence lawyers normally have?
Following the representations made by the British Government, I know that the four are not going to be sentenced to death even if they are found guilty. That is

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a useful fact to know, especially for those involved. Nevertheless, if they were to be found guilty by a military commission in the absence of a death sentence, the sentence could be very heavy indeed. That is all the more reason why the defence lawyers should have the necessary information to do the very best for their clients.
Will the proceedings take place in public or in camera, or will they be split between the two? It is important that the whole proceedings are in public. I would have thought that all parties would have similar thoughts on the matter. My hon. Friend the Minister may remember that when he first made a statement on the situation, before anyone had been released, there was a great deal of criticism from all parties on the way in which the United States intended to act. As we know, five have now been released, but there is much sensitivity on the matter, and rightly so.
I hope that I take the acute threat of international terrorism no less seriously than anyone else. My loathing of acts of terror is second to none. Indeed, for 30 years I took every opportunity to condemn the terrorists. In Birmingham, not very far from my constituency, the IRA committed a terrible act of terror in which some 21 people were murdered in November 1974. That is apart from all the other acts of terror that the IRA committed in Northern Ireland and England. While condemning such acts, as well as those carried out by its loyalist counterparts, I sometimes wonder whether those in the United States—what is sometimes described as the Irish lobby—took the same view of the seriousness of terrorism as we did. When it comes to terrorism, my point is clear: we require no lessons from anyone on the subject. We loathe terrorism and we loathe the threat to our people.
We know where the Prime Minister is at the moment. He is rightly paying tribute to the memory of those who were slaughtered in Madrid a fortnight ago. Nevertheless, international opinion, not least in the Arab world, needs to be persuaded that if the four, or any of the other detainees of various nationalities, are found guilty, the legal process will be just and be seen to be so. I am afraid that the proposed way to try those people, whether they are innocent or guilty, is not likely to achieve that aim, or to come anywhere near it. More safeguards are necessary.
If the four were to be charged—they have not been at the moment—it would be far better if they appeared as defendants in a proper court of law in the United States. They should have lawyers of their own choosing and the defence counsel should have all the facilities that defence counsels normally have in the United States and other democracies. If, at the end of it all, they were found guilty, there would be the feeling in this country and probably in the wider world that the due processes of justice had been undertaken. As it stands, what is being proposed is not satisfactory. I hope that Ministers and the Law Officers in this country do their utmost to persuade the United States of the seriousness of the matter.
3.40 pm
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Chris Mullin): I am grateful to my hon. Friend the Member for Walsall,
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North (David Winnick) for raising this subject and for giving me an opportunity to reiterate the Government's position on the British detainees at Guantanamo bay. In doing so, I want to emphasise two points. First, we have done more than any other Government to look after the interests of our citizens detained at Guantanamo bay and we will continue to do so in respect of the remaining four prisoners.
Secondly, although I accept that many aspects of the treatment of terrorist suspects at Guantanamo bay have been far from satisfactory, we must remain mindful of the unique circumstances in which the detentions arose. I am sure that my hon. Friend is mindful of that. The threat posed by al-Qaeda is unprecedented. In responding to it, Governments have had the difficult task of balancing the demands of civil liberties against the threat posed by an enemy that is extremely cunning, ruthless and utterly without scruple. That has given rise to some difficult dilemmas. I know that my hon. Friend, who, while being a strong upholder of civil liberties, is second to no one, as he says, in his detestation of terrorism, will appreciate those difficulties.
My hon. Friend asked whether the detainees would have access to their own civilian lawyers. We understand that they will, but that those lawyers must come from a list of civilian lawyers approved by the US Department of Defence. He asked who would pay and whether it would be the British Government. My understanding is that the US will not pay for the appointment of a civilian lawyer, but that a military lawyer will be provided in each case. We are considering what advice we can provide on finding qualified civilian lawyers. It would not be appropriate for Her Majesty's Government to provide financial assistance to pay for the lawyers as that is not done in the many other cases in which British nationals are prosecuted abroad. It is not our practice to fund legal assistance for any British nationals facing trial overseas. However, we will be able to provide assistance with finding qualified lawyers.
Let me return to my first point. No Government have done more for their citizens detained at Guantanamo bay than the British Government, both during the detention of the nine men and in seeking to bring about their return. We have been in frequent and regular contact with the United States authorities concerning the British detainees. From the outset we sought to ensure their welfare and actively encouraged the United States Government to resolve their position. British officials have visited Guantanamo bay seven times. We have kept the families and Parliament informed of the detainees' circumstances and of other related developments.
In July 2003, two of the British detainees were designated by the United States authorities as eligible to stand trial by military commission. The commission had been established to prosecute the detainees. The British Government made it clear from the outset that we had concerns about the military commission process and consequently my right hon. Friend the Prime Minister asked the Attorney-General to discuss with the United States authorities how the detainees, if prosecuted, could be assured of fair trials that met international standards. In parallel to that, the Prime Minister talked to President Bush and the Foreign Secretary discussed the matter many times with his opposite number, the US Secretary of State, Colin Powell. Extensive discussions

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have been held between British and United States Government lawyers and officials. Those discussions have involved many complex issues of law and security, which both Governments have had to consider carefully.
Although the discussions have made significant progress, the view of the Attorney-General was that the military commission, as constituted, would not provide the type of process that we would afford to British nationals. We have been attempting to ensure that the legal process will respect the human rights of the detainees, including the right to a fair and public hearing by a competent, independent and impartial tribunal, established by law. As we know, five of the detainees have been released and have returned home. As for the remaining four detainees, we and the United States authorities are continuing to discuss a range of security matters and other issues. As a result of our talks, US legal procedures against Mr. Abbasi and Mr. Begg were suspended in July and, as my hon. Friend remarks, the United States said that the men would not be subject to the death penalty, and that remains the case.
Our overall position remains that the detainees should either be tried in accordance with international standards or returned to the United Kingdom. That is the basis on which we are working and on which we shall continue to work.
David Winnick:Is it the wish of the British Government that, given the opportunity offered in respect of the United States authorities, the detainees could be returned and that the authorities in Britain would decide, as they did with the five detainees, whether any charges should be made? Would that not be the Government's first preference? The detainees are British citizens and we were involved in Afghanistan, so it is not a separate matter from the United States. If the detainees are to be tried in the United States, will a military commission definitely be involved? Will the United States relent on that? Will my hon. Friend deal with the matter of an appeal if the verdict is guilty? If the detainees are found not guilty and acquitted, will they be released from detention and allowed to leave the country?
Mr. Mullin:On my hon. Friend's first point, our position remains the one that I just enunciated, which is that the detainees should either be tried in accordance with international standards in the United States or returned to the United Kingdom. As for whether they would he prosecuted were they to be returned to the United Kingdom, that is a matter for the police and the Crown Prosecution Service, not the Government. I am sorry, but I have forgotten his third point.
David Winnick:Is it the wish of the Government that the remaining detainees should be returned to the United Kingdom as the other five have been and that the authorities here should decide whether any charges are to be made? If they are returned and charges are made against them, and it was only right and proper that they should be charged, there would be no question about the legal processes involved. We are happy with the legal processes in our country.
Mr. Mullin:I dealt with that. If the detainees are to be tried in the United States, which remains a strong possibility, they should be tried in accordance with international standards. Were they to be returned to the United Kingdom—in the event either of their acquittal or because they were not to be tried in the United States—the matter of whether they would be prosecuted here would be for the police and the CPS to decide. It is not one on which I can comment.
I now recall that my hon. Friend's third point was whether the commission is still the most likely form of trial. At present, the answer is yes, but the precise terms on which the trial would take place under a military commission have yet to be determined. Discussions about that are continuing.
Let me deal with the extraordinary circumstances in which the detentions arose. The attacks on 11 September were the most appalling terrorist atrocity that the world had ever seen. More than 3,000 people, including 67 British citizens, were killed. In response to those attacks, as my hon. Friend knows, a coalition of countries came together to launch a military campaign against al-Qaeda and its Taliban supporters to remove them from their strongholds in Afghanistan.
In those operations, thousands of individuals believed to be al-Qaeda or Taliban fighters, or their supporters, were detained by coalition forces. The vast majority were released, but those who were deemed to pose a substantial risk of returning to conflict—about 800 people so far—were sent by the United States to Guantanamo bay to be detained and questioned about their knowledge of al-Qaeda activities. As a result, valuable information has been gained that has helped to protect the international community from further terrorist attacks.
David Winnick:What happened on 11 September was a terrible tragedy. I was in the United States on a private visit that week, so I know how the American people reacted. I spoke to a gathering on the evening of 11 September in which I made it clear that the United Kingdom would stand by the United States. However, is it not a matter of some interest that the five who were detained were held for a long time—two years—yet when they returned to the UK, no charge was made against them?
Mr. Mullin:I have said that the Government regard many aspects of the Guantanamo bay experience to be unsatisfactory. I outlined the detailed discussions that we have held at all levels with the United States. So far, they have resulted in five of our citizens being returned and then released, and discussions about the remaining four are ongoing.
It is easy to criticise Guantanamo bay, and we are critical of some aspects of it. It is difficult to maintain a balance between a country's security and the protection of its civil liberties in the struggle against the menace of international terrorism, of which the recent horror in Madrid is only the latest example. That is a balance that we must strike. The Home Secretary has been open about that. He published a discussion paper entitled "Counter-Terrorism Powers: Reconciling Security and Liberty in an Open Society". I commend that to hon. Members, because it sets out some of the dilemmas that we are addressing.

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I encourage colleagues to consider the issues surrounding Guantanamo bay in that light, and to contribute to the debate on how we should address the various dilemmas that arise from the need to protect the security of our citizens while, at the same time, safeguarding fundamental freedoms that we all rightly cherish.
3.52 pm
Sitting suspended.

EU Constitution
4 pm
Mr. William Cash: It is a great pleasure to be here and to deal with an issue covered by the Bill that I presented to the House of Commons the day before yesterday. Curiously, I have just had the pleasure in the European Scrutiny Committee of meeting the Speaker of the Slovakian Parliament, who indicated that, enthusiastic as Slovakia is about becoming a member of the European Union, it is concerned about the parliamentary democracy of nation states in the EU. I mention that because it reflects some of the concerns that I have been pressing for some 18 years, almost from the time that I first came into the House.
I should like to say how sad we are about the recent tragic bereavement suffered by the Minister for Europe. We are sorry that he cannot be here, but more than understand why. I am grateful to the Minister for Trade and Investment for coming instead.
Until very recently, because of the passing of the European Communities Act 1972, a Bill such as mine would have been useful for reaffirming that the United Kingdom Parliament's laws prevailed over European laws, but it would not have been essential. It now is. The sovereignty of Parliament is the guarantee of British voters' democratic freedom. Parliament needs reform to bring it back to its objectives, and it is now in mortal danger. We must remind the courts that they owe allegiance to the Queen in Parliament and to the voters of this country. It is said that judges are appointed quamdiu se bene gesserit—that is, so long as they behave—in the national interest for which they were appointed, and in accordance, of course, with the proper procedures and laws that they are called on to interpret.
What does my Bill do and why is it now essential? It is a very simple, two-clause Bill that provides that European treaties and laws shall be binding in the courts of the UK only to the extent that they do not conflict with any subsequent Act or statutory instrument of the UK Parliament that expressly declares that any such subsequent enactment shall take effect notwithstanding the 1972 Act. That is to say that Parliament prescribes and the courts must back it. That is the crucible.
My Bill is now urgent because the European constitution has been back at the top of the agenda since the new pro-constitution Spanish Government came to power. Ironically, the Poles are alone yet again. The United Kingdom must therefore reassume the leading democratic role in Europe, as it did in the dark days, even if the circumstances have changed from military aggression to European legislative manoeuvre.
The European constitution not only reasserts the primacy of European laws, but also asserts the primacy of the European constitution over the constitutions of the United Kingdom and other member states. It gives the European Court of Justice the role of superior jurisdiction over both, as well as over our newly proposed supreme court, which explains why it is being driven through in the Constitutional Reform Bill, currently in the House of Lords, before the constitution is enacted. The European Court of Justice, with its ever-increasing arrogation of judge-made law, will, in effect, also have power to strike down Acts of the United Kingdom Parliament that are inconsistent with the vast

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range of the constitution. Indeed, the director general of the European Union legal service and legal counsel to the intergovernmental conference, Mr. Piris, stated:
"The Court of Justice cannot declare that a national law is void because it breaches EU law; it can only declare that the Member State concerned has infringed EU law."
If the constitution goes through, the situation against national laws will be damagingly aggravated.
The practical consequences of the current role of the European Court of Justice are that if it declares an infringement, our courts are bound to give effect to that judgment under section 2 of the 1972 Act. For example, the Merchant Shipping Act 1988 was struck down by our courts. The UK Parliament is, as a result of the 1972 Act, obliged to legislate to achieve conformity with EU legislation and the treaty obligations. My Bill says that if, on behalf of our electorate, we decide not to do so, and therefore decide not to subscribe to those treaty obligations but to insist on our own legislation, our judges must apply and uphold that subsequent and inconsistent Act of Parliament, provided that it is clear and unambiguous. By that I mean inconsistent with the European Communities Act 1972 and the Community instruments, treaties and obligations.
Lord Woolf?s insistence that the UK supreme court should not be empowered to strike down UK Acts might be because he wants that to be reserved to the European Court of Justice, as clearly both the Prime Minister and his chum the hapless Charles Falconer—the noble Lord Chancellor—intend. Let us remember that Acts derive their authority from the voters, and it is no wonder that we need a referendum on the constitution. If the Prime Minister continues to refuse one and drives the constitution through Parliament on a three-line Whip, without specific manifesto authority, the Conservative party must promise a referendum if and when the constitution is enacted, and in any event.
I have argued the dangers of all that for years, in particular in the past two years as shadow Attorney-General and shadow Minister for Constitutional Affairs, and in my most recent pamphlet "The European Constitution—A Political Timebomb". That was published last October and I am now publishing a new one, "The Strangulation of Britain and British Business". They both illustrate the need for the reassertion of parliamentary sovereignty over European laws and the acquis communautaire, and the obligation of UK courts to give effect to the latest Acts that are inconsistent with such laws, provided they are clear and unambiguous.
The issue came to a head last September when the Foreign Secretary said on the Floor of the House:
"international treaties take primacy over national laws".—[Official Report, 16 September 2003; Vol. 410, c. 794.]
My hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) and I refuted that. We tabled a series of questions, which ran into 2004, and forced the Government to back down. Our exchange eventually led to this answer:
]"The ultimate guarantee of Parliamentary sovereignty lies in the power of Parliament to repeal all or any of the Acts which give effect to the EU treaties in this country. It is within Parliament's power to legislate contrary to the UK's treaty obligations. This of
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course includes legislation that might impact on the effective implementation of article I-10(1)"
of the proposed constitution. It continues:
"The result of so doing, however, would be to place the UK in breach of its treaty obligations."—[Official Report, 15 December 2003; Vol. 415, c. 732W.]
It is always right to set out the case as fairly as possible and that is the Government's stated position as of January. I am prepared to say emphatically that that was not their view a few months before, but it is now on the record. If there are treaty obligations, which, of course, are made by prerogative, that are out of date or contrary to our national interests—as is so much European legislation, including the proposed European constitution, if it were to be enacted, and the common fisheries policy—they should be amended or repealed if the other member states and the European Commission will not renegotiate them.
I have always argued that if we are to be responsible in dealing with legislation that this Parliament would not want to continue to accept, we must first engage in the process of presenting our arguments to the other side—to those whom we oppose. After that, if they will not listen, we must steer our own course, as I put it in my personal message to my electors in the last general election. After all, every European treaty since 1972 has been a renegotiation, but only in one direction: further integration. European prerogative treaties—treaties that are made—would be swallowed up by the constitution which, when enacted, would prevail greatly to our disadvantage.
Having retreated in the face of our barrage, the Government will no doubt claim that, in view of their now stated position, my Bill is not necessary. That is not so. The reality is that we are facing the 21st century version of the bloodless revolution of the 1690s, except that the substitution of the Stuarts by the Hanoverians—merely one monarchy for another—was far less momentous in retrospect than the usurpation of our democratic Parliament by the European constitution. Democracy depends for its practical effect on delivery through effective accountability and fair and proper democratic procedures, not through waffle about abstract virtues.
Another important analogy is that the judges under the bloodless revolution were no longer appointed, as they had been previously under the Stuarts, at the King's pleasure—durante bene placito Regis. They were appointed so long as they behaved themselves—quamdiu se bene gesserit. Seeking to arrogate to themselves the making of laws at the expense of democratically elected representatives in Parliament would be beyond the pale, especially if that was accompanied by encouraging the judicial activism of the European Court, which is a new form of usurpation.
The forced abdication of James II was strictly unconstitutional and illegal. However, the absurd idea that it would have been possible for the Stuarts to return after they had been airbrushed out of the system was demonstrated by the failure of the Jacobite rebellions of 1715 and 1745. If we do not reassert the obligation of the UK courts to give effect to UK legislation subsequent to and in conflict with European laws, including the European constitution, we will face a similar fait accompli, but it would now be undemocratic.

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Our parliamentary laws and the Westminster lawmaking system will be deemed to have been absorbed in practice, as events move forward, by the constitution and the assertions of the European cause. It will be an abdication by our Parliament if it whips through and enacts the European constitution without a referendum. The claims made by the European court in Costa v. ENEL, and a few other cases that I shall mention, for its own overruling jurisdiction would become reality. Such is the stuff of modern revolution.
Someone may have been listening to that whispering wind because the House of Lords European Union Select Committee report this month called on the Government to state their view on whether the European Court or national courts should be the final arbiter of the dividing line between UK and EU law, especially in the context of parliamentary sovereignty when there is conflict. That is what my Bill is all about, and I want Parliament to dig in its heels. I am not interested in the Government's weasel words because we have heard far too many of those on the subject during the past year or so.
The matter cannot be left to ambiguity. Present case law is clear. The judgment of Lord Denning in Macarthys Ltd. v. Smith and of Lord Justice Laws in the more recent metric martyr's case, Thoburn v. Sunderland city council, is clear. Let me take the opportunity to place on the record the sad tragedy that Mr. Thoburn died only a few days ago, ironically within a few days of the death of Sir William Wade, the great authority on the interaction of European law and the British parliamentary system.
Lord Denning stated in Macarthys Ltd.v. Smith:
"it would be the duty of our courts to follow the statute of our Parliament"
if
"the time should come when our Parliament deliberately passes an Act with the intention of repudiating the Treaty"—
that is, the European treaty—
"or any provision in it or intentionally of acting inconsistently with it and says so in express terms".
We must keep the courts to that in the light of the European constitution, and the wording in my Bill follows almost exactly the words of Lord Denning in that judgment.
I have set out what my Bill does. There is no time and no scope for uncertainty or ambiguity, or for allowing the Government or the European elite room to manoeuvre. The Bill is backed by many distinguished Conservative MPs and Privy Councillors, and by hon. Members on both sides of the House—
4.15 pm
Sitting suspended for a Division in the House.
4.29 pm
On resuming
Mr. Cash:The matter is of vital national interest and I trust that I shall have the support of the Conservative leadership and a commitment to my proposals in the manifesto for the European elections and the next general election. The claims made by the European
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Court in Costa v. ENEL and the Internationale Handelgesellschaft and other cases, and the related line of European Court cases in relation to what is called Kompetenz-Kompetenz, cannot be underestimated, as the Foreign Secretary sought to do, especially in the light of article I-10(1) of the proposed constitution. The constitutional courts of Germany, Denmark and Italy are all in defiance, but look as if they may be about to roll over. The legal adviser to the European Council and others said:
"The EU is not a federal state for lack of demos, lack of Kompetenz-Kompetenz and more simply for lack of will by its constituent parts."
That suggests a lack of will by member states. One has only to look at the outpourings of the European People's party and the Christian Democrats in Germany, not to mention a host of others, to observe that that is not correct. Furthermore, the simple reality is that the ever-pervasive and encroaching—
4.31 pm
Sitting suspended for a Division in the House.
4.45 pm
On resuming—
Mr. Cash:Furthermore, there is a simple reality: the ever-pervasive and encroaching role of the European Court of Justice, now to be enhanced by the European constitution. It is a case of "Now you see it, now you don't". It is a world of magical mirrors, engulfed in smoke. It is disingenuous and naïve—I would say downright dishonest—to suggest that EU constitutional boundaries have been reached.
We only have to consider the 1970 White Paper and the evolution of the EU over the past 35 years to get the point. We need to ensure that our courts, without a written constitution, do not stray in the wrong direction. If the Government were sincere in their declarations that they do not want a superstate, they would commit themselves to the proposals that I have outlined.
4.45 pm
Sir Teddy Taylor: I congratulate my hon. Friend the Member for Stone (Mr. Cash) on a magnificent speech and on his battle to preserve democracy in the European Union. It cheers up the people of Rochford and Southend, East enormously that he still feels positive about democracy, when their own MP has become such an absurd pessimist on the issue.
I ask the Minister one simple question. On 6 November 2002, a Minister of State at the Department for Work and Pensions told me that, following discussions with the European Commission, the Government were told that under regulation 1408/71, Britain would have to pay winter fuel payments to British residents in Martinique, Guadeloupe, French Guiana, Reunion, the Azores, Madeira and the Canary Islands, all of which are overseas territories of Europe. The cost would be £10 million. As a result of the Chancellor's Budget, it will now cost us £15 million.
As those are areas of sunshine with no coldness at all, my constituents want to know that if our Parliament thinks, as I do, that that is nuts, crazy and an abuse of

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funding, can British MPs vote to stop it? If the 659 MPs say that that is stupid, nuts, wrong and a waste of money, my constituents, especially the pensioners in Southend who suffer from the cold, want to know whether Parliament can stop it? Can we say that the people who live in Guadeloupe, Martinique and the Azores will not get winter fuel payments, and perhaps the people in Iceland or the north of Canada, where it is cold, will? If the Minister can give me an answer—perhaps not today, but by letter—that will reassure my constituents who feel that our democracy is almost dead and wonder why we have MPs at all.
4.47 pm
The Minister for Trade and Investment: I congratulate the hon. Member for Stone (Mr. Cash) on securing the debate. The hon. Member for Rochford and Southend, East (Sir Teddy Taylor) will be pleased to know that the new European constitution, if adopted, would give greater power to the British Parliament to deal with such issues, so I am sure that he will vote for it.
Sir Teddy Taylor:Would it have the power to stop that payment?
Mr. O'Brien:I had not given way, but I had made my point. I will happily write to the hon. Gentleman on the detail.
As for the main debate, the hon. Member for Stone argues that the draft constitutional treaty for the EU will undermine the sovereignty of this House. He could not be more wrong. Nothing in the new treaty, as drafted, would alter the fundamental relationship between this country and the European Union. The new treaty will strengthen the role of national Parliaments in EU business, which is why I can say what I said to the hon. Member for Rochford and Southend, East. The new treaty will strengthen that role.
The treaty will, for the first time, give this Parliament a power, at the EU level, to monitor and enforce subsidiarity. This House, and other national Parliaments, will be able to force the Commission to reconsider measures that do not meet the fundamental principle that decisions should be taken as close as possible to Europe's citizens.
The suggestion made today by the Leader of the Opposition that the draft treaty is the capstone of a federal state is sheer opportunistic hyperbole and soundbite claptrap. There will be a significant enhancement of the role of this House in European affairs under the provisions, if they are agreed. That reflects the Government's belief in the integral part that Parliament should play in debating and influencing the policies of this Government and of the EU. On 11 February, my right hon. Friend the Foreign Secretary set out to the House various ways in which the Government propose to enhance that role of Parliament. They include the publication of an annual White Paper on the forthcoming plans of the Commission and of the European Council and giving sufficient notice of them to all Members of the Commons and the Lords so that they have an opportunity to influence policy before it is set in stone.
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The opportunities for parliamentary involvement in the preparation and scrutiny of the draft treaty have been unprecedented. During the intergovernmental conference alone, Ministers attended eight Committee sittings —including three sittings of the new Standing Committee of the Intergovernmental Conference—that gave parliamentarians the chance to influence the negotiations. If this constitution is so important, it beats me why so few on the Conservative Front Bench—with the honourable exception of the hon. Member for Stone when he was on it—bother to turn up. We participated in more than a dozen debates on the same topic in this House and the other place last year, responded to 16 Committee reports and answered 60 parliamentary questions. That was in addition to the White Paper published in September, which set out the detail of our approach to the negotiations.
In May, 10 new member states will join the European Union, ending the cold war division of Europe and creating an enlarged single market of more than 450 million people: larger than the United States and Japan combined. There are huge advantages in that for Britain. However, if we want to maximise those advantages, we need to modernise the EU's structures to make it work effectively as a union of 25 countries. The new constitutional treaty will make the EU more effective and will give a clear definition of what the EU does and does not do. The constitution will not alter the fundamental constitutional relationship between the member states and the EU.
The hon. Gentleman claims that none the less the treaty will establish the principle of the primacy of European law and so end in some way the sovereignty of this Parliament. He claims that it will make the laws passed by this House and the other place in some way less relevant, or even redundant, as the EU will be able to override them. He believes that we should reject the principle of the primacy of EU law so that member states can effectively pick and choose which EU measures to adopt and implement.
Let us examine those claims. First, the principle of the primacy of EU law is, as the hon. Gentleman knows full well, well established. He should know because my right hon. Friend the Foreign Secretary has been telling him that for a long time. The principle has been accepted since at least 1964, when the European Court of Justice ruled in the case of Costa v. ENEL that the law "stemming from the Treaty" cannot
"be overridden by domestic legal provisions…The transfer by the states from their domestic legal systems to the Community legal system of the rights and obligations arising under the Treaty carries with it a permanent limitation of their sovereign rights against which a subsequent unilateral act incompatible with the concept of the Community cannot prevail."
That is what Britain signed up to when the Conservative Government of the day joined the then European Community. This House gave effect to the principle of the primacy of European Community law through the European Communities Act 1972. Is the Conservative party now opposed to that position, which it has supported for the past 30 years? Or is the hon. Gentleman out on his usual anti-euro limb? That remains to be seen.
Ann Winterton: Will the Minister give way?
Mr. O'Brien:The hon. Lady has not been present during the debate and she is aware that I have limited time, but I will be gracious and give way.
Ann Winterton:I am most grateful and I apologise for not having been here earlier. Is the Minister aware that the Minister for Europe in his Government has said in a written reply:
"The United Kingdom will honour its international treaty obligations until such time as Parliament decides to repeal the Acts that give effect to them."—[Official Report, 30 October 2003; Vol. 412, c. 360W.]
Is that not the opposite of what the hon. Gentleman has just been saying?
Mr. O'Brien:No, our position has been entirely clear, and we have held it throughout. Parliament already has the power to legislate contrary to our treaty obligations, but we should be in no doubt about what that would mean: withdrawal from the EU, which would be a disaster for the UK.
As far as we are concerned, the draft constitutional treaty explicitly states the principle of primacy, and that makes those on the Opposition Benches nervous. One of the purposes of the treaty is to lay out clearly EU principles and our relationship with the EU. The Conservative party signed up to those principles in 1972; it knew what it had signed up to. That is why we support a declaration proposed by the Italian presidency during the intergovernmental conference negotiations last December that spells out that
"the provisions of Article 10-I (1)on the primacy of EU law reflect existing court of justice case law."
Mr. Cash:Will the Minister give way?
Mr. O'Brien:The hon. Gentleman has had his say; I have not got long, and I would like to make some progress.
We support that proposal for clarity because if EU law did not have primacy, there would be no single market. If member states could pick and choose which European legislation they enforced, they would ignore legislation that threatened the protectionist measures that give special privilege to their industries, and we
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would not have the level playing field on which thousands of British businesses and hundreds of thousands of British jobs depend.
The reality is that co-operation with our European partners on everything from the single market to stopping pollution to fighting terrorism depends on each member state implementing the measure that it has agreed to. To argue against this part of the treaty, as the hon. Gentleman is doing, is to argue against the very idea of European co-operation. Here, perhaps, we get to his real agenda. His pamphlet of October last year entitled "The European Constitution—A Political Timebomb" advocates a two-tier Europe where the UK has a relationship of trade and association with the EU. It is a scenario in which the UK would be forced to implement EU legislation if it wanted to continue to trade with Europe, but in which the Government and Parliament would have no influence on that legislation. How the hon. Gentleman could see that as a blow for parliamentary sovereignty escapes me.
The primacy of EU law is a well-established principle that has sat alongside the principle of sovereignty of this Parliament for 30 years. Nothing in the proposed treaty will change that. Most lawyers will be familiar—I am sure that the hon. Gentleman is—with Lord Denning's view expressed in his judgment in the Bulmer v. Bollinger case in 1974. He said:
"When we come to matters with a European element, the Treaty is like an incoming tide. It flows into the estuaries and up the rivers. It cannot be held back. Parliament has decreed that the Treaty is henceforward to be part of our law…The governing provision is section 2 (1) of the European Communities Act 1972…The statue is expressed in forthright terms which are absolute and all-embracing."
In other words, the Conservatives signed up to this in 1972. Their attempt somehow to disassociate themselves from the principle 30 years later is frankly opportunistic hogwash.
In order to give the provisions of the new treaty effect in UK law, they will have to be passed by Parliament. If Parliament so chooses, it can refuse to pass this legislation. Indeed, it could repeal the European Communities Act 1972. As Lord Denning also said in the case of Macarthys Ltd v. Smith, it is always within Parliament's power to legislate contrary to the UK's treaty obligations, but we must be clear that to pursue that course would be to breach our treaty obligations, and we would be signalling our withdrawal from the EU.
It being one minute to Five o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.

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  Pupil Funding
  Pupil Funding
  In-service Training (Schools)
  In-service Training (Schools)
  Pupil Mobility
  Pupil Mobility
  Rewarding and Developing Staff Initiative
  Rewarding and Developing Staff Initiative
  Schools (West Suffolk)
  Schools (West Suffolk)
  Teacher/Lecturer Salaries
  Teacher/Lecturer Salaries
  Teachers' Pensions
  Teachers' Pensions
NORTHERN IRELAND
  A-levels
  A-levels
  Costello Report
  Costello Report
  Easter Uprising
  Easter Uprising
  Energy Costs
  Energy Costs
  Fisheries
  Fisheries
  Pay Dispute (Universities)
  Pay Dispute (Universities)
  Planning and Development
  Planning and Development
  School Lockers
  School Lockers
  Seamus Ludlow
  Seamus Ludlow
  Southern Education and Library Board
  Southern Education and Library Board
FOREIGN AND COMMONWEALTH AFFAIRS
  Afghanistan
  Afghanistan
  Cyprus
  Cyprus
  Iran
  Iran
  Lancaster House
  Lancaster House
CONSTITUTIONAL AFFAIRS
  Magistrates Courts
  Magistrates Courts
  Project Funding
  Project Funding
  Supreme Court
  Supreme Court
LEADER OF THE HOUSE
  Bills (Timetabling)
  Bills (Timetabling)
  Petitions
  Petitions
DEPUTY PRIME MINISTER
  Aggregates (Removal)
  Aggregates (Removal)
  Council Housing
  Council Housing
  Council Tax
  Council Tax
  Departmental Staff
  Departmental Staff
  Housing
  Housing
  Local Government Grants
  Local Government Grants
  London Electorate
  London Electorate
  Ministerial Meetings
  Ministerial Meetings
  Regional Bodies
  Regional Bodies
  Supporting People Initiative
  Supporting People Initiative
HEALTH
  Agency Staff
  Agency Staff
  Biomedical Sciences
  Biomedical Sciences
  Care Homes
  Care Homes
  Clinical Staff Numbers
  Clinical Staff Numbers
  Committee on Safety of Medicines
  Committee on Safety of Medicines
  Community Care Act
  Community Care Act
  Continuing NHS Care
  Continuing NHS Care
  Delayed Discharges
  Delayed Discharges
  Dentistry
  Dentistry
  Drinking Water
  Drinking Water
  Care Eligibility Criteria
  Care Eligibility Criteria
  Energy Consumption
  Energy Consumption
  Free Prescriptions
  Free Prescriptions
  General Medical Council
  General Medical Council
  General Practitioners
  General Practitioners
  Great Ormond Street Hospital
  Great Ormond Street Hospital
  Hand Hygiene Trial
  Hand Hygiene Trial
  Hepatitis C
  Hepatitis C
  Health Services (Chorley)
  Health Services (Chorley)
  Heroin Substitutes
  Heroin Substitutes
  Hospital Food
  Hospital Food
  Immigrant Medical Inspections
  Immigrant Medical Inspections
  Medical Students
  Medical Students
  MMR Vaccine
  MMR Vaccine
  National Programme for Information Technology
  National Programme for Information Technology
  National Service Frameworks
  National Service Frameworks
  Neurofibromatosis Association
  Neurofibromatosis Association
  NHS Capital Use
  NHS Capital Use
  NHS Professionals
  NHS Professionals
  NHS Staff (IT Qualifications)
  NHS Staff (IT Qualifications)
  NHS University Helpline
  NHS University Helpline
  Non-consultant Career Grade Doctors
  Non-consultant Career Grade Doctors
  Nursing and Midwifery Council
  Nursing and Midwifery Council
  Nursing
  Nursing
  Opticians (NHS Vouchers)
  Opticians (NHS Vouchers)
  Out-of-hours Provision
  Out-of-hours Provision
  Paddington Basin Hospital Project
  Paddington Basin Hospital Project
  Parkinson's Disease
  Parkinson's Disease
  Patient Education
  Patient Education
  Personal Care Charges
  Personal Care Charges
  Pharmaceutical Packaging
  Pharmaceutical Packaging
  Radiographer Vacancies
  Radiographer Vacancies
  Seroxat
  Seroxat
  Speech and Language Therapists
  Speech and Language Therapists
  Risperidone
  Risperidone
  Student Midwives
  Student Midwives
  Staffing (London)
  Staffing (London)
  Substance Misuse
  Substance Misuse
  Training Costs
  Training Costs
  Tuberculosis
  Tuberculosis
  Waiting Lists/Times
  Waiting Lists/Times
  Training (EU Accession States)
  Training (EU Accession States)
CABINET OFFICE

  Central Office of Information Targets 2003–04
  The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Mr. Douglas Alexander)
  The targets set for the Central Office of Information for the 2003–04 financial year are:

  Financial:

  To break even on an accruals basis.

  Efficiency:

  To achieve a unit cost reduction of 2.5 per cent.

  Quality:

  For the customer satisfaction system:

  To achieve a customer satisfaction score of 8.25 out of 10;

  To achieve 96 per cent. of customer satisfaction scores of 6 or higher;

  To achieve a response rate of 62 per cent.

HEALTH

  Dental Treatment Charges
  The Minister of State, Department of Health (Ms Rosie Winterton)
  The written ministerial statement of 12 February 2004 covering national health service charges in England informed the House that we planned to raise the maximum patient charge for a course of dental treatment from £372 to £378 from 1 April 2004.

  In order to minimise changes and to avoid any confusion for patients, dentists and their practice staff, we are deferring the increase in the maximum charge for a course of dental treatment from 1 April to 1 May 2004 so as to coincide with the implementation of the doctors and dentists review body recommendation for dentists' fees. The fees will be backdated to 1 April 2004 but the new charges will be effective from 1 May 2004 and there will be no retrospective increases to charges already paid by patients.

  The chief dental officer will be writing to all dentists advising them of the 1 May 2004 implementation date for the statement of dental remuneration and the increase in the maximum charge for a course of dental treatment.

DEFENCE

  Gulf Veterans' Illnesses
  The Parliamentary Under-Secretary of State for Defence (Mr. Ivor Caplin)
  A key principle of the Government's approach to addressing the health concerns of veterans of the 1990–91 Gulf conflict is that there should be appropriate research into veterans'52WS
  illnesses and factors that may have a bearing on these. Our current research programme is expected to cost at least £8.5 million.

  As part of this research effort, the Ministry of Defence funded an independent study of the reproductive health of UK veterans of the 1990–91 Gulf conflict through the Medical Research Council (MRC). The main findings of this research have today been published in a paper entitled: "Miscarriage, stillbirth and congenital malformation in the offspring of UK veterans of the first Gulf war" in the "International Journal of Epidemiology".

  The researchers have reported that for male veterans of the 1990–1991 Gulf conflict, they found no evidence for increased risk of stillbirth, chromosomal malformations, or congenital syndromes. Some associations were reported between fathers' service and increased risk of miscarriage and other less well-defined malformations. For female veterans, the number of stillbirths and malformations were too small to allow meaningful analysis and there was no effect on the risk of miscarriage.

  The MOD welcomes publication of this important research. The MRC's military health research advisory group (MHRAG) has considered the paper. They agree with the researchers that overall, the lack of evidence to link reproductive health problems with Gulf service should be reassuring to veterans and that the apparent increased risk identified should be interpreted with caution. The MHRAG does not intend to recommend any additional research into this aspect of Gulf veterans' health at this time.

TREASURY

  The UK/IMF (Annual Report)
  The Chancellor of the Exchequer (Mr. Gordon Brown)
  I am today publishing the fifth annual report to Parliament on UK operations at the IMF,"Growth For All—Towards a Stable and Fairer World: the UK and the IMF 2003".

  Copies are available in the Library of the House.

FOREIGN AND COMMONWEALTH AFFAIRS

  E-diplomacy
  The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw)
  In our last information and communications technology (ICT) strategy published in 2000 we set ourselves the goal of transforming the FCO from a headquarters with outstations to a single global online organisation. We have come a long way towards achieving that goal. The FCO telecommunications network (FTN) together with our desktop system (Firecrest) provides a dedicated global network that connects our UK offices with over 200 overseas Posts and to the rest of Whitehall. On it we send over 1 million e-mails and download gigabytes of data every day, and run a number of applications including Genie (for issuing passports).

  53WS
  Following publication of the FCO strategy in December last year, we have reviewed what we need from our ICT to enable the more flexible FCO envisaged in that strategy. "e-diplomacy" explains how we will introduce greater flexibility to our ICT infrastructure and enable more flexible use of information. This includes more use of mobile and remote-working technology and new applications to make information more accessible, whilst keeping it secure. We will continue to improve our project management skills and develop closer working partnerships with the private sector to ensure we provide the most cost-effective service to FCO users. We will also work with other Government Departments to achieve efficiency savings wherever possible.

  The plans we have set out in "e-diplomacy" are challenging but achievable. We believe they are crucial to the overall effectiveness of the FCO.

  Copies of "e-diplomacy" have been placed in the Library of the House. It is also available on the FCO's web-site www.fco.gov.uk.

WALES

  Public Audit (Wales) Bill
  The Parliamentary Under-Secretary of State for Wales (Mr. Don Touhig)
  Clause 54 was included in the Public Audit (Wales) Bill to ensure consistency in the criminal law across England and Wales. The Government have brought forward an amendment to Clause 54 to make clear the link with the present legislation that currently applies across England and Wales—section 49 of the Audit Commission Act 1998. It also ensures that any relaxation of the restrictions in 54WS
  the Audit Commission Act can be applied at the same time in England and Wales, following consultation with the National Assembly for Wales of course.

  The Government acknowledge the concerns that have been raised about this clause. Indeed, section 49 of the Audit Commission Act is already being considered as part of a much wider review of statutory restrictions on disclosure that the Government are undertaking. This is the Department for Constitutional Affairs' review into existing statutory prohibitions on disclosure. Such restrictions can be removed by order under section 75 of the Freedom of Information Act 2000 in the case of Acts passed before or in the same session as that Act. The DCA's "Second Report to Parliament on the Review of Legislation Governing the Disclosure of Information" published in November 2002 is available at http://www.dca.gov.uk/foi/foidoirpt2.htm. Section 49 of the Audit Commission Act is specifically referred to in Part II of that report, "Listing by Lead Department" under the Office of the Deputy Prime Minister heading.

  Following preliminary consideration and consultation, the Government's preferred treatment for section 49 is to amend it so that it is consistent with the spirit of the Freedom of Information Act, which has an overall presumption in favour of disclosure. The Department for Constitutional Affairs currently plans to publish a final report on its review in the autumn. The Department for Constitutional Affairs is also intending to bring forward the first order to be made under the freedom of information legislation later this year, and the Government will include the proposed amendment to section 49 in that order. When section 49 is amended, the Government amendment to clause 54 will allow the relaxation of the restriction on disclosure to apply also in Wales. The Government are therefore following the proper process to address this issue, and are already well advanced in doing this.

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Portsmouth.

Boys and Girls: Academic Achievement Gap
Lord Northbourne Lord Northbourne asked Her Majesty's Government:
What actions they are taking to close the academic achievement gap between boys and girls at school, given that in 2002 44 per cent of boys compared with 55 per cent of girls achieved five or more GCSE/ GNVQ passes at grades A to C.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland): My Lords, narrowing the gap in achievement is a key objective of our national strategies, which are designed to improve teaching and learning through from the foundation stage to GCSE. They emphasise engaging, interactive teaching. We are also identifying good practice through innovative school collaborative projects such as the Breakthrough Programme for Raising Boys' Achievement or the Playing for Success Centres, which harness the power of sport to boost skills and motivate boys.
Lord Northbourne: My Lords, I am most grateful to the noble Baroness for that encouraging Answer. Given that some schools, such as Kirklees School in Yorkshire and Notley High School in Braintree, have shown that the achievement gap between girls and boys can be narrowed quite dramatically—in the former case from 17 per cent to 3 per cent and in the latter by two-thirds—and that this is a matter of teaching, organisation and school ethos, is it not right that pressure should be brought to bear on all schools, or at least encouragement should be given to them, to follow practices that will give a fair opportunity for boys to achieve the education that they need and employability in the world in which they will have to grow up?
Baroness Ashton of Upholland: My Lords, I am grateful to the noble Lord for replacing the word "pressure" with "encouragement"; that is important. In particular, the Raising Boys' Achievement project, which is building on the work of 60 schools that have been innovative in this area, is designed to do what I believe the noble Lord, Lord Northbourne, seeks: to spread good practice, look at what has been successful in those schools and enable us to achieve that. We have also developed a network of collaboration between 23 schools that have shown outstanding achievement in this field in order to ensure that we learn the lessons and can spread that practice to all schools.
Lord Quirk: My Lords, does the Minister accept that the achievement gap at GCSE is related to a literacy gap which is already significant at the age of nine and which is as internationally widespread as it is puzzlingly recent? The noble Baroness will of course be familiar with research at the universities of Hull and St Andrews by Rhona Johnston and Joyce Watson, and elsewhere by Marlynne Grant, showing that this literacy gap can be entirely closed by a switch of teaching method. Will the Minister therefore consult with experts such as Jennifer Chew and Bonnie Macmillan about evidence that the gap is worst in countries that have neglected phonics teaching over recent years?
Baroness Ashton of Upholland: My Lords, as the noble Lord will be aware, we have emphasised phonics teaching in the early stages, particularly key stage 1 and the early years, for precisely the reasons that he has identified. As regards international comparisons, it is worth saying that the gender gap in England is significantly smaller than in most other OECD countries. I do not say that because we do not have much work to do, but it is none the less interesting. We are working with a number of different researchers in the field to see what we can do to enhance teaching and learning experiences. It was pleasing to see that at key stage 3 the gap between girls and boys is beginning to close.
The Lord Bishop of Portsmouth: My Lords, does the Minister plan to use the eight outcomes for children known in Portsmouth, where traditionally girls have outstripped boys, which identify the importance of positive role models, support at home and aspirations for achievement, in reversing the statistics outlined in the noble Lord's Question?
Baroness Ashton of Upholland: My Lords, it is important to look at the significant factors that affect achievement more generally. We know that gender is one of them, but, as I believe the right reverend Prelate was saying, other issues concerning social class, ethnic origin and the local context, for example, have a bearing on the achievement of children. It is important that we keep those factors in mind also.
Baroness Lockwood: My Lords, is it not a fact that we are now seeing a reversal of the traditional picture of boys beating girls at GCSE and A-level? The picture has been reversed by the kind of programmes put into operation in schools to bring up girls' performance and to even out the difficulties. I hope that the Minister will agree that the question of culture and ethos, and what we must aim at, is a balance between what is attractive to young women and what is attractive to young men, so that we do not have one soaring far above the other but rather we try to bring them along together.
Baroness Ashton of Upholland: My Lords, my ambition is that they should soar together. In the 1970s, in particular, work was focused on girls' attainment and, more particularly, their participation. Noble Lords will remember that girls' participation in maths, science, technology and such subjects was an issue in the 1970s.

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That has been addressed through the national curriculum and other work. As always, the critical factor is to look at what is happening in children's achievement to identify whether there are issues of gender, socio-economic grouping and so on, and to find strategies to enhance their ability to achieve.
Baroness Sharp of Guildford: My Lords, does the Minister agree that one of the changes that has taken place since the time when we were worrying about girls underachieving is the introduction of continuous assessment in GCSE examinations, with the shift away from the one-off, two or three hour examination? Has she any evidence to suggest that this may have had some effect on the achievement of boys and girls?
Baroness Ashton of Upholland: My Lords, it is not that girls were underachieving, it is that girls were not participating. They achieved very well in the subjects that they took. It was obvious that it was being suggested to girls that there were certain subjects that might be more appropriate for them. We should be clear about that. I do not have any evidence specifically about what the noble Baroness was asking. We know that the structure of the literacy hour—with clear outcomes and the way that it is focused around achievement—is having some impact on boys' attainment. There may be lessons that we can draw from that, which fits in a sense with what the noble Baroness was saying about the way in which boys learn, which we need to do more to understand.
Baroness Seccombe: My Lords, I hear what the Minister is saying, but does she agree that statistics show that girls do better in single-sex schools?
Baroness Ashton of Upholland: My Lords, I asked a specific question this morning about whether there was such an effect with single-sex schools. It is incredibly difficult to isolate that as an issue. There is conflicting evidence over whether examination results are better for pupils taught in single-sex schools. It is clear that where staff are fully committed to single sex education, where there is extensive preparation of staff and students, and where there are gender-specific teaching strategies, the outcomes can be greater.

Constitutional Reform: Ministerial Responsibilities
2.44 p.m.
Lord Peyton of Yeovil asked Her Majesty's Government:
Whether they believe that the office of Secretary of State for Constitutional Affairs will command the same degree of public respect as that of Lord Chancellor; and, if so, what grounds they have for so believing.
The Secretary of State for Constitutional Affairs and Lord Chancellor (Lord Falconer of Thoroton): My Lords, the office of Lord Chancellor combines ministerial and judicial functions and the role of the Speaker of this House. The Secretary of State for Constitutional Affairs performs ministerial functions, will not be head of the judiciary, and will not be Speaker of this House. The offices will therefore be different. The office of Secretary of State for Constitutional Affairs will be entitled to, and will receive, respect.
Lord Peyton of Yeovil: My Lords, I see awfully little to be grateful for in that. Now that the noble and learned Lord gives the impression of being less insistent on the notion that a promise that has become inconvenient in performance can be regarded as time-expired, has he given any thought to some of the other measures that he has brought forward, particularly the abolition of the office that he now holds, the Lord Chancellorship? Is he not a little concerned that when he finds himself as a mere Secretary of State for Constitutional Affairs, he will be very much a sitting bird for the Home Secretary to pick off at leisure?
Lord Falconer of Thoroton: My Lords, I am glad to see the noble Lord, Lord Peyton of Yeovil, back—I hope with a new hip that works better than the last one. The new arrangements that we propose; namely, the Secretary of State for Constitutional Affairs performing the ministerial functions and the Lord Chief Justice being the head of the judiciary, as a combination, will provide the sort of protection that is appropriate today.
Lord Henley: My Lords, as the noble and learned Lord will be sitting on the committee that will be examining his abolition, can he confirm that he will not be able to give evidence to that committee, and that other Ministers—including the Prime Minister—can give evidence to that committee about the origins of the desire to abolish his post?
Lord Falconer of Thoroton: My Lords, I very much hope that I can give evidence, and I very much hope that the committee will agree that I do give evidence.
Lord Goodhart: My Lords, does the noble and learned Lord agree that the respect for either of these offices depends on the willingness of the Prime Minister of the day to appoint to that office a person who is worthy of holding it? Does he also agree that if a future Prime Minister were to appoint an individual unworthy of that respect, the grandeur and antiquity of the title of the office would not, and should not, guarantee respect for that person?
Lord Falconer of Thoroton: My Lords, it is a very important office, and of course it must be held by someone who is worthy of it. The fact that it is an important office does not mean that we cannot, after proper scrutiny, take steps to improve the discharge of the functions presently performed by the Lord Chancellor.
Lord Waddington: My Lords, will the noble and learned Lord the Lord Chancellor do his best to ensure that the deliberations of the Select Committee on the Constitutional Reform Bill do not end in a cosy lawyers' carve-up? Should not the object of the exercise be to ensure that we finish with a structure that is not just acceptable to judges and lawyers, but commands the confidence of the people because it does not involve the scrapping of well tried systems and the abolition of well respected offices?
Lord Falconer of Thoroton: My Lords, I feel that I can answer this question as one lawyer to another. I am sure that the important thing is to avoid any sense that there is a cosy carve up between lawyers, because that would not have the confidence of the people. I entirely agree with almost all that the noble Lord said. I do not agree with the proposition that we cannot provide a system. Indeed, I believe that we can provide a better system than the one that presently exists, if we make the necessary changes that we propose in the Constitutional Reform Bill.
Lord Renton of Mount Harry: My Lords, did the noble and learned Lord have the opportunity to listen to "Breakfast with Frost" on Sunday, in which Peter Hain, the Leader of the House of Commons, in answer to a question from David Frost about House of Lords reform said:
"I think instead of just looking at composition we will also seek to curtail the powers of the Lords … we need to bring down the period that it can frustrate the will of the Commons, from a year to under a year"?
Does the Lord Chancellor agree with that?
Lord Falconer of Thoroton: My Lords, sadly, I missed "Breakfast with Frost" last Sunday. The relationship between the House of Lords and the House of Commons is right at the heart of any issue relating to Lords reform. I would not wish to say at this stage what the right course is, hut, plainly, the issue should be examined.
Lord Ackner: My Lords, does not the fact that it was only after the former Lord Chancellor, the noble and learned Lord, Lord Irvine of Lairg, had withdrawn his name from the list of speakers who were to attack Clause 14 of the Asylum and Immigration (Treatment of Claimants, etc.) Bill answer the question?
Lord Falconer of Thoroton: My Lords, there was an issue with Clause 14 relating to the judicial review ouster. Many people, including the noble and learned Lord, Lord Irvine of Lairg, raised issues about that. The Government listened and withdrew the judicial review ouster.
Lord Selsdon: My Lords, if and when the noble and learned Lord the Lord Chancellor commits hara-kiri,
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who will stand between the Archbishop of Canterbury and the Archbishop of York in order of precedence in this country?
Lord Falconer of Thoroton: My Lords, I do not know. They may stand next to each other.
The Countess of Mar: My Lords, does the noble and learned Lord agree that respect should be earned, whether it is for an office or for an individual?
Lord Falconer of Thoroton: My Lords, I do.

Yarl's Wood
2.51 p.m.
Baroness Williams of Crosby Baroness Williams of Crosby asked Her Majesty's Government:
When the inquiry by the Prisons Ombudsman on the allegations of bullying and intimidation of detainees at Yarl's Wood immigration removal centre will be published.
Lord Bassam of Brighton: My Lords, my honourable friend the Minister for Citizenship, Immigration and Counter-Terrorism will make arrangements for the publication of Stephen Shaw's report as soon as possible following her consideration of its content and findings.
Baroness Williams of Crosby: My Lords, I believe that the report reached the Minister some time towards the end of February. On 11 December, he pledged to the House that it would be published as soon as possible. Can he give us any indication of when it will be published?
Secondly, why did the Prisons Ombudsman, who conducted the review, interview no past detainees, only current detainees? Past detainees would be freer to speak their mind and give evidence than current detainees, who might be concerned about their status.
Lord Bassam of Brighton: My Lords, I cannot be more specific about the publication of Stephen Shaw's report. As I indicated, a draft was submitted earlier this year—on 24 February. With regard to the interviews, my understanding is that detainees spoke to the inquiry team, as did members of staff. The inquiry team spent two weeks at Yarl's Wood, making sure that it had the opportunity to speak to those who had been detained and to staff as well. A fairly lengthy time and great care were taken to record as much as possible during the inquiry.
Lord Corbett of Castle Vale: My Lords, can my noble friend tell your Lordships' House what plans there are to rebuild the bit of Yarl's Wood that was destroyed in the fire? If there are no plans to develop the site, what will happen when, in two years' time, the Oakington immigration reception centre has to close

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because of housing development on the site, given the Government's ambition to expand the estate for the holding of some of those who claim asylum?
Lord Bassam of Brighton: My Lords, the first phase of Yarl's Wood has already reopened and provides accommodation for 60 single females. It reopened on 28 September last year. I understand that there will be a progressive reopening of the undamaged part of the centre, which will eventually accommodate up to 400 people, comprising single females and families. That should be complete by December of this year.
Viscount Bridgeman: My Lords, what progress is being made in addressing the specific criticisms in the report produced in April 2003 by Her Majesty's Inspectorate of Prisons on the five immigration centres that the provision of interpreters and translated documents was very poor?
Lord Bassam of Brighton: My Lords, it is hard to provide the noble Viscount with a specific response. I recognise that it is an important issue. I know that the Home Office has been addressing it and that great effort is made to ensure that the sort of services that are required for proper communication to take place are put in place and that those who are detained have access to their rights.
The Lord Bishop of Worcester: My Lords, will the Minister reassure the House that the delay—if there is one—in publishing the ombudsman's report is not related to any distinction between publicly and privately run institutions, in terms of the readiness to publish critical documents?
Lord Bassam of Brighton: My Lords, I am more than happy to give that reassurance. It is irrelevant whether the operators of any of Her Majesty's Government's institutions are public or private. Lessons must be learnt, if mistakes have been made. Given the thoroughness with which Stephen Shaw approaches such matters, I am sure that he will have provided the Minister with the fullest possible outline of what took place. I am sure that the recommendations will be carefully considered.
Lord Carlisle of Bucklow: My Lords, the Minister said that the report of the Prisons Ombudsman had been in the hands of Ministers for some weeks. Why is he unable to say when it will be published?
Lord Bassam of Brighton: My Lords, no doubt, the Minister is giving the report very careful consideration and taking its recommendations seriously.
Baroness Walmsley: My Lords, can the Minister clarify the Answer that he gave to my noble friend Lady Williams of Crosby? Was any access given to or any interviews done with former detainees, or were the interviews done only with current detainees? Has any
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disciplinary action been taken in respect of staff as a result of the allegations? Has any retraining taken place or been planned as a result of the allegations?
Lord Bassam of Brighton: My Lords, I would love to be more specific in response to the noble Baroness's first question. The advice that I have is that detainees were able to speak to the inquiry team; no distinction is made, I understand, between former and current detainees. I will check that point; the noble Baroness is right to press it. I cannot be very helpful with the noble Baroness's second point, for which I apologise.
Lord Berkeley: My Lords, will my noble friend remind the House whether the reopened sections of Yarl's Wood are equipped with sprinklers, to avoid a repeat of the disastrous fire two or three years ago?
Lord Bassam of Brighton: My Lords, I am happy to confirm that that is the case and that sprinklers have been fitted.
Lord Avebury: My Lords, will the Minister deal with the point raised by the noble Lord, Lord Corbett of Castle Vale? Oakington is due to close in two years, and the Government have no plans for any alternative facility. Could Yarl's Wood be extended to provide alternative accommodation to Oakington, thereby reassuring all the staff, who are in great anxiety about the future of the institution?
Lord Bassam of Brighton: My Lords, the noble Lord makes a good point. I understand that adequate provision has been made for removal centre locations. I will endeavour to check the point about Oakington, as it is an important matter. As I explained, there is an expanding facility anticipated at Yarl's Wood, with the gradual reopening of that facility.
Lord Hooson: My Lords, will the noble Lord clarify his response to the noble Lord, Lord Carlisle of Bucklow, who asked him when the Government intended to publish the report? He said that the Government had only recently received it. Is that any reason to refuse publication? The Government do not intend to change the report, do they?
Lord Bassam of Brighton: My Lords, the Government have no intention of changing the report. We particularly wanted an independent report. Stephen Shaw is a highly adept and effective official, and his independence is greatly valued. We will, of course, publish his report, and we will publish it when we are ready to do so.
Baroness Williams of Crosby: My Lords, in view of the indications in the original report that appeared in the Daily Mirror—that head-butting and other forms of restraint would be permitted—can the Minister

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assure the House that that would be out of the question in what, after all, is a detention facility where most of the inhabitants arc women?
Lord Bassam of Brighton: My Lords, I thought that I dealt with that matter when the noble Baroness raised it last year. We take it as given that that form of restraint would be highly inappropriate.

Kosovo: Repatriation
3 p.m.
Earl Russell Earl Russell asked Her Majesty's Government:
Whether they will suspend the return of asylum seekers to Kosovo until the situation is clearer.
Lord Bassam of Brighton: My Lords, the situation in Kosovo developed quickly last week. The United Nations Interim Administration in Kosovo which oversees flights of returned asylum seekers advised us on 18 March that due to the security situation it would not be able to accept forced repatriation flights until further notice.
In the light of that, flights returning failed asylum seekers to Kosovo have been temporarily suspended. We shall continue to monitor the situation closely in conjunction with the Foreign and Commonwealth Office with a view to resuming flights as soon as is practical and possible.
Earl Russell: My Lords, I thank the Minister for that reply. In considering how long the duration of this policy should be, will he take account of the remarks made by Ruud Lubbers of UNHCR on 18 March, in which he referred to,
"the fragile character of the situation in Kosovo"?
After all, we are dealing with people's lives, about which we ought not to take too many chances.
Lord Bassam of Brighton: My Lords, the noble Earl is right. Those comments are very important. I have no doubt that they will be carefully considered. The Government take the situation in Kosovo very seriously. For that reason, we have suspended flights and are not returning failed asylum seekers to Kosovo.
Lord Renton: My Lords, bearing in mind that for a good many years now in this country we have absorbed many genuine asylum seekers and many whose claims were not genuine, will the Government be firm in ensuring that those who are not genuine have to return to their own countries?
Lord Bassam of Brighton: My Lords, clearly that is the intention of the Government. It is also the case that we are returning increasing numbers of failed asylum seekers back to where it is most appropriate for them to return.
The Lord Bishop of Portsmouth: My Lords, according to my somewhat confused mind, asylum
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seekers can be returned to their country of origin if it is deemed part of a safe area. I think that what lies behind the Question posed by the noble Earl, Lord Russell, is perhaps a need to loosen up exactly the definition of safe areas. I am not at all sure, and I wonder whether Members of the House agree, about the policy being adopted by the Government. Will the policy of not returning asylum seekers be viable?
Lord Bassam of Brighton: My Lords, what needs to be understood is that we have to take very careful cognisance of the safety of those we seek to return if their asylum application has failed. That is exactly what we have done in this situation. We have acted entirely properly. That course has been well advised.
Lord Avebury: My Lords, will the Minister join me in congratulating KFOR on its prompt reaction to the crisis and the rapidity with which we moved forces in to prevent a much greater loss of life than actually occurred? When the Government decide to resume flights, will they pay particular attention to minorities such as the Roma and ensure that the situation in Kosovo is safe for them as well as any others who may be returned?
Lord Bassam of Brighton: My Lords, the whole House will want to congratulate KFOR. It has done a splendid job in the circumstances, for which we are very grateful. My noble friend Lady Symons is taking very close note of what the noble Lord said. I am sure that that will be communicated.
Viscount Bridgeman: My Lords, does the Minister agree that the constitutional limbo in which Kosovo finds itself as defined by Security Council Resolution 1244 represents a major barrier to the move towards stability and democracy in the country? Can he tell us what progress is being made in the Security Council in settling the status of that territory?
Lord Bassam of Brighton: My Lords, I must confess that the noble Viscount has asked a question that is well beyond my brief. To be entirely fair to him I ought to provide him with a written reply.

Foot and Mouth Disease Inquiry
3.4 p.m.
Baroness Byford Baroness Byford asked Her Majesty's Government:
Why the evidence of the Department for Environment, Food and Rural Affairs veterinary officer Jim Dring was not forwarded to Dr Anderson's "Lessons Learned" inquiry into foot and mouth disease.
Lord Whitty: My Lords, at the time there was a concern that the contents of Mr Dring's personal statement, had it received publicity beforehand, could have been prejudicial to Mr Waugh's trial, at which Mr Dring was a witness of fact. Mr Dring contributed to the epidemiological investigations set out in the

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Defra report to the Anderson inquiry and his own notes of his visits to the Waugh farm were submitted to that inquiry.
Baroness Byford: My Lords, I thank the Minister for that response. How soon after the outbreak had occurred was the decision taken to withhold the evidence from Dr Anderson's inquiry? At what level was that decision taken? Was the Minister advised at the time?
Lord Whitty: My Lords, the decision was taken around September/October 2001 when we were submitting papers to the Anderson inquiry. I can give the noble Baroness the exact date. As to the level at which the decision was taken; it was taken by those who were compiling the evidence for the Anderson inquiry on legal advice. Ministers were not informed. As Ministers subsequently have said, had they been informed, they would not have taken the same decision.
Lord Livsey of Talgarth: My Lords, does the Minister acknowledge that the cover sheet on Mr Dring's 30-page memorandum apparently had been removed when it explicitly stated that it was to "The Anderson Inquiry, Room 207, Ashley House, 2 Monck Street, London SW1P 2BQ"? Dr Anderson's report is entitled, "Lessons Learned". What lessons have Defra learnt as a result of this alleged sleight of hand? Is not the best action now to hold a very brief inquiry into this matter? Clearly, foot and mouth is far too important to be left on the shelf.
Lord Whitty: My Lords, it is clear from the cover note and from what Mr Dring has said that he wanted his personal statement to go to the inquiry in some form. The legal advice was that it could be prejudicial to the trial of what almost certainly was the starting point of foot and mouth and therefore to any judgment that that court made. In a sense, that was understandable legal advice. Officials acted on that advice. It is clear that that was the process.
What is now clear is that Dr Anderson should have received that. He would not have put it in the public domain. Had Ministers been informed of that decision based on genuine legal advice, they would have taken a different decision. It is important that Dr Anderson should have been able to make his own judgment on what was in Mr Dring's letter. However, it is also important that, now that Dr Anderson has seen the letter, he says that it would not have altered the terms of his recommendation from the inquiry.
Lord Rotherwick: My Lords, was Dr Anderson aware that he was not receiving this information? Is there any other information that he did not receive that he should have received?
Lord Whitty: My Lords, clearly, Dr Anderson was not aware that that information existed. Of course, he was aware of Mr Dring's involvement and he had sight
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of Mr Dring's contemporaneous notes of his visit to the Waugh farm. Therefore, he was not entirely without information on Mr Dring's views and what he had done.
As to other information, there was some information that was summarised because it was based on confidential material. However, as far as I can ascertain, it does not appear to be the case that other material was withheld for the same reason or for any other reason. However, I shall qualify that. Until two or three weeks ago I was not aware of Mr Dring's letter either. Nevertheless, they were rather special circumstances which related to what were probably the most important legal proceedings arising from the foot and mouth epidemic.
The Countess of Mar: My Lords, does the noble Lord believe that the failure to submit this evidence to Dr Anderson had any effect on the Government's decision to ban swill feeding without compensation for a very small number of pig swill feeders? They were obeying the law by doing exactly what they were told and cooking the swill at the right temperature. They had never created any problems. Does the noble Lord think it is fair that these people should not be compensated?
Lord Whitty: My Lords, at the time the Government were sensible to take the decision to ban swill feed. Indeed, that action has in many respects now been followed by Europe as a whole in the light of the clear evidence that swill feed could have contributed towards or brought the diseased meat into that particular pig farm. In such circumstances it would not be normal practice to compensate because that was a measure was taken for public health or animal health purposes.
Viscount Bledisloe: My Lords, what right or power does some official in Defra have to suppress a communication from Mr Dring to Dr Anderson without the permission or the knowledge either of the author of the document or the person to whom it was addressed?
Lord Whitty: My Lords, officials in Defra and elsewhere are encouraged to take legal advice on how they should proceed in relation to any documentation provided which makes reference to an ongoing legal case. In normal circumstances that would be a sensible and orderly decision, and we would expect officials to take note of that legal advice. Because of the wider significance here, it may be that it should have been referred upwards to senior officials and Ministers, but I would not suggest that officials were acting out of order. They acted in relation to normal instructions. As Members of the House would expect, officials are encouraged to follow legal advice.
Baroness Byford: My Lords, does not the noble Lord agree that it is regrettable that that decision was taken and that neither officials at Defra nor the

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Minister were informed? Members of the House are deeply concerned about the spread of disease. The one thing that we have tried to bring into being is an animal health Bill that in the future would prevent or restrict the spread of disease very quickly. What steps will the Minister take to ensure that these disgraceful events do not happen again?
Lord Whitty: My Lords, I have said that I regret that the letter did not go to Dr Anderson. However, I do not think that it has had any bearing on Dr Anderson's decision. He has made that clear himself. While he feels that he should have seen the letter, he has also said that it would not have changed his decision and recommendations.
Turning to the efficacy of the recommendations, those matters have been debated at considerable length both here and elsewhere. I believe that what has been put in place, along with the contingency plan for dealing with any future outbreak of foot and mouth or similar disease, will prove effective. However, vigilance is required on the part of farmers as well as on the part of enforcers and veterinary advisers.
Lord Soulsby of Swaftham Prior: My Lords, regrettable as this incident might be, does not the Minister agree that one of the major problems at the time of the outbreak of food and mouth disease was the very substantial reduction in manpower in the State Veterinary Service? That put everyone under a great deal of pressure. Without wishing to excuse the situation, can the Minister provide some evidence that the shortage of staff in the State Veterinary Service will be attended to?
Lord Whitty: My Lords, as the Government's evidence to the Anderson inquiry made clear, the changes made to the manning levels of the State Veterinary Service have not been as drastic as is sometimes alleged in terms of farm visits, although it is true that there have been some shortages. Indeed, Mr Dring's statement refers to certain constraints he faced because of staff shortages. We believe that the State Veterinary Service is staffed at the appropriate level to deal with today's problems, but we also need to call on private vets should this or a similar disease break out again. That is very much a part of our contingency plans for dealing with any future emergencies.

Business of the House: Debates this Day
3.14 p.m.
The Lord President of the Council (Baroness Amos): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord King of Bridgwater set down for today shall be limited to three hours and that in the name of the Lord Fowler to two hours.—(Baroness Amos.)
On Question, Motion agreed to.

Business
Lord Grocott: My Lords, I need to relay a short item of business to the House and I am sure that noble Lords will be patient and understanding. The next debate is a very important one on defence. The Minister, my noble friend Lord Bach, was scheduled to be back in the House in good time for the debate. Today he has been visiting the Royal Navy at Faslane. His plane has been delayed. Although I keep looking at the door, it is expected that we shall be able to start the debate in 20 minutes' time, at 3.35 p.m.
Obviously it would be inappropriate to start the debate when the Minister is not in his place. This has been discussed in the usual channels, but more particularly with the noble Lord, Lord King of Bridgwater. Everyone has been most understanding. For the first time in my life I have watched Question Time hoping desperately that the questions would be longer. However, in the circumstances, the sensible action is to adjourn the House.
Lord Selsdon: My Lords, before the noble Lord sits down, perhaps I may ask him one question. As he has said that this is an important debate, why are so few Members on the Government Benches speaking in it?
Lord Grocott: My Lords, the answer is that Members on these Benches are in total support of the Government. In particular, my noble friend Lord Bach will be adequately equipped to deal with any queries that may arise. I beg to move that the House do now adjourn until 3.35 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 3.15 to 3.35 p.m.]

Defence
Lord King of Bridgwater Lord King of Bridgwater rose to call attention to defence policy, including the additional challenges posed by terrorism; and to move for Papers.
The noble Lord said: My Lords, in preparing for this debate, I took account of the events that occurred since we knew that we would have this debate. I remind your Lordships: Madrid, the atrocity; the assassination of a Government Minister in Herat in Afghanistan; the intensive fighting in Waziristan; the outbreak of attempted ethnic cleansing, perhaps, again in Kosovo; the assassination of Sheikh Yassin; the civil riots and petrol bombing in Basra; and the seemingly continuous backdrop of murder of American soldiers and Iraqi police in Baghdad and surrounding areas.
I welcome the Minister, understanding that he has had an extremely difficult journey and very much appreciating the efforts that he will have made. It is not my peroration but merely my introduction that he has missed.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach): My Lords, perhaps I may take this opportunity to apologise to all Members

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of the House for not being in my place at 3.15 p.m. I think that the House knows that I was fulfilling a longstanding engagement with the Royal Navy on the west coast of Scotland. It would have been quite wrong for me not to have gone there. The plane back was delayed. If it had not been, I would have been in my place at 3.15 p.m. I of course apologise to the House, and especially to the noble Lord, Lord King, for not having been in my place.
Lord King of Bridgwater: My Lords, I entirely appreciate—as will the House—the Minister's reasons and the important engagement, which is not one that allows for much flexible timing. You are very much at the mercy of your conveyors, as you might say, when you arrive in Faslane. I hope that the Minister had an interesting trip.
I instance that background to describe what events have taken place. I want to talk about the background to them. I have previously referred to what I think is a dangerous world. The Cold War ended in an almost headlong rush. One of its worst legacies was from one of the last events of the Cold War: the Russian invasion of Afghanistan and the rise of what might now be recognised as the militarisation of militant, extremist Islam.
Afghanistan became the perfect training ground for a movement that was in any case showing considerable pressures, strains and activity because of events in other parts of the world. Many young men travelled to Afghanistan, joined the Mujaheddin and were supported by the United States and us with weaponry and by the Saudis and others with substantial funds. They learnt to fight; they learnt how to conduct warfare against a sophisticated, major modern adversary; and they learnt the fullest compendium of terrorist capability.
They were successful and we cheered them for it and admired them. I remember, at the beginning of the Gulf War, the arrival of the last of the coalition, the Mujaheddin, the Taliban from Afghanistan, who came to help the Kuwaitis in recognition of the Saudi and Kuwaiti contribution to their fight in Afghanistan, to help to clear Saddam Hussein from his illegal invasion of Kuwait. But, of course, having come from this perfect training ground with the gratitude of the Taliban, it did not end there. The Taliban was able to offer massive training facilities. Its instructors were hardened, trained professionals from the Afghan war and there were opportunities for those skills to be deployed in Bosnia and the fight to support the Muslims there; in Chechnya and the Muslim resistance and search for independence; in Kosovo; in the everlasting challenge of Palestine; and now in Iraq.
Out of that has come a recruiting and training system of quite enormous dimension. I do not think anyone knows how many thousands passed through those training camps. Every fresh activity seems to provoke a further grievance. How many willing recruits will the assassination of Sheikh Yassin produce for the training camps that Al'Qaeda may be able to establish?
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I instance this because it could easily be thought that some of the problems we face at the present time are a few rather dangerous sparks of a fire that will be easily extinguished. Any fair analysis will recognise that we face a major conflagration that has been stoked for some time and is a major threat to the world.
I wrote a foreword on behalf of the Intelligence and Security Committee six years ago, as the noble Lord, Lord Campbell-Savours, will recall. We expressed then increasing concern over Islamic terrorist threats. Five years ago in my foreword I said:
"Last year we spoke of the scale of terrorist attacks around the world, which averaged 60 a week, and of increasing concern over Islamic terrorist threats. This year saw the attacks on the US embassies in Nairobi and Dar es Salaam which killed 220 people"—
slightly more than were killed in Madrid—
"and wounded 5,000"—
significantly more than in Madrid—
"and which confirmed the scale of the threat posed by Osama bin Laden and other Islamic groups".
If one observes the examinations and investigations taking place in Washington at the present time on Capitol Hill, one hears the question being asked as—your Lordships may fairly ask—about why we did not have greater consciousness at the time these events were taking place. I omitted from that list of events the earlier attempt on the World Trade Centre some 10 years ago and the subsequent and serious attack on the USS "Cole". So American experience of such attacks is over a long period.
We must recognise that we face an enormous challenge and that it will be a long haul. It will be an even longer haul if we make no progress in the main conflict areas. The ones that I have immediately in mind are Palestine and Chechnya. So my first priority for a defence policy has nothing to do with our Armed Forces but presents a major challenge to the diplomatic skills of the world and ourselves to make some proper progress on those long-standing and troublesome issues.
If we are to have a successful defence policy, our second priority must be to sustain public morale at home. I am critical of the statements made by some with current responsibility who refer to the terrorist threat and say that it is not a matter of "if" but "when". That is not a particularly helpful message. It is not certain that it will be "when". Of course the risk is enormous; of course the threat is very great; but we have substantial capabilities in our intelligence and security services which have served us very well in the past. Our hope must be that, with the maximum public contribution, vigilance and willingness to accept some difficult changes in the way in which we go about our lives, we can determine to ensure that it is not a matter of "when".
Incidentally, I was talking earlier today to Sir Michael Quinlan, the ultimate guru on nuclear policy, who told me that in the late 1950s that was said about nuclear war; that it was not "if' but "when".
If we are to sustain the morale of our people they must understand that we will do our best; that we do have capabilities; and that it is the determination of the

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Government, and the leadership that I am sure they wish to give, to ensure that it does not happen here. We should tell the people the truth, make every reasonable preparation we can to prevent it happening, and give the leadership that people deserve.
The truth is that we have no choice but to stand. We do not face an enemy with whom we are able to negotiate. Against extremist, fanatical militants of this kind we have no choice but to stand. At the same time, we must distinguish them from those who have legitimate grievances, with whom we should certainly seek to engage. So that is the background against which I approach the defence policy.
At this most dangerous time it is absolutely vital to sustain our defence expenditure, which is under unacceptable strain. The reality is that, as we do not know at any one minute what is going to happen—as we did not know until a week ago that we were going to send another battalion to Kosovo; as we did not know that we were going to send another 100 SAS to help in the exercise in Waziristan to tackle Al'Qaeda and to assist the Pakistan army—it is absolutely vital that we maintain our capabilities in this field.
As to resources, I listened to the Chancellor in his Budget speech. I still do not know what he was saying. Against the Aunt Sally that he put up that he might freeze defence expenditure and cut it in real terms, he said:
"At a time when our armed forces are now serving in Iraq, Afghanistan and Kosovo as well as in Northern Ireland and elsewhere … such a course would be irresponsible … I reject it … I can tell the House that I propose real terms increases in defence spending".—[Official Report, Commons, 17/3/04; col. 333.]
The House of Commons and everyone else thought that that meant there was to be new money and a significant new increase in expenditure. The briefing afterwards stated that there was to be no new money. If that is the economic situation, tell the truth. Do not try to embroider it for the sake of a Budget speech that sounds good at the time but proves to be a great letdown to those in the Armed Forces.
The reality is that we shall have to look at our defence policy. One of the phrases that I lived with in my time, which others know well, is that it is not "how many" but "how capable". That sounds jolly good, but if there is ethnic cleansing in Kosovo it cannot be dealt with by a UAV and a stand-off missile; if problems explode again in Afghanistan, you will not deal with them without boots on the ground and people who can play their part. I am afraid that that means not only capabilities but people as well.
I should say to the Minister that he is able to make announcements about what the Armed Forces—the Army, the Navy and the Air Force—and the Ministry of Defence will do largely because of what others have prepared for him before. He and his colleagues are the trustees of our present capability. But that has been bequeathed to him by others. Of the equipment that he was able to praise and produce in the Iraqi campaign, a great deal of it was ordered during my time and earlier. The Eurofighter was ordered way before I became Secretary of State—so you can tell how long
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ago it was—and we do not have it in service yet. So a lead time is necessary for providing such items of equipment.
There is also a lead time for providing that most effective requirement to which Ministers throughout the generations have stood at the Dispatch Box and paid tribute—the wonderful calibre and quality of our Armed Forces. They are admired around the world, led as they are by the captains, the majors, the colonels, the sergeants, and the sergeant-majors, who were trained 10 or 15 years ago. They have been trained and retrained; they have been retained; they have made their career in the services and have given the leadership, around which the recruitment of those who have a much shorter span within the Armed Forces make their contribution as well. So the judgment on the Minister will be made not on how well we do next week or next year, but on whether he hands on those capabilities to his successor and the successor after that.
I was deeply distressed to read the Select Committee report on what happened in Operation TELIC. There is no doubt that the Government took a risk and did not give adequate notice to the forces and the logistics staff for the preparation. What happened to some of the forces who went out there was a disgrace—the shortage of ammunition, the shortage of personal body protection, the inadequacy of uniforms and the lack of desert boots. Those were problems that all Governments have, but it was crucially, above all, because it was left too late. The Select Committee was absolutely right—there was no need to leave it late because diplomatic measures, with overt preparation for military force, was the most likely way in which to avoid a conflict.
Our forces are dangerously stretched at present. The TA and reservists, above all, perhaps, are under quite exceptional pressure. Unless we ensure that the resources are there and can maintain the morale, the training and the capability of our forces, we are on borrowed time. And there is nothing worse than being on borrowed time in such a dangerous world. My Lords, I beg to move for Papers.
3.52 p.m.
Baroness Dean of Thornton-le-Fylde: My Lords, I thank the noble Lord, Lord King, for introducing this debate and setting the scene for the very wide issues that we face. I should also like to comment on the earlier remark about there being only one speaker from the Labour Benches; my noble friend the Chief Whip said that the Minister would answer every point and we would all support him. I do not want it to be thought in any way that I do not support the Government. As a colleague said to me, "Brenda, you're playing left-wing, right-wing and centre-forward today for the party".
This is a very difficult and wide issue and I am pleased that we are debating it today. No doubt we will continue to debate it, because, as the noble Lord, Lord King, said, this is not a five-minute wonder. It is with us; it is about life today. I should like to

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concentrate on the Armed Forces, accepting that perhaps today, more than ever, the integrated working of not only the Armed Forces but our security services generally is essential.
I predicate everything I say against the background that our Armed Forces like to work. They like to do what they are trained for, and if that means being posted into an operational field more than once, sometimes several times, over a two-year cycle, they will face that. But it is a question of what comes with it and what we as a nation give them to carry out that role and to recognise the impact on their lives and families as well.
In the debate on the White Paper of 11 December last year, Delivering Security in a Changing World, Nicholas Soames, leading for the Opposition in the other place, said that he generally agreed with the thrust of the paper. I think that most people would, although there would be great differences on the detail. Chapter 5 of the White Paper deals with personnel. It announced that in April this year, the Government would publish a personnel plan. Essay 5, which accompanied the White Paper—I do not always follow the terminology—talked about the increasing competition and cost of personnel because of the Armed Forces having to compete with other parts of our community. That is essential. Will that personnel paper be published, as a policy, in April, on time? It has to be integral with the overall defence policy.
The National Audit Office report and the report of the Select Committee on Defence referred to by the noble Lord have criticisms but they also recognise what has been achieved. The reports are very positive. The House of Commons Defence Committee report refers to the impact of Operation FRESCO. The firefighters' dispute came out of nowhere—who would have thought it would have had an impact on how our Armed Forces, all 19,000 of them, would be expected to cover in that industrial situation at the same time as preparing to go to war in Iraq? That was an enormous challenge that had a side effect we must consider.
The report referred to lost leave. I gather the situation is improving considerably, but it has an impact on retention. Recommendation 86 talks about the key effectiveness of our services based upon their training. If we do not have the resources available, whether it is time or physical support, that will affect training. If there is anything that helps the professionalism of our Armed Forces, it is the good training that personnel receive.
On the reliance on reserves, the problem over the years is that the reserves, and their employers in particular, probably thought that they would never be deployed. In some skill areas, such as medicine, as much as 10 per cent of the overall cover is provided by the reserves. That has presented problems, and it is covered in Recommendation 29 of the Defence Committee report. It certainly reflects what I heard, going around talking to Armed Forces personnel. They talked about people having lost their jobs when they come back, which confirms what I heard.
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We need to recognise where we have made progress. Staging has gone—it was a legacy left by the Conservative Party when it left government. Although it was some time ago, because personnel such as majors—not the corporals and privates—have made the Armed Forces their career, they still ask questions about staging. It affects morale and it affects their pensions later on. So the fact that staging has gone is welcome.
The welfare package has in recent years improved enormously the support for the Armed Forces and their families when they are deployed. The treatment of partners, as announced in the Iraq conflict, should a service man or woman be killed in action, is very welcome. So there have been many improvements.
A survey of 11 fellow nations and partners—Australians, Americans, Canadians, and so on—showed that the overall conditions and package for our people compares very well with theirs. In addition, of course, the long-awaited outcome of the pensions review is still outstanding.
We have seen progress, but I believe that we are poised at a very important time for defence in this country. We talk about education, health and our communities, which are all very important issues. But defence and defence policy need to be up there with those issues as a priority for the Government in view of what we are facing as an individual nation and what others around the world face. If these terrorists believe in anything, it is that the world is a village. Borders do not matter to them and neither do nationalities.
It is terribly important that the resources for the defence budget are strictly monitored and watched over very closely to ensure that the money is spent properly—sometimes it is not. Those resources are crucial, and I will address my remarks to this matter in the closing minutes of my contribution to this important debate.
Resource account budgeting has proved difficult for the MoD in particular. Like anything new that is trialled, there are always hidden problems. I was pleased to read that an increase in real terms means that. If it is announced in a Statement by the Chancellor of the Exchequer, I am sure that it will be honoured. However, the problem is that we are talking about the next spending round which does not start for two years. We have a problem here and now. The rumoured £1.2 billion shortfall is not an insignificant sum. It is an enormous amount of money. If we are to make savings in the long-term defence budget, it cannot be cut in the first year, because one cuts the very things that are needed. These are people-related issues. Contracts are entered into and time is needed to deal with them. Keeping ships tied up and telling pilots that they cannot go on training because it is too expensive will not help us to contain and use our resources properly.
It is important that we ensure that, in the interim period of two years before we get the real increase—unless the Minister makes my day by telling me that we will get that increase in real terms from this year—we make it clear that we do not expect the £1.2 billion

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shortfall to take place. People are not interested in defence because of any macho reason. I am interested in defence because of the defence of this nation. I want to make sure that the compact that we have as a nation with our Armed Forces personnel is honoured fairly. I hope that the Government also think that.
When the Cold War came to an end, about 30 per cent of the defence budget was cut. Enormous numbers were slashed. That was some time ago, but the services are still feeling the effects of the skills black hole caused by those jobs going. The Armed Forces are still short in some key skill areas. These issues must be addressed in an overall defence policy.
4.2 p.m.
Lord Bradshaw: My Lords, I thank the noble Lord, Lord King of Bridgwater, for introducing this debate. I will turn attention away from defence to terrorism. I declare an interest as a member of the Thames Valley Police Authority. I am speaking in this debate because my attention was drawn to a newspaper headline that I noticed at the station. It announced, "We are not prepared". It was, as usual, a scare story. It said that if there were a Madrid-type incident in this country, we would be in chaos for a long time.
A good deal is being done to prepare us for the consequences of such an incident. About three weeks ago in the Thames Valley, we ran an exercise called Operation Red Signal. It was a partnership operation between the police, the health service, the fire brigade, the military and all sorts of other people. It was not a job for a few office boys around a table. It involved a lot of real people, with two unconnected incidents happening simultaneously on a Sunday in the Thames Valley area. A good state of readiness to respond was shown. There was a rather grim attitude rather than an enthusiasm to respond, but we are moving towards being properly prepared for an event, even though it is impossible to know what it might be or where it might happen.
However, such exercises are very expensive. This one lasted only a day, but the police costs for my own authority were more than £500,000 and there were further costs for each of the 15 or 16 local authorities for the lire service and ambulances. Our authority went three times over the Government's suggested level of precept, so we had already stretched the Deputy Prime Minister's patience to the limit with what we asked of the council tax payers. There will be more exercises and more alarms, but we must spend the money. To some extent, that touches on what was said by the previous speaker. These are expensive but necessary things to do.
We have to set such exercises beside the Government's priorities to cut burglary, car crime, robbery and drugs misuse. We have a great shortage of experienced people, because most of our officers leave us to work for the Met. We are constantly recruiting officers and we have a young and very inexperienced force of people. They are not unenthusiastic, but they are inexperienced. Looked at from the point of view of those who lead the police force, the day-to-day work
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is very difficult. It is intensive and nerve-racking work, deciding what to do and when to do it, knowing that the blame in modern circumstances will fall on the front-line police officers, who will be asked why they did not foresee the problem. I am afraid that incidents are now seen as media events rather than tragedies. There are also the inevitable after-the-event opinions of journalists who criticise everything from the safety of not having to plan, foresee or do anything.
There is a second element involving delicacy of judgment—not to make a pre-emptive move. If people are to be prosecuted—and many noble Lords have referred to this matter in this House—evidence is required in order to make arrests. There will be problems if someone is jumped on too soon, without sufficient evidence. However, the webs involved in international terrorism are extremely complex and secretive, as the noble Lord, Lord King, said. I challenge my own Benches to consider how much civil liberty needs to be conceded in this fight. Do we take risks in circumscribing the liberties of a very small number of people when, on the other hand, there is the possibility of the death or injury of a very large number of people? Officers have to make such judgments. The primary function of the police force is to protect the public, but it can be a very uncomfortable trade-off.
For example, along with other police forces, we recently received reliable intelligence of the possibility of an attack on an aircraft approaching or leaving Heathrow. Huge numbers of police, some military and other people were involved in what had to be an intrusive operation to thwart this threat. Such operations may involve intrusion into people's lives and liberties, but the alternative could be a major almost unspeakable tragedy. Similarly, we must view stop-and-search as a necessary weapon in such a struggle which has to be balanced against treating ethnic minorities or asylum seekers with dignity and respect. This debate is not helped by people who use arguments about stop-and-search that are ill founded and ill researched as fairly cheap political propaganda.
I am not expecting an off-the-cuff answer on this matter, but the railway systems in the capital are extraordinarily vulnerable to attack. Will the Minister ensure that the police are equipped with sufficient good-quality equipment to x-ray packages that are found and those that are left in left-luggage offices? I believe that there is some equipment, but there is only a limited amount that has to be shipped around from station to station according to demand. We should supply equipment that is needed to deal with the terrorist threat.
I conclude by saying that the co-operation at local level is better than ever. People are working together. Those in local government and the police, ambulance and fire services have a unified command structure to deal with the problems. The area is very difficult but the agencies involved are working hard to ensure that, if required, they are prepared—not willing or enthusiastic but quite determined to deal with the problem. The chiefs of our public services are doing their best to keep up our defences and preparations much as the noble Lord, Lord King, asked. It is not easy in a world where newspapers seem to make a virtue of ghoulish headlines,

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but it is one where the people who are doing the work at ground level deserve tremendous support wherever they can get it, because they are doing a very vital job for our community.
4.11 p.m.
Lord Craig of Radley: My Lords, I, too, should like to thank the noble Lord, Lord King, for introducing this important debate. I should like to concentrate, and narrow the focus of my remarks, on Eurofighter, or Typhoon as it is now named for the Royal Air Force. It will be a key contributor to our defence capability for many years ahead. Control and dominance from the air are widely agreed to be vital to success in military operations. However, there continues to be a great deal of adverse criticism about this major equipment programme: it is said to be outdated, delayed, too expensive, designed for the Cold War and not required for today's and tomorrow's front line.
Bearing in mind the comment of the noble Lord, Lord King, about long gestation periods, it will not surprise your Lordships to know that I was closely involved in the formative period of that vital air power requirement. As Chief of the Air Staff in 1987, along with my opposite numbers from Germany, Italy and Spain, I signed the revised operational requirement for the project. Before that, we had some hope that the French might be persuaded to join us, but that was not to be. We envisaged then that prototypes would be flying in the early 1990s and that the aircraft could enter service by mid-1995 in the air forces of all four countries. Regrettably, we are still nowhere near that level of achievement. It has been a highly unsatisfactory and frustrating story for the air forces and, of course, for the nations involved. I shall not attempt to apportion blame, some of which must lie with the manufacturers and more with the behaviour and procrastination of all the governments involved.
There have always been, in a major collaborative programme, periods of review and uncertainty as governments and new administrations satisfy themselves about committing very large sums of money to the next stage of development or manufacture. In spite of all our experience with such programmes, we have yet to be realistic enough about the political/bureaucratic problems. At times, frustrations are such that it is tempting to pull the plug on the whole programme, but except in the very first few years that is rarely very realistic either, any more than would have been an early decision to run the whole programme as a national one.
For those who criticise the delays and inefficiencies of this collaborative programme, I have a lot of sympathy; but for those who then go on to criticise the performance and operational need for the aircraft, as part of their argument for withdrawing from its procurement, I have no such sympathy at all. Cost is one criticism—and, yes, the programme is costly and imposes a major demand on the defence budget for a number of years, some of which is already past expenditure and so of no more than academic interest, and some is still to be committed.
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Our Armed Forces are today being committed to a global expeditionary role, which in turn requires new capabilities, particularly if we are to operate alongside United States forces, as the Government have stressed that we must expect in their recent defence policy statements. I welcome that. We have only to recall the many years of air operations over the no-fly zones in Iraq or the intense rates of air effort at the start of any recent campaign, to appreciate that there is a real and critical role for air power in all warlike and conflict prevention scenarios.
While one would hope to be able to bank on the short, sharp shock, the more likely eventuality is that roulement and replacement of deployed forces will have to take place. For each squadron's worth of strength deployed overseas, another couple are required to allow for operational role training, recuperation, and the ongoing requirement to provide experienced instructors for the next generations of air crews.
Critics argue that Typhoon is far too sophisticated for today's type of operation. It was designed, admittedly, to fight in intensive combat against Soviet forces, and we no longer face such threatening capabilities, so it is claimed that it is no longer required. But critics do not think to distinguish between the performance of the airframe—the platform—and the weapons systems with which it may be equipped. In the late 1970s and the 1980s, a great deal of study was undertaken into the relative performance of an airframe and its weapons for the air superiority role. High manoeuvrability and agility of weapon and/or airframe are of course essential if one is to give one's air crew a reasonable chance in a one-on-one joust in air superiority battles against well equipped enemy fighters. It would be foolhardy, as well as immoral, to set out to equip one's own side with inferior performance overall to that of potential adversaries.
The outcome of all the operational evaluation work was clear: the airframe itself had to have high manoeuvrability. Hence the design and performance of the Typhoon airframe. But what seems to be overlooked completely in the argument is the enormous flexibility offered by this high agility in air power's other key requirements. Yes, there is air superiority—but in addition there is a platform with different or additional weapons and other pods that can provide for close air support, air offensive and reconnaissance roles.
The operational lives of modern airframes are much greater than those from a couple of generations ago—and some of those did us well. I flew the Vulcan in every rank in my service from Squadron Leader to Marshal of the Royal Air Force. The Vulcan and I entered the Royal Air Force in about the same year. Nearly 40 years on, it was still in service as an air-to-air refuelling tanker. The B52, a strategic Cold War bomber at outset, is now rearmed with smart weapons and able to provide close air support for ground forces from far-flung airfields. The Canberra, the RAF's first jet bomber, is, 50 years on, an outstanding intelligence platform with its modern sensors. Those and other Cold War airframes are still flying operationally in today's conflicts. I expect the same longevity for Typhoon, with weapon changes and upgrades over the years of its service life.

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At the end of the day, one of the best tests of any equipment is whether those who will have to rely on it for their lives like it and are happy to be operating with it. I have no doubt that there is a big thumbs-up from the air crew now that Typhoon is at long last in RAF hands and will soon reach the front line.
So long as our Armed Forces are to be sent on expeditionary operations far from home bases, they must enjoy the protection, both offensive and defensive, that only air power can provide. Typhoon has a critically important role to play in any future operations. Its initial cost will be well amortised over a long in-service life. I hope that the Government will continue to give it the fulsome support it deserves to help to meet the Government's defence objectives.
4.20 p.m.
The Lord Bishop of Portsmouth: My Lords, I begin by commiserating with the Minister for the circumstances that brought him here this afternoon. I look forward to his words at the end of the debate. I hope that he will have caught his breath by the time we finish.
This debate is important and timely. Like others here this afternoon, I want to say how grateful I am to the noble Lord, Lord King, for inaugurating this exploration of a number of interlocking issues that need to be addressed together, which is precisely the advantage of an occasion such as this. We do our defence policy, in relation to terrorism or anything else, a grave disservice if we do not see it in its complexity.
For example, I am sure that many noble Lords are relieved by the promise held out in last week's Budget that defence spending is to be increased in real terms. But we need to know more about what this will mean in the long run. There are some large equipment spends coming up that have already been negotiated and of which knowledge is in the public domain. I refer, for example, to the new Eurofighter aircraft and the two new aircraft carriers that Portsmouth will be proud to have in the naval dockyard. But there is the lack of equipment for front-line troops in Iraq. This may be explained by the fact that it simply arrived at the wrong place, which may reveal a lack of investment in logistics.
There is also the fact, which comes across to amateurs such as me, that modern warfare is reported and debated by the media in a way and to such an extent that would have been impossible, and probably not allowed, even 10 years ago. That places a burden of accountability on the Government and Armed Forces that they have not hitherto known or experienced.
In recent years many quite dramatic thresholds have been crossed. For the navy world-wide, the suicide terrorist attack on the USS "Cole" in Aden in late 2000 opened a new era in force protection for sea-borne forces. That has led to the need to work out exactly how to identify and destroy at sea vessels full of explosives.
As the First Sea Lord, Admiral Sir Alan West, has made clear recently, the role of international policing currently undertaken by the Royal Navy includes
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curbing the work of modern-day pirates and uncovering the insidious links between terrorism, drugs and arms smuggling, as well as the smuggling of illegal immigrants. These facts are not known to the public. They can be known but many people seem to be unaware of this widening role. Eighty per cent of the world's trade and 95 per cent of Britain's trade moves by sea. Our country is more reliant on the sea than almost any other nation. A threat at sea has a direct impact on us.
In all the reorganisation that rightly goes on in our Armed Forces, it is important that we are aware of the need for high morale among our service personnel, as the noble Baroness, Lady Dean, said earlier.
That brings me to the question of security. Security processes are now far tighter. As we know well, that affects civilians. We are getting used to living in a far less predictable and far more dangerous world than the one in which my generation grew up during the Cold War, which was stark and resented but was, in some strange ways, manageable; at least it was more manageable than the situation that we are in now. In the presence of the noble Lord, Lord Campbell-Savours, I am not sure whether I am allowed to admit to being the son of a former MI6 officer, but since he has died I am perhaps allowed to do so.
Our new climate of "controlled fear" places new burdens on many of our institutions and intelligence, as a concept, often has to carry additional burdens that may make us confuse it with fact. When the facts, as we experience them, do not match the intelligence that we may maintain we have received, it is assumed that something must be wrong with the system and heads must roll. That is not always a helpful way to operate. All knowledge is partial because it is incomplete. We cannot always know and express the whole picture. In being aware of what we come to know and in trying to communicate it, we are limited by our attitudes, which are formed by education, experience and country of origin, as witnessed by possible changes in policy towards the Iraq conflict and its aftermath in Spain.
That brings me to terrain that noble Lords might expect to be covered by someone speaking from these Benches. In the major speech given by the Prime Minister on 5 March, he referred to,
"the poison of religious extremism,"
and the need for the peoples of Iraq and Afghanistan—I am glad that he mentioned both and not just Iraq—to be enabled to triumph over that kind of oppression. Since 9/11, religion has re-entered the world map with a new force that cannot be dismissed by the western, secularist agenda. If we follow that tack we shall be storing up a great deal of trouble for ourselves and the next generation.
As my friend the most reverend Primate the Archbishop of Canterbury has said in some recent public contexts, religious extremism needs to be countered with religious language, knowledge and understanding. He said that more work needs to be done in order to find the right kind of language, not only for dialogue with religious leaders and between them, but for really effective religious education in our

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schools. Religious education should be about more than exploring rites of passage and festivals, important as these are. It should be about much more basic questions, such as why people believe certain things and what makes them act in a particular way. The challenge that I, as a theologian and a bishop, have to live with is how those two relate to each other, if they do so at all. The word for actor in the original Greek is a hypocrite and all men and women of faith are challenged all the time as to whether they are actors, even when they are dressed in rochet and chimere in your Lordships' House.
I am aware of straying into other areas but, as one might say in the Navy, that is my part of ship. We need to know what the extra resources in the Budget are likely to produce and to learn lessons from logistical mistakes in the Iraq conflict, as well as elsewhere. Those of us, including me, who were doubtful about the wisdom of getting involved in that conflict, even on the worthy grounds of tempering US policy a little, need to realise that we have to start from where we are: post 9/11, post the initial part of conflict in Iraq and post the Madrid bombing.
For those who have studied the history of world civilisation in any depth, there are many lessons to be learnt, the most important of which is that there are always new forms of old dangers. Europe's 20th century collective memory is scarred by the two world wars. It is one of the reasons why we instinctively mistrust authority and historic institutions. We need a defence policy that is backed up by adequate defence resources in this new, wonderful, but at the same time, errant, world in which we find ourselves.
4.28 p.m.
Baroness Park of Monmouth: My Lords, as Sir Kevin Tebbit told the Defence Committee,
"British military forces are designed for serious military duties rather than simply peace-keeping".
By dint of immense professionalism and courage they performed magnificently in Iraq, but I suspect it was a close thing. Operation Fresco, which tied down 19,000 troops to cover the firemen's strike, preventing them from training and rotating, undoubtedly adversely affected our operations in Iraq and, as the Defence Committee said,
"could have undermined the Armed Forces' ability to sustain combat operations".
The Armed Forces are being more and more stretched to cover more and more tasks and a breaking point must come. It should not lie with them to make more cuts in an already overworked and under-resourced force, but with the Government who should refrain from adding to the demands placed upon them while still withholding the essential resources. Highly trained and highly motivated men and women should not be lightly discarded to save money; nor should the facilities needed such as training to make them effective.
The Chancellor, as the noble Lord, Lord King, has already reminded us, believes that we should support our Armed Forces to ensure and enhance our security.
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He rejects the idea of freezing the defence budget and cutting it in real terms as irresponsible and contrary to the national interest and proposes a real-terms increase in defence spending. On the face of it, those are very reassuring words. Why then is it widely feared that severe cuts throughout the forces are having to be considered? I suggest that too many commitments have been blithely agreed, especially in Europe, and the Army is being used far more than ever before as a useful political weapon in operations that do not necessarily serve the nation's defence interests.
While I believe the Government and, still more, the media have misjudged our national character in giving so much oxygen to terrorism by making such a public drama of the potential terrorist threat, steps do need to be taken to free whatever military resources—including naval forces—are judged necessary to prepare our defences. We have, after all, plenty of experience, thanks to the IRA—I never thought to thank them for anything. The man in the street only wants to feel reasonably confident that measures are being quietly taken to ensure that there are proper plans and enough resources in terms of intelligence, policing, urban planning and military resources. An important step to be taken at once is to ensure that the Armed Forces are able to do their prime job of defending the realm. That means freedom to train and to rotate and to work in conditions that encourage men and women to stay in the forces.
Add our NATO commitment and the fact that only we and the French—and in due course, perhaps, the Poles—have professional standing armies, and we must surely begin to wonder how many more hats we can expect our Armed Forces to wear and still be able to defend this country, especially against a very sophisticated terrorist threat. Russia, too, has not gone away. There are still considerable stocks of weapons of mass destruction vulnerable to theft or illicit sale. Despite much investment since 1991 by the EU to dispose of 40 tonnes of chemical weapons, for instance, some 35 tonnes have still not been disposed of.
Since 2000, the MoD has worked as part of the new Global Conflict Prevention Pool with the Foreign and Commonwealth Office and DfID. It is described as a joint approach to reducing conflict. Necessarily, our military strategy is thus more tied than ever to political and humanitarian goals. That sounds splendid, but it makes planning very difficult and can only dilute the military ethos and lead to defence needs being subordinated to non-military aims and thus to losing sight of the main priority, the defence of the realm. Part of that defence is to know our enemy—how he thinks, how he feels. Reviving MECAS would be a useful start.
I beg the Government to recognise that the armed services will no longer be able to carry out their vital tasks if they are spread too thin. Not least, they must not constantly be required to do the impossible in interventions which may not be directly relevant to our defence. Pride in their professionalism is an essential component of their success; it can only be blunted by perpetual overstretch. These men have families. Marriages are constantly eroded by the unreasonable demands being put upon husbands and fathers. That is a serious social injustice.

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Unfortunately, developments in the EU in the past four years and the many new tasks arising from the SDR doctrine of a defence strategy driven by foreign policy and humanitarian needs mean that our Army, as well as ensuring strategic national defence, both here and abroad, must be ready for global intervention, peacekeeping at several levels and special forces tasks as in Afghanistan and Sierra Leone.
It must fight as part of NATO, as part of the EU, as part of the UN, as the partner of a sophisticated high-tech ally, the US, and as the framework nation leading a so-called EU force where the only other professional army at present is the French. It must be equally capable of a high-tech war requiring interoperable skills and sophisticated command and control procedures with the need for rapid deployment to a rescue operation such as Sierra Leone or the recent deployment to Kosovo. The training for those two tasks is very different, as are the weapons and skills used. Asymmetric warfare and its new challenges will also call for very sophisticated training and flexibility. What chance have our Armed Forces of continuing to perform miracles if they are denied the resources and there are too many tasks?
At present, we are committed to five EU strategies. The first is the EU working with NATO. The second is the EU on its own, doing peacekeeping and the Petersberg tasks. The third is the EU conducting, under the new Solana strategy, early, rapid and robust intervention in other countries on a global basis before situations deteriorate or before terrorism or proliferation threatens. The EU expects to be able to conduct, and it says so in its strategy, several such operations simultaneously—with whose troops? State failure and regional conflict may be judged under the strategy to require preventive intervention by force of arms.
Fourthly, the EU and the UN have signed a formal protocol to co-operate on crisis management where they are to train and exercise together with interoperable troops and a common command and control structure. Fifthly, the EU and the African Union have agreed on the development by the African Union of a Peace Support Operation Facility. That turns out to be an African military force, to be funded by EU development money and monitored by DfID and other development officials. This African conflict prevention force would intervene in unstable situations, where necessary with the EU supplying logistics, communications support—both things that we are short of—transportation costs and per diem payment for the troops.
Finally, it is vital that our Armed Forces should be able to draw upon good intelligence. It is good news that the idea of a central European security agency is not to go further. Bilateral relations work and are trusted, in varying degrees, for the exchange of intelligence and another Europol would not be useful. I hope the Government will also resist any movement towards broadening access to intelligence in this country. We are facing a ruthless enemy which is not a national entity easily identified but a kind of amorphous jellyfish. That enemy must be kept
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guessing. We must never forget that whatever is said in public, in Parliament or elsewhere in a free and open society, will be heard too by our enemy.
4.37 p.m.
Lord Bramall: My Lords, I, too, am most grateful to the noble Lord, Lord King, for this debate at this crucial time, when our military commitments and challenges are manifestly so many and the pressure of stretch and finance on the Armed Forces still so great.
In the memory of many of the British public, the Armed Forces of the Crown have done everything that could be expected of them over a wide spectrum of operations. As a result, the country may well have become complacent and come to assume that they will always be successful in any task given them irrespective of those pressures to which they are continually subjected. This may prove a dangerous assumption. There is not much wrong with their organisation and speed of response for war fighting, peacekeeping or anti-terrorist operations. Indeed, the confidence and capability which comes from the first is invaluable in dealing with the second and also with the third, which of course depends as much on international police co-operation, on greatly improved intelligence, on highly selected land and air operations involving special forces and, as the noble Lord, Lord King, said, on solving the key diplomatic issues. But it is important to recall how marginal the circumstances have often been which have allowed the Armed Forces to be so successful.
Over the past quarter of a century, we have had for instance, the Falklands campaign, when I was Chief of the General Staff, which was embarked upon only just in time because many of the ships vital to that operation would have been dispensed with because of financial pressures and the consequent political decisions. In the first Gulf War, a great deal of cannibalisation of equipment and units from the three divisions in the then much stronger British Army of the Rhine was needed before one effective armoured division could be put into the field. The ground war then lasted only 100 hours so casualties were minimal and the logistic machine was not really tested.
In Bosnia our intervention was mostly of the peacekeeping variety with only an element of peace enforcement, while in Kosovo the commitment of our ground forces was dependent on Yugoslav compliance induced by 70 days of high level air bombardment, much of it provided by the Americans. One year ago in Iraq, the British joint forces were able to operate effectively in their own way in their own time without pressure on them to get to Baghdad quickly. Their area—Basra being much more homogeneous than Baghdad—was somewhat easier and the casualties therefore thankfully light, and the duration of the operation was again really too short to test any inherent weaknesses in equipment and the logistic chain, although some obvious ones did become apparent.
Against the background of it "just being all right on the night", there are four areas that give great cause for concern because they would increasingly affect

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performance. The first is manning where the quite unacceptable and unsustainable overstretch has led to disappointing retention and continued undermanning, cancelling much of the improvements on recruiting. I agree entirely with the noble Baroness, Lady Dean, that soldiers like to be actively employed, but there is nothing unusual for soldiers in combat units to have nine months' separation from their families in every year, and for operational tour intervals to be no more than a few months instead of the two years thought to be essential for proper leave, vital retraining and domestic harmony, and promised year after year by Ministers as being an aim that will be achieved "just round the corner".
Moreover, few combat units can now operate effectively in battle without some injection from other units and other cap badges and without reinforcement from the Territorial Army. This, of course, applies particularly to the medical services. It may be possible to reorganise combat units and the regimental system so that they are a bit more economical in organisation and movement costs, but whatever happens in Northern Ireland—that is by no means clear—whatever pressures there are on finance and whatever improvements in technology may be said to be in the pipeline, there must be no fewer units or less manpower allowed for in future plans. Otherwise, it will not be possible to provide a proper roulement for all the various commitments, both those manifestly current and those as yet unforeseen but no less likely if the Government are to continue a hectic policy of intervention operations, some of which are, of course, essential. Having enough boots on the ground and being ready to relieve those on the ground to maintain and sustain the commitment must be a high priority, and the noble Lord, Lord King, made the point so graphically.
I mentioned the TA which, despite a financial squeeze on training days, has proved its quality as the best reserve we have, and its ability to integrate with and reinforce regulars in emergency operations. Moreover, its partial mobilisation worked well. The fact may have to be faced, however, that for the immediate future this volunteer force may have partly "shot its bolt"—volunteers feeling that they have done their stuff and finding that on their return their jobs have been put at risk. That must be watched very carefully because, vital as the volunteers remain—not least because of the terrorist threat to this country—an undermanned Regular Army may not be able to rely on them to quite the same extent for operations overseas. If that flows into the medical services, medical cover could be in real trouble.
That brings me on to the third concern—the medical services. The centre of excellence on which the regeneration of the defence medical centres was based, and was boasted about, is now a bit of a nightmare. At Birmingham there is neither the space nor as yet any indication that the money will be provided to produce the facilities and the right esprit de corps, both so essential if this centre is to be the beacon of quality and example which will encourage middle peace doctors
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and surgeons to stay on in the services. Certainly a great deal more money will have to be spent on the centre if it is not to fail. If it fails, we shall not have any regular medical services to speak of. Therefore, I should like an assurance from the Minister that the necessary money will be provided.
Shortages in vital equipment and weaknesses in the logistic chain still exist, particularly in the signals field and ground to air communications for which in Iraq the British Armed Forces were almost entirely dependent on those provided by the US Marine Corps. Other shortages, of course, have been given rather more prominence in the press.
To conclude, I believe that the public should be made aware of all this because unless the Ministry of Defence tackles these things with a high degree of urgency instead of, for political reasons, playing them down or even denying that they exist, there is a real risk that the next time the Armed Forces are ordered to take part in medium or large scale intervention operations, it will end in the sort of military disaster that we have avoided for the past quarter of a century. When I say, "tackling", it will, of course, mean getting the Prime Minister's backing to obtain the necessary funding from the Treasury on which all these improvements may ultimately depend. Much play is again being made about a marginal growth in the defence budget, but, as we have heard, this is probably not new money, and in any case is almost certainly offset by the money that the Treasury is now demanding back as a result of a new accounting system forced on to the MoD to its disadvantage.
During the previous defence debate I gave the Minister every opportunity to deny my point that in practice there would be less and not more in cash flow terms for vote holders in the coming years to end the serious shortcomings. Noble Lords may think it was significant that he decided not to do so. After all they have done, and continue to do, at the drop of a hat to support this country's foreign policy, I believe that the Armed Forces deserve better. I just hope that the British people will remember this.
4.47 p.m.
Baroness Sharples: My Lords, I, too, wish to thank my noble friend for initiating today's debate. I very much welcome the noble Baroness, Lady Dean, as the new chairman of the All-Party Defence Group in your Lordships' House. I am sure that she will be a great success.
With other Members of your Lordships' All-Party Defence Group, I visited the Defence Logistics Organisation near Bath a year before the exercise in Oman. At that time the organisation appeared ready—or it told us that it was—for the problems that obviously lay ahead. The aim of the exercise was obviously to expose any flaws in the organisation. As we were told following the exercise, there had indeed been problems with certain equipment. So when the war in Iraq started, had the initial difficulties and mistakes been rectified? It appears—other noble Lords who have spoken have mentioned this—that in many instances they had not.

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Reports from those actually fighting make disturbing reading. We have certainly seen a lot about this in the press, and I do not think that it has been exaggerated. I can only pray that in any future conflicts, men and women can rely on those behind them not to let them down.
The Defence Logistics Organisation is vast, employing some 28,000 people. Each of the divisions within that organisation is charged with a distinct task. I shall not elaborate on that. Is its strategic goal to reduce output costs by 20 per cent before the end of 2006 realistic if it is to provide a truly first-class service to the front line which is its objective and which is necessary for it to do? To have set up the DLO combining the three services must have been the right decision at the time. It was set up only in 2000, so it is not very long ago. One realises that the initial difficulties must have been considerable. Were the initial savings of £2.8 billion necessary and were they a factor in the lack of certain equipment in Iraq?
Restructuring now undertaken shows that lessons have indeed been learnt, and I hope that they will be truly learnt. The approach now taken seems realistic. Yesterday evening, the group was lucky enough to be addressed by Sir Alan West, who was encouragingly upbeat and optimistic about the future of Iraq, which he had recently visited. Like many of us he wondered why so few of the press presented a similar view.
My worries are genuine, and many noble Lords feel the same way; many of the public feel the same way. I sincerely hope that when the Minister replies, he can honestly—I mean honestly—reassure us on the various concerns expressed.
4.51 p.m.
Lord Lyell: My Lords, noble Lords consulting the list may wonder why I am batting before two noble and gallant Lords. The Minister may come to understand three wicked words—"Just in time"—to which I shall refer, and I am afraid that the problem is due to the slight disruption of time. I am one of those multi-role combat Peers, and I shall have another duty in your Lordships' Chamber before the close of the debate. That is why I am very grateful to the speakers who have allowed me to make a few short comments in support of my noble friend Lord King. He has enormous experience of defence, of course, not least against terrorism. He was a fine boss when I was last in the employ of the government in Northern Ireland. He has enormous experience; we heard of a great deal of it today.
As my noble friend Lady Sharples said, we are extremely lucky to have the noble Baroness, Lady Dean, as the chairman of the House of Lords defence group. It is 31 years since I made my first visit with it. Over the years, I must have made upwards of 50 separate journeys, some far, some near, but on each and every journey one message was hammered home to me: it was the men and women of the defence forces that made them the best in the world. Indeed, that was brought home very shrewdly by the noble and gallant Lord, Lord Bramall.
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I am one of the last conscripts in the British Army. I think that there are four conscripts speaking today. My noble friend Lord Selsdon asked me this morning what my record and regiment were. He may have something to say on the subject; I must cut my remarks fairly short. In three months, May, June and July 1957, a well known sergeant in the Coldstream Guards known as "Kiwi"—after the boot polish, not the creature—insisted on the very highest standards. He turned youths of 17 and 18 such as myself into soldiers. I have never forgotten that. We find noble and gallant Lords, senior officers and every kind of distinguished man and woman serving in the defence forces. What someone such as myself considers important first of all, whether we are talking about men or women, is that they be soldiers—they should not start dreaming about being a leader or moving up; they must do their job. That is the strength of the British defence forces.
Since the 1950s and even the 1960s, the British defence forces have become all-volunteer. As has been stressed by my noble friend Lady Park and, above all, the noble and gallant Lord, Lord Braman, overstretch now meshes dreadfully with domestic life. The men and women in the defence forces are not like African or Mexican warriors, leading a celibate and delicate life until 35 or 40, whereupon they retire to domestic life. Our volunteers want to lead normal lives. I worry a little when I hear gentle tales suggesting that there are occasionally some difficulties in filling all the vacancies on the non-commissioned officers' course in Brecon for the future leaders in infantry tactics.
Indeed, the noble and gallant Lord, Lord Bramall, stressed the appalling problem of overstretch. We always hear—undoubtedly we shall hear it again tonight; I point out to my noble friend Lord King that we have heard it from noble Lords of all persuasions—that the average gap between tours of duty is two years. Of course it is not. First, we have to deal with cross-posting, filling up other regiments. Special duties in special areas may cover many roles. Also, there is the length of training for those separate and quite often new tasks. All that reduces the two-year gap. It is nothing like that. My noble friend Lady Sharples referred to the First Sea Lord. He pointed out that, even in the Royal Navy, overstretch and retention is becoming a little problem.
It is clear that the defence forces cannot perform their full duties without marvellous help from the reserves. I have some figures from 2003. My noble friend Lord Luke and the noble Lord, Lord Brett, came with us to Cyprus. One tenth of the British battalion on the blue line in Nicosia were reservists. In Kosovo two years ago when the noble Earl, Lord Attlee, came with me, 37 of 115 of the personnel at the headquarters of the multinational brigade were reservists. Of course, that is just the headquarters; the figure was 8 per cent for the total. The noble and gallant Lord, Lord Braman, pointed out that the proportion in the Defence Medical Services is much higher. Without the reserves it would be in far greater difficulties, and the difficulties are bad enough as it is.

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I am sure that the Minister looks after equipment and what I think he calls procurement. Priorities are obviously the name of the game, and I am sure that he, his entire department and his sector will be very professional. However, I hope that the first priority every single day, week and month for him, his department and the Secretary of State would be what I call the kit—the body armour and NBC kit needed by soldiers and defence forces. We might have had slightly distorted reports in the press, but there can surely be no excuse for problems over body armour. The second priority is ammunition. We have had reports—ever so discreetly—that units were occasionally short of ammunition. Then there is the question of food, drink and all the tents, as was referred to by the noble and gallant Lord, Lord Bramall.
After I left the British Army, I was trained to be an accountant, so I am very well aware of what Americans call inventory and we call stock. My noble friend Lord King referred to the Select Committee on Defence in another place. The Minister would be knocked from here to heaven and back if it found warehouses full of obsolete kit from the 1950s and 1970s, so he is squeezed delicately. He does a decent job, and I congratulate him, the Ministry of Defence and all those who made Operation TELIC such a success. Many things went right, perhaps by luck, but I suggest that there was some good judgment.
I have a little motto: "Every little helps". That is a rather naughty jingle, but it is very true. Every improvement in kit, weaponry, perhaps avionics—that was spoken about by the noble and gallant Lord, Lord Craig of Radley—and families and welfare keeps the men and women of our defence forces in the place where they should be, which is being the best. The right kit must arrive on time, the forces must be trained to use it and, above all, the Minister must take on board the question of overstretch. Indeed, it was stressed to us last night that Operation FRESCO pushed one section of the Armed Forces to a very critical level of margin, given the manpower and duties that were expanding all over the world.
I hope that the Minister can take that on board. I am very grateful to my noble friend for initiating the debate and to other noble Lords. I for one want to thank every man and woman in the forces today, tomorrow and every day. They do not have such a comfortable life as we do, on our soft leather Benches; they work and work for us all.
5 p.m.
Lord Boyce: My Lords, let me add to others before me my own welcome to the initiative of the noble Lord, Lord King, in refocusing the attention of this House on defence. Given that, as we speak this afternoon, there are some 33,000-plus soldiers, sailors and airmen scattered around the world on various operational duties—duties that are all arduous and many dangerous, but all being conducted with exemplary professionalism—defence is certainly a subject that deserves a higher profile than it
726 ordinarily gets, especially as the tempo of military activity is hardly slowing, as our deployment to Kosovo showed last week.
We have a defence policy which encourages that high tempo, with the Armed Forces being enjoined to develop their force planning such that it is able to cope with multiple concurrent small to medium sized operations—including contributing to countering terrorism—on a global basis. I do not have a particular problem with that. But agility, mobility, responsiveness with high levels of readiness, and the ability to shift information fast and act on it with minimal delay, will be key features needed to enable that policy. We are also encouraged to believe that the future equipment programme is being shaped to accommodate those capabilities, or improve them if they already exist, especially in the development of technologies using network techniques.
But, we need to assess carefully how the change to the new way of doing business will be managed. We absolutely must be wary of getting rid of old systems until the new ones are adopted in good working order—especially if the aspirational specification has been diluted, or brought in incrementally for reasons of economy. We must remember that however clever the new technology, it does not allow a unit to be in two places at the same time. We will want to keep in mind that much of the future hi-tech that is given so much hype is not suited for what goes on operationally for the vast majority of the time—that is to say, mundane, albeit important, low intensity peace keeping tasks which do not require super hi-tech capabilities to conduct.
I shall give a couple of examples which, needless to say, have a maritime flavour. I am sure that the Royal Navy will be delighted to have further evidence that it has such a champion in the shape of the right reverend Prelate the Bishop of Portsmouth, following his intervention. The future carrier should be an archetype of our new technology—a system with global reach that will have a potent, self-contained and sustainable offensive capability, providing presence, deterrence and coercion independent of host nation support. It will be a positive exemplar of true joint flexibility across the air and maritime elements. But that will be in danger of not happening if the concept starts to be nibbled away at for affordability reasons. We also need to ensure that our legacy systems, both hulls and aircraft, are kept in good operational order to cover any gap created by project drift which, I fear, is not an unlikely scenario. There are, of course, analogies to my carrier example in land and air systems, which time does not allow me to describe.
My other example concerns being in two places at a time. The destroyer/frigate force provides a striking example of effective war fighting elements—the Type 45 destroyer will be a world class warship—which are amenable and at the high intensity end of the war fighting spectrum, to the attraction of network enabled capability. But the highly mobile and flexible destroyer or frigate is also the most versatile of all platforms and can be seen employed across the full range of operations. They are engaged in 18 of our 21 military tasks, from high intensity war fighting to peace support, humanitarian operations,

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maritime interdiction, policing and supporting Britain's overseas trade and diplomatic interests. That force provides a means of flexible, political and military response to developing crises, remaining ready for operations in international waters for extended periods with no requirement for a logistic footprint ashore.
In low intensity tasks that "presence" provides a serious, effects-based contribution and it is one for which numbers are required. I am afraid that the new defence policy mantra of "numbers are not important", alluded to by the noble Lord, Lord King, is very glib in the context of peacekeeping operations, unless the Government intend to drive our people even harder or dramatically reduce the number of our commitments.
That brings me to the most important of the attributes called for by our defence policy—the resilience, good will and morale of our Armed Forces. I believe that those are in serious jeopardy. Our commitments today exceed the currently laid down defence planning assumptions and they have done so since 2001. The stretch caused by that—for example, with 30 per cent of the trained Army deployed on or committed to operations—is demanding, to say the least.
However, despite that, our solders, sailors and airmen have totally committed themselves to whatever has been demanded of them, with huge success; and they deserve recognition and reward. But I fear that they may think that we are going in the opposite direction. There is the £1 billion to £1.5 billion that it is said the Treasury wishes to claw back from the settlement that defence received in 2002, a point made by the noble Baroness, Lady Dean. For this year and next year, with much of the budget already committed to the procurement programmes, uncommitted money can be found only from the front line. So raids on training, quality of life improvements and so on have already started. I should be grateful if the Minister would reassure the House that no such raids are taking place, notwithstanding the impression currently held by those in the field.
If that is true, the message being sent to our hard worked Armed Forces hardly bears thinking about. Furthermore, if that raiding of money flows into future years with certain capabilities being cut, thus denying the Armed Forces what they have been told they will receive in order to be up with the best in the 21st century, the effect on their confidence in those who sit at the top of defence will not be helpful.
In short, it does not require much imagination to conjure up the impact that the combination of short-term pain and medium-term disillusionment will have on those cornerstone attributes that I mentioned—resilience, good will and morale. In summary, I am concerned that our defence policy does not give sufficient attention to the low intensity and ordinary tasks which occupy our forces for 90 per cent of their time. I fear that what is expected of our soldiers, sailors and airmen who have to implement this policy of rising tempo will not be matched by sufficient recognition, in
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terms of resource, of what the Armed Forces do for this country and the Secretary of State's comment in our House Magazine last week that,
"They deserve nothing less",
in the context of the services being properly resourced, could sound hollow to those at the coal face where our people could be left wondering, "Less than what?".
5.8 p.m.
Lord Marlesford: My Lords, I pay tribute to my noble friend Lord King for giving us the chance to have a debate on defence. It is a debate in which we have no fewer than four former Chiefs of the Defence Staff—one from the Royal Navy, two from the Army and one from the Royal Air Force. That is indeed a major contribution to the debate. There is a particular point for the Minister to deal with when he replies; it was made first by my noble friend Lord King, and echoed by the noble and gallant Lord, Lord Bramall, and the noble and gallant Lord who has just spoken. It is the matter of defence expenditure. I recognise that the Minister will not be able to answer all of the points that have been raised in a debate such as this. But it is crucial that he gives a clear indication of the expenditure that will be available for defence in the coming two years. Is there to be the increase which was implied in the Chancellor's Budget Statement? We simply cannot play around with words.
It is disappointing that only one Member from the Labour Benches is speaking today. Although the noble Baroness, Lady Dean, is not now in her place, she is extremely welcome in taking an active interest in defence matters. However, I do not believe the Chief Whip's comment that there are no more Labour speakers in the debate today because everyone is so satisfied. That cannot be true. The subject is much too important for that explanation. I hope that more Members on the Labour Benches will take a real interest in defence.
On expenditure, the role of Trident has not been mentioned. It takes a significant proportion of the defence budget and there are those who might say, "That is a relic of the Cold War and part of the defence which is not relevant today". I beg to differ. With certain developments taking place in certain parts of the world, it is right and proper that we should maintain the Trident capability. It has probably as fine a deterrent capability as any and it is one that we know will work.
I want to talk primarily about terrorism. A factor not always taken on board is that the difference between a war on terrorism and a conventional war is that in terrorism one is not fighting against a nation state. The enemy is much more amorphous. That is one of the reasons the United Nations has had such difficulties. Indeed, most of our international arrangements and obligations and the framework of international law are based on the concept of exchanges and wars between nation states. We are now fighting something which in no way is a nation state.
Primarily, we are fighting militant Islamic fundamentalists. My noble friend was right to point out what a long time they have been a threat. Osama bin

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Laden founded MAK—the Arab volunteer force to fight the Soviets in Afghanistan—in February 1980. It became Al'Qaeda, which means "The Base", in 1988. As my noble friend pointed out, it is 10 years—February 1993—since the first Al'Qaeda attack on the World Trade Centre. Bin Laden published his infamous and chilling declaration of war on the West in September 1996. That was a long time ago. Until 9/11 we had a period of phoney war, but during all that time Al'Qaeda was inexorably gaining strength and preparing. After all, 9/11, whatever else one thinks about, was an astonishing achievement in purely logistical terms.
How are we to fight terrorism? Clearly, it has to be a combined operation with the military forces. Secondly, we want to try to remove the causes of terrorism. The greatest cause is the Palestine problem. We have to drain the reservoir of hatred which nourishes this form of terrorism. Like most noble Lords, I too believe that the two-state solution is the only practical one we can contemplate. The chances of that happening—one gets more depressed rather than encouraged—must largely depend on the United States' influence on Israel. However, Britain and France have more expertise on what makes the Middle East tick than any other part of the world.
In fighting terrorism, we must constantly weigh the loss or erosion of civil liberties against the measures that we need to take to protect our people and our way of life against the threat of a theocratic state which at best would be like Iran and at worst like Afghanistan under the Taliban.
I was pleased that the noble Lord, Lord Bradshaw, speaking from the Liberal Democrat Benches, specifically referred to the extent to which inevitably and with great reluctance we have to sacrifice or modify some of our civil liberties in order to fight the war against terrorism. There are those who say that if we forgo civil liberties in the war against terrorism, we are in effect losing that war. I do not accept that argument. I believe that we must make sacrifices at each level.
I want now briefly to turn to the need to introduce into this country a much better method of knowing who is who. I refer not to identity cards as such, but to the need for everyone to have a number linked biometrically to a central record. The card is merely a method of recording it. Arguments have been put forward against such a system on grounds of civil liberties. I do not believe that those arguments are sufficient to overcome the urgent need.
There appears to be a battle inside the Cabinet, with the Home Secretary in favour of the scheme, while the press suggest that groups of other Ministers are forming up against him. I believe that we need such a system and that we must also soon reform our passport system, which is most insecure. Noble Lords may have noticed that since the Madrid bombing, on arriving at Heathrow you queue up and someone actually looks at your passport and swipes it. That is new and it is astonishing that during the period of phoney war no such thing was done
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Some months ago, I had a conversation with representatives of the Passport Office and it convinced me that we have a most insecure passport system. All these proposals go together and I hope that the Government will pay serious attention to them. And in this House we can play our part by always wearing—as we are asked to do—our own passes. I see the noble and gallant Lord, Lord Bramall, and a former Commissioner of the Metropolitan Police are wearing their photo passes and we would all do well to follow their example.
Finally, the economic cost of countering terrorism is considerable and significant in national terms. We must all pay that cost. It is much lower than the cost of successful terrorist operations against us.
5.18 p.m.
Lord Guthrie of Craigiebank: My Lords, I, too, am grateful to the noble Lord, Lord King, for initiating the debate. I have been asked by my noble and gallant friend Lord Inge, who is in the United States with the Butler inquiry, to say that he much regrets that he is unable to attend this important and timely debate. He wishes to be associated with what I am about to say.
Since I have been a Member of your Lordships' House, I have on numerous occasions heard many noble Lords rightly praise the performance of the Armed Forces. Whether it has been in Bosnia, Croatia, Kosovo, Northern Ireland, Afghanistan or Iraq, the services have risen to the demands of the occasion. Many people in this country and overseas now take their success for granted. Like the noble and gallant Lord, Lord Bramall, I believe that to be very dangerous indeed.
The Iraq war took just three weeks and the British forces were spectacularly successful but we must clearly understand that we were fortunate. If the Iraqis had fought better and if we had had to fight in the towns and the war had been prolonged, in my professional judgment the Armed Forces could have found themselves in considerable difficulty. We are right to praise the services, but we need to recognise that all is not well and that a time may come when they could fail. We cannot continue to take their achievements for granted, nor can we continue to take the risks with them that we do. There is much to be worried about.
At present, because of financial restraints and continuing operational commitments, the services are not able to train to the necessary standards. Too many training exercises, particularly overseas, have had to be cancelled or curtailed for both the regular and the Reserve Forces. The services are being pulled in too many directions. Training is expensive but unless it happens we put servicemen and servicewomen in unnecessary danger.
A major reason for the success of the Gulf War was that the services had trained together in Oman on an exercise which, for financial reasons, many in Whitehall had tried to cancel. The shortcomings of our Challenger 2 tank were detected on an exercise in Oman rather than later in the Iraq war. We are now hazarding future

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operations as training opportunities are reduced and many members of the Armed Forces could be committed to operations less well prepared than they need to be.
Despite the Chancellor's reassurances, there remains considerable scepticism, indeed, cynicism, in the services as to what financial help their overstretched budget will receive. Too often in the recent past, budget increases which had been trumpeted have had so many conditions imposed upon them that they have made very little difference to the services. On two previous occasions I have asked the Minister in this House whether the rumours were true that over £1 billion in savings were to be made over the next four years. I should be grateful if my question could be answered tonight.
If large savings are to be made and new money will not be available, very difficult decisions must be made and not just funked. It is quite right for priorities to change, and we need to move on from some of the decisions taken by the Strategic Defence Review, which at that time were appropriate. Defence cannot stand still and, now that the threat has changed, we cannot afford to spend a penny more than we have to on equipment which is unlikely to be used in the foreseeable future.
Resources will need to be rebalanced and money directed to where it is most needed. That will be a very difficult exercise. Some will benefit and others will not, but unless this happens we could end up by being fairly ordinary everywhere. Equal misery for all three services is not the answer, but too often has been in the past.
I pay tribute to the reserves, whose contributions to operations over the past few years has been crucial. However, we have to be very careful in continually using them to the degree they have been used and are being used. They are not in existence just to get the regulars off the hook when shortfalls appear and for the Ministry of Defence to get personnel on the cheap. Some members of the Territorial Army relish their many deployments but others do not expect to commit so much time, neither do their employers expect that. It would be very sad if overuse led to many of the excellent young people who are reservists leaving the services. That seems to be a trend which may be emerging.
I was in the Army for 44 years. My experience and instinct tells me that we are already in very difficult times, perhaps as difficult as any time since World War II. The only time of similar concern that I can recall was the late 1970s when it became necessary for a new government to rescue defence from ever increasing decline. But today I judge the situation to be far more serious than it was then. The Armed Forces are already very much smaller than they were in the 1970s. The world is more unpredictable. Sudden danger is likely to be with us for many years. The noble Lord, Lord King, has clearly outlined what we are up against. How long will the services be involved in Iraq and Afghanistan? How often will soldiers be rushed back to places such as Kosovo?
Today the risks are very high. Soldiers are being killed in action and attacked daily in Iraq. I suggest that the Government have to do more than pay lip
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service to the loyalty of the Armed Forces. We need to recognise just how serious the situation is and take appropriate action.
5.26 p.m.
Lord Selsdon: My Lords, I am grateful to my Light Infantry friend, the noble Lord, Lord King, for the speed at which he moved from one subject to another, fully informed, and to the Minister for having given priority to the Royal Navy.
I questioned earlier why no Back-Benchers on the Minister's side other than the chairman of our Defence Committee were to speak in the debate and was told that that was because the Minister had the competence to speak about any subject.
I should like him to know that he is among friends. We have here the Life Guards, the Coldstream Guards—I have them in the right order because I have been well briefed—the Scots Guards, the Welsh Guards, the King's African Rifles, the Royal Green Jackets, and a Hunter and Meteor pilot, who is not in his place. He is probably flying around somewhere else. We have too, naturally, a submariner, as noble Lords would expect and, on the Liberal Democrat Benches, apart from a policeman a brass bandsman—it is a pity that there are not more Liberal Democrats speaking in this debate—and, on their Front Bench, a member of the TA. On the RAF side, apart from a pilot, on my left we have a leading aircraft woman. We have a FANY masquerading as an SOE, and an SIS. He probably trained the father of the right reverend Prelate the Bishop of Portsmouth. Against all of that we have a knowledge which is quite intriguing. However, we do not have the Irish presence.
I was in the Navy and was brought up to address your Lordships on defence matters by recalling Lord "Jackie" Fisher and that the role of the British Army should be that of a projectile to be fired by the British Navy. The role of the Navy is to deliver our forces in the right place at the right time. Last Sunday I found myself in Munster, trying to help it in its challenge to become European City of Culture. As your Lordships will know, 92 per cent of that city was destroyed. They are very keen down there on the British Forces. I nipped down to the barracks to try to find out who was serving there because that information was not available on the Internet.
It was a windy day. I looked in, leaving the car outside so that they would not think I was a terrorist, and someone asked, "Who are you?" I handed over my House of Lords pass and within a moment someone said, "My Lord, would you like to join in today? It's Oates Sunday."
Many noble Lords may not know that, if you have been in the Navy, the only thing that you can remember is your service number—mine is PJ963040. I shall now ask my noble friend Lord Marlesford, who says that he believes in numbers, whether he happens to remember his service number. My noble friend Lord Lyell can remember his. It is the one number that we can remember better than any other, including our bank code, thus showing the discipline that we all underwent.

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I did not dare admit that I did not know what Oates Sunday was. Only when I returned here and asked Black Rod and a Clerk did I find out that it is named after a man who gave his life for his friends, Captain Oates. As I was dealing with a cavalry regiment, I had thought that perhaps it related to feeding horses on a particular day, but I was told that "Oates Day" went with "Paddy's Day". Seeing the emerald green opposite, I recall that, although I am not a Catholic, I was on Catholic territory. A band was playing; the wind was blowing; the ladies' hats were flying; and men were holding down the tents. Looking at the background, one realised that one was in an Army community not just of husbands and wives but also of children. They were dressed in cub scout uniform, washing the wheels of cars for a small amount—in the green territory of Germany you are not allowed to wash your car with a hose, except in a washery, which recycles water.
I took the chance to ask those present what I might say today. I suppose that they will not mind my quoting them. The senior officer said, "Tell them that our men would fight in socks and jockstraps, if it were necessary". It is becoming increasingly necessary as we realise that the equipment and resources that we need to keep our men are no longer there. I shall not criticise; I shall read from Armed Forces personnel note SN/1A/2182 of 10 October 2003:
"Fundamental to our ability to field Armed Forces which are among the best in the world is the quality of the volunteers who make up those forces".
It continues:
"The SDR defines overstretch as 'trying to do too much with too little manpower'".
Manpower without personal equipment loses pride. My noble friend Lord Lyell referred to the absence of tenting, equipment, boots and personal facilities, despite long-term spending on carriers et cetera. When fighting terrorism we must equip our men with the best possible personal equipment. It is not a terribly expensive exercise.
In the days when our men were three to one, you should have heard the words spoken in the souk, the bazaars and mosques in the countries of the Middle East and others where I spent time. People there had a respect for these men. Moreover, those directly or indirectly associated with terrorist activities or suchlike advised their supporters and followers to steer clear of the British. They said that, should you confront the British, your life expectancy would be half what it would be if you confronted the Americans or others, but should you be honest and uninvolved in such nefarious activities, you will be protected and looked after as a friend.
I shall now raise some of my concerns. Why did we disband the Iraqi army? In the old days we took over other people's armies. At one time we did that in East Germany, disbanding the officer or political class and taking over. The Iraqi army did exactly what it was told. Looking around the world at present, we might try to bring the military of some of these countries into a group that might fight terrorism.
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We now come to what I was told by philosophers were the three Ps—not public/private partnerships. The first is psychology: the knowledge of the psyche and the ability to get behind and understand the minds of those planning or proposing such activities. The second is philosophy. I used to think that philosophy was love of knowledge, but it is the love of wisdom, which one cannot have without knowledge and intelligence. The third is politics: understanding the reasons that people seek to do such things. Possibly, as has been said, international media attention may well promote an idea.
In our Armed Forces and among our own expatriates around the world, we have eyes, noses and ears, but we have failed so far to explain the cause and root of terrorism. We have failed to explain the religion behind it. It is not a religious war. When I have spoken to many in the Arab world, the Islamic world and other cultures, I have found that they, too, share the horror of the activities that take place. Even the Koran—I am sorry, I should not say "even"—says:
"He who kills shall surely himself be killed".
We should concentrate on recruiting and equipping people to fight or to combat this particular evil, which has been around for many, many years. Noble Lords will remember the Mahdi and the Emir of Bokhara—throughout this world we have had problems. But, for the first time ever, we have by far the best personnel in military service in the world. If we were only to equip them properly and add to their numbers, I believe that we would have nothing to fear.
5.35 p.m.
Lord Redesdale: My Lords, like a number of noble Lords, I congratulate the Minister on his Herculean efforts to make it from one end of the country to the other to be with us today. I also thank the noble Lord, Lord King, for introducing the debate. I commend him on introducing a debate without falling into the trap of talking about spending, which seems the subject closest to our hearts in such debates. I apologise for falling immediately into that trap myself.
I know that in his speech later in the debate the noble Lord, Lord Astor, will take an interesting position on spending. It has been the position of his Benches to talk about an increase in spending, a message that does not seem to have percolated down to another place, given that the noble Lord's right honourable friend in another place Oliver Letwin talked about cuts in the Ministry of Defence budget.
On that basis, we welcome the Chancellor's talk of increasing the money available to the Ministry of Defence. However, that must be taken with a pinch of salt, because no budget can rest solely on the claims made during the Budget speech and in interviews given afterwards. As the noble and gallant Lord, Lord Boyce, and the noble Baroness, Lady Dean, pointed out, there are significant areas of uncertainty over certain spending commitments. This will test whether the rise in the MoD's budget will be a significant increase above inflation, or whether there will be a rise at all.
In the present climate the Liberal Democrats would try to avoid cuts to the MoD budget. In responding to a Question on carriers recently, the Minister asked me a

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rhetorical question—it must have been rhetorical because I could not answer at that time—on our position. I shall send the Minister the Liberal Democrats' position on defence because he was so interested in it. As many noble Lords have said, it is very difficult to set a position on how one would deal with spending commitments. As has been pointed out, a massive procurement programme is under way at present. It appears to face real problems, especially in 2008–12. If there are problems of overrun and cost escalation, any figures put down on paper now could look farcical.
However, one area in which we believe that there could be cost savings is the Eurofighter/Typhoon. It would be our intention to cut back on the third tranche of the Eurofighter. Before the Minister attacks me on that point, I wish to ask him a question, as the Government appear to have their own considerations about Eurofighter. There has been talk of possible savings of £2 billion to £5 billion if a cutback took place. Perhaps the Minister could tell us the Government's position on the third tranche of Eurofighter. I agree with the noble and gallant Lord, Lord Craig, who is not in his place at present, that it is a fabulous aircraft. I have seen it doing unbelievable feats at air shows. However, one must ask whether a weapons system designed to meet Cold War capabilities, and whose only comparable aircraft in the air are American, is needed at present.
Have there been any further developments in the RAF air-to-air refuelling contract? There seem to be a number of question marks hanging over that. The procurement budget has the possibility of making all figures look interesting. Who will be the prime contractor for the new aircraft carriers that are on order? Although it is a joint contract between BAe and Furness, there is an indication that a new prime contractor, possibly IBM, could be taking over as lead contractor. That would be of' interest to the House.
One area of spending that will be interesting is whether the Government will consider cutting the number of troops on the ground to meet procurement budgets. The noble and gallant Lord, Lord Bramall, mentioned the issue of troops on the ground. It is important at the moment, with so many commitments, and particularly in the past week the commitment in Kosovo, that we do not reduce the number of troops on the ground. Their professionalism and expertise will be incredibly important in the Balkans to stop that situation disintegrating.
Quality of life is always cut when looking at cost savings, a point mentioned by a number of noble Lords. It would be tempting to start talking about overstretch and commitment, but there is a real issue over quality of life and time spent away. In the past the issue was the quality of accommodation. The issue was brought home to me by a friend who has recently left the Armed Forces. He said, "It is easy to improve the quality of life for the Armed Forces—you quit". That obviously has cost implications in losing experienced personnel, the loss of those skills and the cost of those training skills.
Another area that has been raised this afternoon is logistics and asset tracking, as the noble Baroness, Lady Sharples, pointed out. I was particularly concerned
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by television reports about equipment, especially ammunition. I remember training in infantry skills on my way to Sandhurst, in the TA. I was only in the REME—I do not know if that counts, according to the noble Lord, Lord Selsdon, as being the Army. I admit that I was never a very good infantry soldier. One of the things that was drilled into us at great length was winning the fire fight. The reports coming back from the Gulf of some soldiers going into action with only five rounds of ammunition make a mockery of one of the basic tenets of infantry doctrine. I very much hope—I know that this is an area of concern, as it was raised by the Select Committee and the NAO report—that the Government will look again at this area, especially the provision of ammunition.
I have left myself very little time to deal with the massive area of terrorism, an area with which my noble friend Lord Bradshaw and the noble Lord, Lord Marlesford, dealt. The White Paper set out the formation of the Civil Contingency Reaction Force. The Minister said that this has reached its operational strength. Its operational strength envisages 500 troops per area. Considering the Madrid bombings, is 500 troops considered a sufficient number of troops per area? I believe that London is one area. Have they the equipment and training to meet the task set out for them? Many reports on our ability to deal with such disasters have suggested that we do not have the equipment, personnel, or training to deal with a large-scale disaster.
I did wish to look at terrorism. We must be careful about our terminology. The term "war on terror" and the term "axis of evil", which is now somewhat redundant, have caused a great deal of unrest and unhappiness in areas in the Middle East, which I travel to reasonably frequently. The effect should not be underestimated. Those people carrying out the bombings, especially suicide bombings, are those who are most easily influenced by the terminology that we use. If we start talking about a "war on terror", that delineates one side against another. This is a presidential election year, and the talk from the United States on terrorism will gear up. Many such comments feed in to the unhappiness that is felt by many people in Iraq. Our soldiers are doing a fantastic job in Iraq, but the recent attack on our soldiers, and the comments that were shouted at them, show that Iraq could well be a breeding ground for future unhappiness and those who would sign up to the cause of the terrorists.
This has been an important debate. Although we are critical of the Minister, he has tried extremely hard to meet many of the problems that are set out. I echo the words of the noble Lord, Lord Lyell, that we thoroughly appreciate all the efforts made by the Armed Forces.
5.47 p.m.
Lord Astor of Hever: My Lords, I, too, thank my noble friend Lord King of Bridgwater for initiating this important debate. I congratulate him on a powerful and thought-provoking speech. With such knowledgeable and experienced speakers, this debate was always going to be of the highest quality. I would also like to thank the Minister for making such an effort to come here tonight from Faslane. I hope that he enjoyed his visit there as much as I did.

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I am sure that the House will join me in expressing our continuing admiration and appreciation of our service men and women serving in Iraq and elsewhere, particularly the reserves. This is an appropriate time to be debating the defence of the realm. It is imperative that at this time we do not become so fixated on the war on terror that we neglect the need to look after our Armed Forces. We must look after service men and women, whether regular or reservist; look after the families, because their support underpins the morale of our service men and women; and look after the procurement programmes and logistics, because without the right equipment we cannot expect to meet the security challenges of the years ahead.
This is a time when the Government must prove their competence to manage all these things, not just through their words, but through their actions. We on these Benches were consistent in our support for the Government and for our Armed Forces during the war in Iraq. However, it is our duty as Her Majesty's Opposition to probe and question government policy. My noble friend Baroness Park of Monmouth rightly said that our Armed Forces are spread too thin and are more and more stretched. This was reinforced in an excellent speech by the noble and gallant Lord, Lord Bramall. They cannot be turned on and off at the whim of government. They must be given the time to recruit, train, and see their families, if we are to retain the most skilled and experienced servicemen, particularly when servicemen are being approached for security work in Iraq at the rate of £100,000 plus a year, tax free.
As my noble friend Lord Selsdon said, our Armed Forces must be given the best possible equipment. The operational demands placed on the Armed Forces have meant that hundreds of training exercises have been cancelled. If soldiers, sailors and airmen do not train enough, they stop being combat-ready. That stark truth was pointed out by the noble and gallant Lord, Lord Guthrie of Craigiebank. I agree also with the noble and gallant Lord's observations about the reserves.
The noble Baroness, Lady Dean of Thornton-le-Fylde, gave an excellent speech on personnel. I congratulate her on her election as chairman of the Lords All-Party Defence Group. She and my noble friend Lord Lyell have worked hard to draw up a full and interesting programme, and I hope that as many noble Lords as possible will support them and the group. My noble friends Lady Sharples and Lord Lyell mentioned the excellent speech given to the group last night by the First Sea Lord.
I agree wholeheartedly with the noble and gallant Lord, Lord Boyce, that numbers are important. The hearts and minds of the local population cannot be secured with network-enabled weapons systems; it can be done only with troops on the ground. The situation in Basra would be much easier if more soldiers had been available in the days immediately after the occupation of that city.
The noble Lord, Lord Redesdale, asked about my party's resource intentions for the Armed Forces. That was covered in detail yesterday in the other place. I commend
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that debate to the noble Lord. We believe that our front-line Armed Forces must be a fundamental priority. They must receive sufficient resources adequately to fulfil their duties and their extensive commitments. When we announce our detailed spending plans later in the year, we will make clear how we intend to shift money from unnecessary and inefficient back office expenditure to the front line to maintain and enhance our defence capabilities.
There are still too many question marks over major equipment programmes. The noble and gallant Lord, Lord Craig of Radley, set out the uncertainties with Typhoon. There is also the support vehicle project. That important tri-service project for over 8,000 supply and recovery vehicles is already running a year late. It is therefore disappointing to learn from the Defence Procurement Agency's website that the preferred bidder is not expected until late 2004, a delay of a further nine months. When does the Minister expect the support vehicle to be in service?
The noble and gallant Lord, Lord Boyce, mentioned future carriers. The Government know that they have our wholehearted support for that programme. They may therefore reasonably expect our support for firm decisions on moving the programme forward and on time. I am sure that the right reverend Prelate the Bishop of Portsmouth also hopes for an early announcement. Earlier this month, my noble friend Lord King of Bridgwater was told by the Minister not to concern himself too much about air cover for the existing aircraft carriers, but the early withdrawal of the Sea Harrier FA2s represents the loss of our fleet's ability to defend itself or its associated land forces from any form of sophisticated air attack until the new carriers, together with the air defence versions of the future joint combat aircraft, come into operational service.
Our Armed Forces remain thinly spread, with urgent commitments to Kosovo and Afghanistan on top of our continuing commitment to Iraq. The Commons Defence Select Committee warned that, in Iraq, the Armed Forces were stretched very close to the maximum that they could sustain.
At home, terrorist attacks are described as inevitable. We on these Benches will not flinch in our determination to pursue the war against terror, wherever and whenever it must be fought, but A New Chapter to the Strategic Defence Review and the defence White Paper made little mention of the threat of terrorism of the kind that we now face. Are we prepared? The public have been told almost nothing about the threat. They have received no training, and the emergency services have been given no extra manpower to deal with any incident. Can the Minister confirm that all 14 civil contingency reaction forces are now fully manned, fully equipped and fully trained? Have they all taken part in joint training exercises with the police, ambulance and fire authorities? Are the command and control structures in place and fully understood? Have civilian and military radios been tested together in the urban environments in which they may have to be used and without the use of mobile phones as a back-up? What happens if a terrorist attack takes place on the boundary between two or more police

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force areas? The noble Lord, Lord Bradshaw, with his wide experience, pointed out that much is being done, albeit at huge cost.
The success of the attacks against America in 2001 was due as much to a failure of imagination as of intelligence. There is no manual to tell us how to fight the war on terror. Our future success lies in our creativity in anticipating and deterring the actions of terrorists, coupled with a relentless desire to root them out wherever they may be.
What are the Government's plans for engaging the patriotism and religious ideals of the British Muslim community in the war against terror? What plans do Her Majesty's Government have for increasing the number of Muslim recruits to the Armed Forces?
My noble friend Lord King of Bridgwater initiated this excellent debate by showing what a dangerous world we live in. The future is uncertain, but we have faced uncertainties before. My noble friend Lord Marlesford said that we would have to make sacrifices. With decisive leadership, strong alliances and, as my noble friend Lord King of Bridgwater said, the maximum public contribution, we can meet whatever is to come.
5.57 p.m.
Lord Bach: My Lords, the House has a fine tradition of well-considered and thought-provoking debates on defence. Today's debate is no exception. In my turn, I congratulate the noble Lord, Lord King of Bridgwater, on instigating the debate. Again, I apologise to the noble Lord—and through him to the House—for being late on parade. I agree with the noble Lord, Lord Astor of Hever, that the noble Lord's speech was forceful. There was a bit of the light infantry about the brilliant counterattack on defence spending that he launched from his side of the House towards the close of his speech. I will have more to say about that in due course, but, more seriously, I thought that his speech was thought-provoking and excellent.
Before I begin, I congratulate the noble Lord, Lord Astor of Hever, on being appointed defence spokesman for his party in this House. He has a hard act to follow—the late Lord Vivian—but I know that he has great experience in the field. I look forward to working with and against him, in the way that we do.
Two weeks ago, a series of bombs was detonated on packed commuter trains in Madrid. It was the largest single terrorist atrocity witnessed on mainland Europe. The scale and sheer inhumanity of the attacks, calculated ruthlessly to cause the maximum loss of innocent life, brought home once again the immediacy of the threat posed by international terrorism. Our White Paper, which was the subject of what I thought was another good debate earlier this year, highlighted three key challenges that face us: international terrorism; the proliferation of weapons of mass destruction; and the consequences of failed and failing states. The chilling consequences of the coming together of those three challenges will not be lost on noble Lords.
If we are to rise to meet those challenges, our Armed Forces must adapt accordingly. That is why the Strategic Defence Review, with its emphasis on
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expeditionary forces, sets us in the right direction. Following the events of 11 September 2001, A New Chapter to the Strategic Defence Review developed that further and introduced a number of measures designed to enhance the ability of the Armed Forces to support the civil authorities as they respond to major crises at home.
These included the development of a network of joint regional liaison officers, to which the noble Lord, Lord Redesdale, referred, the introduction of communications equipment compatible with that of the police and, of course, the establishment of 14 civil contingency reaction forces. At the moment we have no plans to review that.
The White Paper builds on that foundation to present the case for even more flexible rapidly deployable forces that are structured and equipped to perform a wide range of tasks from peace enforcement to counter-terrorism operations. Of course, we must embrace new technology so that we can exploit the potential of our military capabilities to the full.
In the January debate, I bemoaned our lack of a crystal ball in which we could see where and when we shall deploy in the future. But we have a wealth of experience which shows us that we should plan to be able to support three concurrent small and medium-scale operations, at least one of which is an enduring peace support operation. That is the pattern that has increasingly become the norm in recent years and we judge that it will continue to be the case for the foreseeable future. In building that into our plans, as all noble Lords have said, we must ensure that our Armed Forces retain the ability to adapt at longer notice for less frequent but much more demanding large-scale operations. On top of that, we also have to continue to meet our standing tasks and commitments. We believe that the White Paper provides the policy baseline against which we will work. I do not claim that it will be easy to achieve that balance.
In response, we will plan to maintain a broad spectrum of capabilities to ensure that we are able to conduct limited national operations or be the lead or framework nation for coalition operations at small and medium scale. But we do not see there being a requirement to replicate the same range of capabilities at large scale, given that in the most demanding operations it is inconceivable, we think, that the United States would not be engaged either leading a coalition or as a part of NATO.
That is nothing new. It has always been the case in modern times that we have worked alongside our allies in the more demanding and complex of operations. Nor does it mean that we will be able to operate only in tandem with the United States. Indeed, the changes presaged by the White Paper will enhance our ability to conduct expeditionary operations, both nationally and as part of a coalition.
A wide range of issues has been raised in the debate. In the 15 minutes that I have left, I intend to address the main issues. If there are questions that I omit to answer. I shall write to the noble Lord, Lord King, with copies for all relevant Peers. I intend to cover briefly terrorism,

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personnel, Typhoon and procurement generally, the House of Commons Defence Committee and Operation TELIC. Although I am not sure that I shall succeed, I hope to satisfy the noble and gallant Lords, all of whom spoke about the Budget. I shall be frank and, I hope, helpful about the Budget, even if I do not satisfy them fully in terms of figures.
I turn first to terrorism. We accept as a government that there is no military solution to international terrorism. It is one strand of meeting the challenges. The Armed Forces play an important part in support of the Government's strategy for tackling the problem. As Members know, the Home Secretary and the Home Office are responsible for security and consequence management in which we, as government, have invested heavily. Of course, the Armed Forces are available to help civil authorities if they need to ask for help.
We have achieved a great deal—for example, the operations in Afghanistan and widespread international co-operation post-Afghanistan—in pursuing terrorist networks worldwide, international progress on aviation security and, not least, tackling terrorist financing, as well as other issues. We shall continue to play our part in doing that. As the noble Lord, Lord King, said, this is an enormous challenge, not just for the UK to have to fight, but for all of us. We need diplomatic and many other skills in order to combat it.
The nonsense of the "end of history", which I have mentioned to the House before, has been shown up so clearly by the events since the end of the Cold War. It falls to us to deal with it. I believe that the House will deal with it in a united way.
The noble Lord, Lord Bradshaw, mentioned the civil contingency exercise. Please forgive me if I rather duck that issue; it is a matter for the Home Office rather than for us. But his remarks have been heard and will be in Hansard. Like the noble Lord, Lord Marlesford, I, too, was impressed when, from the Liberal Democrat Front Bench, the noble Lord posed the question about balance, for his own party and for all us. We must try to get the right balance between a terrorist threat and our protection and love of our civil liberties.
The right reverend Prelate the Bishop of Portsmouth mentioned merchant shipping. The Royal Navy deploys worldwide on a range of tasks. Like other navies, under international law it is obliged to render assistance to other mariners. If a Royal Navy ship encounters a clear case of piracy on the high seas, Royal Navy policy is to deal with such incidents and those responsible. Commanding officers of warships are issued with clear guidance on the action that they should take.
My noble friend Lady Dean asked about the service personnel plan; I, too, congratulate my noble friend Lady Dean on her new appointment. I am advised that that plan is still expected to go live in April as planned. It is an internal plan but none the less important for that. The noble and gallant Lord, Lord Bramall, raised concern about medical services, which he has raised in this House on many occasions. He knows that mistakes have been made in this field in the past.
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Historically, it has been under-funded. That was recognised in the Strategic Defence Review. We have since seen substantial additional funding. I shall look into the problems that he mentioned today to pass on to the relevant Minister as soon as I can.
As regards reserves, we provide detailed advice to reservists on their legal right to reclaim their civilian employment in the UK and how to seek reinstatement in line with the Reserve Forces (Safeguard of Employment) Act 1985. Each reservist receives a copy of the guidance. In respect of retention in the Territorial Army, we are not sure yet of the impact that operations in Iraq have had. Work is in hand to identify the effects through the use of demobilisation surveys and the continuous attitude survey to be published shortly.
The Army is very busy. The noble and gallant Lord, Lord Boyce, used the figure of 30 per cent of the Army being committed to operations in mid-March 2004. I compare that with 57 per cent committed and 54 per cent deployed in late April 2003. We are committed to achieving a balance of commitments and aim to commit personnel to operations for no longer than is necessary to achieve the military aim. We will withdraw our personnel from operations as soon as we can.
The noble and gallant Lord, Lord Boyce, made an impressive speech in which he commented on the practice of leaving out the issues of numbers in terms of platforms and manpower while we are quite rightly engaged in trying to use modern technology in order to achieve effects-based results. In our view, flexible forces and platform numbers are not mutually exclusive. We are ensuring that our forces are used in what we hope is a smarter manner appropriate to the particular threat that needs to be confronted. So we are trying to achieve a series of effects, some of which are manpower intensive. Indeed, the example given by the noble and gallant Lord of peace support operations is one. Others are more technologically intensive. Flexible and technologically advanced forces do not preclude troops on the ground. Rather, we envisage a mixture of hi-tech and troops on the ground to maximise the chosen effect. I hope that that is helpful to the noble and gallant Lord.
I shall deal next with the Typhoon programme. I was delighted by the speech of the noble and gallant Lord, Lord Craig. The Government remain committed to Eurofighter Typhoon. We have a contractual commitment to purchase 55 Typhoons in the first of three planned production tranches, and there is a memorandum of understanding with our partner nations to cover a further 89 in tranche two and 88 in tranche three. As is well known, discussions with the four nation members and with industry regarding tranche two are ongoing. Given the obvious importance of the contract, our priority is to ensure that industry's proposals for the programme are soundly planned and based on appropriate levels of design maturity. In response to a point raised by the noble Lord, Lord Redesdale, a commitment to tranche three is not expected before 2007.
Of course we believe that the role of Typhoon must be one of multiple capability, otherwise the criticisms that are made of it would have some weight. It must

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have a multi-role capability, which is what tranche two is supposed to do. We are doing our very best to bring forward a suitable package on that.
I shall say a brief word about procurement in general. Sometimes we set our minds on in-service dates all the way through a programme. It seems to me that on occasion that can be a mistake. The assessment phase of a programme, which leads to main gate, as it is known—in effect, the signing of the contract with the company that will procure the goods comprising the programme for us—sometimes comes too soon. The principles of Smart Acquisition refer to 15 per cent of the total cost being spent during the assessment phase. The danger of coming to the end of the assessment phase too soon is that the programme is not sufficiently de-risked and you pay a heavy price further on when those risks emerge again and you encounter delay. With delay, of course, comes extra cost. We hope to be brave in saying on occasion that assessment phases must carry on until we have de-risked a programme sufficiently to move forward to the important main gate stage, when we sign the contract.
I turn briefly to the points raised on support vehicles. A prime contract is due to be selected in spring 2004, and the approved in-service date is April 2006.
I was going to talk about Operation TELIC. However, I want to say something about the budget in my remaining four minutes so I shall pass that by, save to say that good things were said in the report about what Her Majesty's Government did in relation to the operation, along with criticisms. We are not, I hope, too arrogant not to take note of those criticisms and to make sure that mistakes are not repeated. However, as I said, good things were mentioned in the report, which concluded by saying that deploying such a large force to the Gulf in the time available was in itself a significant achievement.
I shall move straight to budget issues. All departments have to deal with fluctuating pressures and to live within the resources allocated to them by Parliament. The Ministry of Defence is no different. There is a range of reasons why this is a particular issue for us at the moment. Only one of those reasons is that recruitment has been more successful than we had envisaged. That is good news generally but it puts a greater burden on the budget. However, I should point out that this year, 2003–04, has been complicated by the implementation of full resource accounting and budgeting which has raised new issues, in particular over how quickly we might use resources released by reducing our asset base to fund other activities.
To manage the in-year pressures, we have had to scale back cash expenditure across the department, in particular in the Defence Logistics Organisation and the Defence Procurement Agency. There remains some uncertainty about the size of the challenge we face over the next two financial years. It is clear that during both next year and the year after we shall continue to face financial pressures. We are conducting an assessment of where reductions in
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planned expenditure can be made in each of those years so that we can continue to live within our means. It is likely that we will need to make adjustments to our spending plans so that we can continue, as I say, to live within our means, but as well as looking to reduce costs, a key aim of this work is to allow us choice and planning flexibility.
So I am not in a position to be able to tell noble and gallant Lords and the House generally what figures are being bandied about, but I think that I have been fairly frank with the House in going as far as I have. I was delighted at what the Chancellor had to say about defence in the Budget. His positive remark obviously referred to the spending round that will be decided in July, saying that there will be a real increase in defence spending in that round. The three-year period will begin in 2005–06, not in any later year. It will cover the period 2005–06, 2006–07 and 2007–08.
I believe that we can contrast our view on increased defence spending—and I repeat that the last settlement was the best one that defence had had for very many years—with that of the party opposite. I am afraid that it has talked for a long time, in this House and elsewhere, about the need to increase resources for defence. But then, probably much to the disappointment of Front-Bench spokesmen on this subject both in this House and in another place, they have been told that there will be a freeze on defence spending that would last for two years if the Conservatives were to come to power at the next general election. That freeze would mean a cut of £1.5 billion. I think that we are entitled to ask where it is that the Conservatives, with their acknowledged interest in and respect for the subject of defence, intend to find that money. I hope and do not doubt that in due course we shall be given an explanation. However, I think the policy set out so far by the party opposite is one that will have disappointed many people involved in the defence field, many ordinary citizens, and a great number of Conservative voters.
I have ended on a party political note, but what I value about debates in this House on these matters is that, while the Government come in for a fair bit of stick, we are able to talk generously and openly about the problems affecting our country's defence. I am sorry if it sounds glib in the repetition, but the one thing on which we are absolutely united is our acknowledgment of the amazing work being done by our Armed Forces. I had the privilege of seeing that at first hand today, and everyone seeing it at first hand recognises that we have the best Armed Forces in the world.
Lord Astor of Hever: My Lords, before the Minister sits down, can I say that he put a wonderful spin on what my right honourable friend the Member for West Dorset was supposed to have said? I suggest that the Minister reads what was set out in the speech. He may then care to think again.
6.19 p.m.
Lord King of Bridgwater: My Lords, first, I thank the Minister for taking the trouble to sit right through the debate after what has obviously been a very busy

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day and probably a busy preceding night. He has replied as conscientiously as he could. I thought that he slightly lost it at the end because I heard the remarks of my right honourable friend. He read a prepared statement in which he said that further details of what we propose would be available, I think, later in the year. I have never doubted that a Conservative government will do what is necessary for defence. That was always my philosophy and was always reflected in the support that I received from any Chancellor and Chief Secretary with whom I had to deal.
I thank all noble Lords who have spoken. It has been a very sombre debate. We have had the benefit of the quite remarkable experience—which the other place is not able to contribute to a defence debate of this kind—of no less than four former Chiefs of Defence Staff, including the two most recent holders of that office, and, particularly importantly, of the chairman of the Armed Forces Pay Review Body.
I have tried to emphasise the importance of morale. For our homeland and our homeland security, we need morale in our homes and in our Armed Forces at the present time. The Government will have to nurture both through some very difficult times. I think the Minister understands that very well.
As to the present situation, I shall make only one comment. The Minister said that it was inconceivable that we would find ourselves in certain circumstances where the United States would not be with us. I merely warn him that it was my experience when I had any responsibility for defence that the inconceivable usually happened. We find ourselves now in places that no previous defence review anticipated we would be in; and in circumstances that no previous defence planner of some years ago anticipated would arise. So it is necessary for the Government not only to make sensible arrangements for what they think will happen, but to have something in the reserve for events that never occurred to them would arise but which inevitably will happen.
I am deeply grateful for the contributions that have been made. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Pensions
6.22 p.m.
Lord Fowler Lord Fowler rose to call attention to the case for encouraging occupational and personal pension provision; and to move for Papers.
The noble Lord said: My Lords, the debate is designed to call attention to the case for encouraging occupational and personal pension provision. King on defence and Fowler on pensions—it is getting rather like the old days on these Benches. Looking at the list of speakers on our side, I notice that you do not have to be a former Thatcher Cabinet Minister, but obviously it does help.
I congratulate the Minister on being in her place. That is more than the usual courtesy; it is a heartfelt welcome for her punctual arrival.
We last debated pensions in one of these debates in March last year. I said then that, given the current crisis in pensions, we would want to return to this subject. Perhaps I may gently remind the Minister, who seemed to be in some doubt about my position on the previous occasion, that I speak entirely on my own account from the Back Benches. Having spent 20 of my 31 years in the other place being constrained by the official policy of my party, I enjoy the freedom of the Back Benches. Perhaps I may add, in a spirit of across-the-Chamber friendship, that we look forward to the day when the Minister and her colleagues have that same enjoyment.
Since we last debated this issue there have been a number of new developments: first, we have had the publication of the Pensions Bill, and I shall touch on that later; secondly, last week in the Budget speech, we had the Chancellor of the Exchequer deciding that from April 2006 there should be a limit on the capital value of any individual pension provision of £1·5 million. How this will work and the number affected is still, to me at any rate, slightly unclear. Perhaps the Minister will give guidance on this in her reply to the debate.
Let me give an example of one person who is potentially affected; that is, the Prime Minister. Mr Blair has a half pay prime ministerial pension plus his parliamentary pension. He is due, therefore, a pension of about £100,000 a year. The capital value of that provision is, by the Government's calculation, put at something like £2.5 million. As I understand it, if he registers that amount on April 2006, then there will be no extra tax to be paid. But if he continues to accrue after that he will be taxed at a marginal rate of 55 per cent. So he has a rather important decision to make.
I tried to get guidance from the Treasury on this but, sadly, the only advice I received from the Chancellor of the Exchequer was that it would save a great deal of unnecessary trouble if the Prime Minister was to retire before the new system came into being. So I would be grateful for the Minister's guidance on the position.
There has been another development; a further change since last year. The Association of British Insurers is now measuring the public's view on pensions and pensions policy. I want to be fair to the Government because their position has improved. Whereas last year public trust in the Government's pensions policy stood at only 15 per cent, this year it has improved to 17 per cent of people who now proclaim themselves satisfied. If I may put it this way, the debate will therefore touch on the concerns of the other 83 per cent of the nation.
Quite seriously, there should be absolutely no doubt about the public concern that there is on pensions, particularly on occupational and personal pension provision. In 30 years of debating these issues, I cannot remember and have never seen concern greater than it is today—and with some cause. Only 19 per cent of employers now provide a final salary pension to new

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members; and 41 per cent of all companies operating final salary schemes have closed them to new members in the past 12 months. At the same time, personal savings are close to a record low. It is a dire position which all parties should want to improve.
Let me be clear: I do not blame the Government for each and every part of the pensions crisis—that would be the worst kind of "yah-boo" politics; I accept that—but I do blame them in a number of very important respects. I blame the government for imposing a £5 billion a year pension tax at the very worst time. As the markets went down, the Chancellor and the Prime Minister imposed this massive new tax. It will go down in political and social history as one of the most spectacular misjudgments any government have ever made.
I blame the Government for doing so little to encourage personal saving. As we have constantly pointed out, a simple change would be to end the rule that anyone with a personal pension must, as the rule stands at the moment, take an annuity at the age of 75. The Government persist with that policy in spite of the fact that annuity rates have halved since 1990. I honestly and genuinely believe that they underestimate the feeling there is on this issue among those who have saved all their lives for an adequate pension; and, perhaps even more, they underestimate how the rules now will dissuade other people from saving in the future. In the next few weeks, I hope to introduce a Private Member's Bill in precisely this area.
But, above all, I blame the Government for not having a strategy for occupational and personal pensions. What makes that so odd is that outside government some consensus on the way forward is now beginning to form. Let me give my view, on my interpretation, on where there is substantial agreement and where that agreement would be possible.
First, I believe that we should make the basic state pension as generous as possible. It is a well understood pension, which is more than can be said of so much of the other state pension provision, and it is capable of floating many, many people off income-related benefits. I congratulate my party's spokesman in the other place, David Willetts, on the brave step he has taken by promising an earnings-related state pension inside his pension policy, which I think is more relevant to today's needs.
Secondly, I have supported since the 1980s—and the Government continually quote my support—some form of pension credit. Having myself introduced family credit for families with children, my view has always been that extra help was necessary, particularly for those pensioners who, through no fault of their own, had not had the opportunity of building up their own pension. That was often because the opportunity simply did not exist for those pensioners.
I know that there were reservations in my party on the pension credit introduction, but I am very glad to see, to know and to understand that my party has now pledged to continue with the pension credit. That is good news. For although we all hope that as many
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pensioners as possible can be floated off income-related benefits, this will frankly not happen overnight.
Thirdly, and crucially, I believe that we should do everything in our power to encourage and help everyone to build up a pension of their own. Here I part company with the Government. They have abolished the state earnings-related pension scheme—SERPS—and I certainly agree with that policy; that will come as no surprise to the Minister. However, they have replaced it with an alternative second state pension, which is just as full of complexity as its predecessor. I wonder how many people covered by that second pension actually understand it. I remember carrying out a survey for SERPS; it was quite clear that the majority of the people who were covered by SERPS did not understand what it was about. Indeed, most of them did not know that they were covered by it in the first place. I do not think that that is a very satisfactory position for pension provision.
I would much prefer the second pension to be built up by the individual, with a fund of his own, outside the state organisation. Contributions from the employer and the employee, yes—but there is no reason why the Government cannot contribute to such a pension by matched contributions for low-paid employees and outright contributions for carers.
Let me say in parenthesis—and here I probably part company with both Front Benches—that I do not run away from the idea of a compulsory scheme. I am sceptical that we will ever persuade all those who should be saving to save. Currently, many who could be building up a second pension with matched employer contributions—such pensions are actually on offer—are not doing so. For those who say that this is a very startling proposal, let me remind them that nearly 20 years ago, in our 1985 Green Paper on pensions, the Conservative government advocated such a course, and no one backed that more strongly than the then Prime Minister, my noble friend Lady Thatcher. Sadly, the solution was too radical for those times, but I think its time may have come.
Of course, I accept, following everything I have said, that there is an implied and major responsibility on the private sector and the life insurance companies. Let me make my position on that absolutely clear: I have no sympathy whatever with companies which either knowingly or through incompetence fail in their duty to the public. All too often, the failures of the past 50 years have not been the failure of systems but the failures—and worse—of executives and salesmen who have exploited the public. That was certainly the case with the mis-selling of personal pensions, and it was quite right that those companies should have had to put the position right. So I will back any sensible measure of control and supervision in this area and also any watertight compensation arrangements where mistakes have been made. That is how I will judge the Pensions Bill—whether that protection is adequate or not.
However, such legislation is, by definition, for the future. We also have the present to deal with. We have cases in which a number of pension schemes have been

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wound up when companies have gone into receivership, leaving their members with very much lower pensions than they were promised. I have in mind the position of employees in ASW, Dexion, United Engineering Forgings and Blyth & Blyth. A typical example is of one man, now aged 59, who spent 38 years working for Dexion but now looks set to lose 80 per cent of his pension entitlement.
And of course we have the case of Equitable Life. I do not want to argue the case in detail—that has been done this afternoon in the other place. Suffice it to say that there are very few people who were happy with the Government's initial response to the Penrose report. My view is that the fault lies not so much with the regulatory system—pre-1997 or post-1997—but with the lack of action of some of the regulators and, most of all, with the company itself. I suggest that the question now is how we take that issue forward—how we restore confidence and how we find some justice for thousands of pension savers who have found their pension entitlements so cruelly reduced.
I have one suggestion to make, which comes from my misspent youth as a Minister. In the early 1970s, it became clear that action was needed to help railway pensioners because of the deficits in their funds. In an entirely bipartisan way, the Conservative Government of Ted Heath introduced legislation to make very substantial grants to the British Rail pension fund. That legislation was overtaken by the 1974 election and was reintroduced by the Labour government of Harold Wilson.
The only concern was that very big lump sums were being paid over to the British Rail pension fund. In my Transport Act 1980, I kept to the agreed policy of compensation but, in effect, paid on a pay-as-you-go basis when the liabilities became due. That seems to me a way forward that has the advantage that compensation, whatever was agreed, could be paid year by year and we could have the agreement of all the political parties to such a solution. In pensions, there is much to be said for bipartisan agreement, and I believe compensation is justified here.
The reason I advocate that course is that I think that natural justice demands that we should seek to help men and women who have saved for their retirement and done everything that successive governments have asked them to do. But I advocate that course for another reason: there is an urgent need to restore confidence. By any standards, the past few years have been extraordinarily difficult. Yet as people live longer, the need has never been greater than it is today that we should encourage provision for old age. That means that people should have the confidence to invest and to save. I want everyone to have a decent pension of their own—that, I think, should be the aim—but I fear that today, we are some way from that goal. I beg to move for Papers.
6.37 p.m.
Lord Brookman: My Lords, the subject of pensions is very high on the political agenda. We should all be
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grateful for this timely debate, initiated by the noble Lord, Lord Fowler, whose expertise and experience I must confess I am unable to match. I declare an interest, not only as a person who benefits from a final salary pension scheme but also as a former General Secretary of the Iron and Steel Trades Confederation, the community union. I was both an employee and an employer, so I had to administer a pension scheme.
I should like initially to refer to what I know best: the achievement—for it was an achievement of a final salary pension scheme for blue-collar workers in the steel industry. Thirty years ago in 1973—not very long ago—tens of thousands of workers were introduced into a pension scheme. When I started work in 1953 at the Ebbw Vale steel works in south Wales, I was amazed, not only by the adverse working conditions but the age profile of the employees. Many were over the age of 70. Why? I suggest that it was because there was no pension scheme and nothing there for them to retire on.
Only white-collar workers in the steel industry had pension schemes in my younger days. Staff workers had a pension scheme. My father was one, and one of my brothers, being a foreman, was another. But for me and my other brother—no pension schemes for us. So 1973 was a good year for the introduction of company pension schemes—at least, it was for me and for many thousands of others. As an aside, it was public ownership that introduced a pension scheme for blue-collar workers throughout the United Kingdom steel industry.
We are where we are, so I welcome the Government's introduction of the Pensions Bill. Following the terrible series of disasters with companies going into liquidation, and the subsequent effect on employees' pensions, the Bill will go some way to safeguard schemes for the future. However, I stress, that is for the future.
The noble Lord, Lord Fowler, rightly raised the issue of the plight of workers in serious difficulties as a result of companies such as Allied Steel and Wire and others going into liquidation. It has brought home to millions of our fellow citizens the weaknesses in protection for pension rights. I suspect that very few of your Lordships are unaware that 1,000 redundant workers in the steel plants in Cardiff and Sheerness, some with 30 years' service or more, face lives of penury as a result of the insolvency declared in 2002.
From my perspective, a pension is not just another financial commodity for which we pay now to use later. Millions of men and women employees, along with their employers, pay contributions to occupational pensions that build up entitlements. Such entitlements are part of their pay. They are not something special to them: but their pay. Their own money goes into the pension scheme. I suggest that it is part of the deal that resulted in their being employed in the first place. A company pension scheme is a good selling point for any company wishing to employ people.
Indeed, the law—many noble Lords are expert in this area—recognises that there is something special about wages. If a company becomes insolvent, employees' pay

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has the first claim on assets, and it is my understanding—I shall be corrected by the Minister if I am wrong—that the state steps in to make up shortfalls. Fortunately, as a general secretary, I never had to face such a situation, but I believe it to be the case.
A colleague of mine who follows these issues more assiduously than myself makes a valid point. He says that this is a case of basic morality. As a religious man, he quoted Leviticus and the epistle of St James as an injunction on employers to pay labourer's wages at the end of the day on pain of incurring heaven's wrath. It is a moral responsibility. It is a moral responsibility for banks and bankers. We read and hear about vast profits, mind-boggling salaries and, at the same time, the withdrawing of credit from companies such as Allied Steel and Wire, which eventually led to the current dilemma. Dilemma it is, because it now seems that the key unions at Allied Steel and Wire have started a legal claim against my Government stating that they are in breach of a European Union directive. The directive refers to governments having a formal obligation to establish and maintain arrangements to guarantee payments of pensions when companies go bust with debts to pension funds. That directive has been in effect since 1980. I need say no more.
The proposed pension protection fund is to be welcomed. However, it cannot be right that workers such as those in Cardiff and Sheerness will be hung out to dry. Some months ago, my noble friend the Minister indicated to me in reply to a question that there would be no retrospective legislation. Much has happened since then however. There has been much activity in another place. The Western Mail, a leading newspaper in south Wales, published an article on 16 March that referred to an "encouraging meeting" between the Prime Minister and Mr Kevin Brennan, MP for Cardiff West, which is welcome. I am also pleased to hear that, at Question Time today in another place, the Deputy Prime Minister gave a positive response to a similar question from the Floor.
This injustice should be addressed. Companies are winding up defined benefit schemes. Employees at Allied Steel and Wire in Cardiff are suffering. Some companies are using dreadful tactics whereby 12-month contracts are imposed, with employees incurring no benefits at all. The Pensions Bill is good news, but I want it to be stronger. I want it, as do many other noble Lords, I am sure, to safeguard workers' interests and help those who are currently suffering as a result of their companies going into liquidation.
6.45 p.m.
Baroness Barker: My Lords, I declare an interest as an employee of Age Concern England. I, too, thank the noble Lord, Lord Fowler, for the opportunity this evening to discuss again this important issue. The debate is timely, following as it does the report of the Penrose inquiry. It could be said of last week that it was a bad week to be an actuary.
I have been a Member of your Lordships' House since 1999, and I have noticed the frequency with which we politicians return to the subject of pensions
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policy. Perhaps that is because, unlike the Prime Minister, those of us who pursue our political careers in this House and who are not on the ministerial Front Bench receive no pension contributions for our efforts whatever. More likely, it is because, remarkably, pensions have shot up the political agenda in a way that few could have predicted in previous years. There are well known reasons for that, such as the economic reasons associated with the happy experience of the increase in longevity of most of the population, and changes in old-age dependency ratios coupled with changing employment patterns.
However, two important things have changed over the past five years. The first is the public perception that a growing older population coupled with a declining birth rate is an economic burden. That impression is frequently reinforced. However, as the Select Committee on Economic Affairs noted in its report in November 2003, many of the actuarial assumptions beneath that simplistic statement are open to challenge. However, one thing is clear: the structure of private and occupational pensions has appeared to change little to take into account those significant demographic changes.
The second thing that has markedly changed is the perceived attitude of employers towards occupational pension provision. In 1998, the report by the Pension Provision Group entitled We all need pensions stated:
"In addition to wanting to provide for their employees in old age, employers offer a pension scheme because they see it is in their own interest to do so. Most importantly, employers believe that the provision of a pension scheme will help attract, retain and motivate employees. They may also consider that providing pension schemes enhances their reputation in the community generally and avoids the bad publicity that can be associated with employees retiring into poverty".
However, as the noble Lord, Lord Brookman, said, five years on, in the wake of the collapse of schemes such as ASW's, which have left thousands of people facing a retirement in penury, everything seems very different. Rightly or wrongly, there is a perception that generosity of occupational pension provision is risky or unwise for an employer. The proposals for the Pension Protection Fund in the Pensions Bill can be depicted as a way of penalising good employers and bailing out the bad, which is not helpful.
One thing that employers have failed to reflect is the necessary change coming upon us in attitudes to work and employment. By December 2006, employers must be ready to implement the EU employment directive of 2000, which prohibits discrimination on grounds of age. To date, there is little evidence of companies abandoning employment practices that are based on age and few have abandoned arbitrary retirement ages. December 2006 is not very far away and it is of concern that, on the one hand, people are talking about the need to raise the basic state pension age and, at the same time, there is little evidence of employers taking on board the implications of such a move for them.
The title of today's debate does not include the basic state pension, but it is impossible to discuss private and occupational pension provision without making reference to it. Indeed, the Government's own strategy explicitly recognises that with the proposals in

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Clause 194 of the Pensions Bill for combined pension forecasts. Time and again, research into the low level of investment in personal pensions reveals that people have wildly optimistic expectations of the level of retirement income that they can expect from personal pension provision. People either have insufficient access to information, or their level of financial literacy is so low that they cannot understand the nature of different pension products. That situation is not helped by the complexity and uncertainty of the ways in which private and occupational pension schemes interact with the basic state pension.
I therefore noted with interest the recommendation of the Select Committee on Economic Affairs that the possibility of a national financial advice network provided by the voluntary sector should be explored. That said, I have strong reservations that any voluntary organisation would find itself able to undertake any such risk whatever. But I do believe that there is a case for private sector companies to consider whether they could be involved in voluntary organisations. From that I would exclude my own, as I refer to those that have a track record in provision of money advice. They are the organisations that the public trust to give them independent advice.
The noble Lord, Lord Fowler, was absolutely right when he referred to the gender discrimination in annuities having a huge impact, particularly given the way in which the change to defined contribution schemes carries on completely unabated in a way that five years ago was simply not envisaged. There really ought to be further research on that.
Finally, on these Benches we have consistently argued that the greatest need is among older pensioners. We believe that the longer the time since a person was actively engaged in the labour market, the greater the probability that they will have an inadequate retirement income. Efforts to enable people to stay economically active for longer, including changes which enable people to work part time and call down part of their pension entitlement, are to be welcomed. However, until the state pension system recognises the plight of older pensioners, of whom there will be many more, and until private and occupational pensions schemes similarly address that issue, in a way that is comprehensible to those who need to make the financial planning that the noble Lord, Lord Fowler, rightly called for, I believe that many of the changes that we are considering at the moment may be interesting academic exercises, but will leave most of the general public still facing an uncertain future.
6.53 p.m.
Lord Lea of Crondall: My Lords, first, I add my voice to those welcoming the initiative of the noble Lord, Lord Fowler, in introducing this debate. I add my support to the sentiments expressed by my noble friend Lord Brookman on the problems of ASW and other companies in similar positions, and hope that the talks to which he referred could lead to some accommodation being reached on that matter.
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I welcome the key features of the Pensions Bill, and shall pick out one or two points in it. I shall relate that to the collapse of confidence to which the noble Lord, Lord Fowler, referred, which is not principally a question of the government of either party but a collapse of confidence in the industry. "Independent financial advisers, are they all crooks?" is the type of sentiment that one hears expressed. There is a massive job to do, which I relate to the problem of advice about pensions. In that regard, the Government have been doing some very interesting things, from the Green Paper right through to what is happening directly in the Department for Work and Pensions.
Underneath all that, there are some fundamental questions to be asked about where we are going on the savings ratios in Britain. I know that people speaking for some other economies do not agree with what I am about to say, but I believe that our savings ratio in Britain—whether the household savings ratio or the national accounts savings ratio—is far too low. It is 5 per cent, broadly speaking, as compared with 15 per cent in France, Germany and Italy. Some people believe that because we have a high level of consumption, higher as a percentage of the gross national product than France, Germany or Italy, Britain is doing rather well and Germany, France and Italy are not doing so well.
It is a question of timescales and mortgaging the future. John Maynard Keynes said that in the long term we are all dead, but one certainly has to take a timescale of 20 or 30 years, when some people in this room may not be dead. Certainly, that is a timescale for which we must plan in the pensions industry. It is interesting and important that the terms of the debate are so similar to the remit of the Independent Pensions Commission, chaired by Adair Turner, which has been operating for about a year and has another year or so to go. He is working with two very distinguished colleagues, one of whom, Jeannie Drake, is a leading trade unionist.
I briefly remind the House of some of the matters that the commission is studying in great depth. Under the heading of demographics, it is investigating the potential demographics in 2050 of life expectancy, fertility, migration and other variables. The commission asks the question, which I rather like,
"whether there are any limits to the increase in life expectancy".
It asks about the implications of different demographic assumptions for annuity rates at different ages.
The commission also asks when and why people retire. That might seem rather a facile way in which to pose the question, but there it is. The commission focuses on trends in labour force participation rates, considering age, gender, ethnic and other categories. It asks to what extent so-called early retirement is voluntary or involuntary.
I wish Adair Turner and his colleagues all the best. They are a very distinguished team of three. They are going quite wide in their trawl, but it is essential that

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they do so. Another example of the width of their trawl is mentioned in their interim comment on what they are working on. It says:
"A crucial issue will be the implications of house ownership for `adequacy' of savings. This will depend on whether housing assets truly represent a releasable source of wealth and thus income in retirement, or whether for many people they are only relevant because they secure rent-free retirement".
Finally, the commission is considering not the state pension system itself but the likely consequences of the present and evolving state system for the levels of support that the state system will deliver in relation to the incentives for private savings.
I refer to two points in the Bill that are particularly welcome. The pensions protection fund is based on the fact that although in,
"the overwhelming majority of cases, promises made in defined benefit pension schemes are fulfilled … in some exceptional cases, a scheme will go bust with an underfunded pension and the workers lose out … This has shaken trust in pensions in general"—
trust that the Bill is "taking action to restore". The statement goes on to say:
"The PPF will be a compensation scheme protecting pension scheme members, so that if their employer goes bust, they can be reassured that they will still receive the core of the benefits which they had expected—protecting the pension promise. This is a huge step forward for pension security … [and] has been welcomed by the CBI, the TUC and the public at large".
It will give,
"100% of the original promise to people who have reached pension age [and] 90% for people below that age (subject to a cap of £25,000 per year)".
Then there is the pensions regulator:
"The new Pensions Regulator will focus on protecting the benefits of pension scheme members, concentrating its efforts on schemes where it assesses that there is a high risk of fraud, bad governance or maladministration … The Pensions Regulator will also have a specific function of providing information, education and assistance to certain categories of people involved in administering, advising and facilitating the operation of certain schemes".
So far, so good. We need to have some extra provision in the legislation to give workers the absolute right to be consulted about changes in pensions and it is important that provision is being made for Citizens Advice Bureaux to be given some assistance. As a credible part of the voluntary sector, I welcome the fact that they are gingerly moving into the field of giving pensions advice.
7 p.m.
Lord MacGregor of Pulham Market: My Lords, I think that this is the third time in less than a year that I have spoken in a pensions debate in this House and I again declare an interest as a trustee of a pension fund and as a director of a life assurance and pension provider.
I agree with the noble Baroness, Lady Barker, that the reason that we are coming back to this again and again is because pensions have gone right up the political agenda. They will be a major issue for governments of all persuasions in the years ahead and they must be must be got right in the long term. In seven minutes it is very difficult to cover this field and
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I shall therefore just highlight a few issues, to each of which I would like to have been able to devote a full half-hour, in the hope that we can come back to them later.
I remember that after I left the Cabinet, as my noble friend Lord Fowler indicated, and felt freer to talk on these matters, I was speaking and writing about pensions in the mid-1990s. The general theme that I was developing then was the pension time-bomb. Of course, I was then referring to demographic factors, with which we are all familiar, and to the fact that surveys and reality showed that many young and not-so-young people knew that they had to save more for their old age, because the state pension would not provide, but were not doing so. That was the worry then.
In the period since then, we have had many issues that none of us predicated at that time. At that time the atmosphere was still that we were congratulating ourselves on having the best funded pension provision in the EU and many pensioners and prospective pensioners were basking in the expectation of retiring at the age of 60 or even earlier and having a very comfortable retirement life for many years.
All of that has changed. I want to begin by asking the "what if?". What if the Government had not taken £35 billion already, and I gather will probably take £6 billion a year, out of pension funds, which has undoubtedly had a major effect on the black hole that we are all discussing? What if there had not been such a focus on mis-selling? I fully understand the point about pension mis-selling and if I have time I will return to it. But what if we had not had seven years of an atmosphere in which the bad news was always put forward in the media and there was constant pressure about everything that was going wrong in the pension industry? It is no wonder that the public's confidence has collapsed and even providers now feel beleaguered and uncertain of their future.
What if the Hyman case in the House of Lords in relation to Equitable Life had gone the other way? Instead of being 3:2 as it was, what if, with only one judge taking a different view, it had been 3:2 the other way? There would be a different debate going on at the present time.
What if the equity markets had not downturned? Most interesting of all, what if we had not moved into a low inflation and low interest period? I applaud that for all sorts of other reasons—we have all been endeavouring to achieve this in our lifetime—but let us be quite clear. It has a significant impact on the current debate on pensions because many pensioners are complaining about the low annuity rates they are getting, which are a direct reflection of low inflation and low interest rates. I remember in the 1970s when inflation was at 26 per cent and therefore the interest rate return that pensioners were getting on their bank deposits was fairly high that when inflation came down they were complaining that the interest rates had come down too. It was very difficult to get that realistic argument over. We are suffering from this not only because of the annuity position but also because, I

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suspect, low interest rates have a bigger influence than the current state of the equity markets in the actuarial calculations for pension funds. It is curious that the black hole would be diminished quite a bit if interest rates went up substantially, because of the way in which the liabilities are calculated.
All of these things have happened. If none of them had happened we would still be facing the demographic timebomb and other issues that I was referring to in 1975. But now we are in a climate where the position is very much worse.
I want to spend the last four minutes of my speech on a few reflections, I hope in the spirit of my noble friend Lord Fowler, trying to make the point that this is an issue that all governments must assess and therefore we should not be criticising each other all the time—although I am about to do that. I have to say that in relation to the new pension cap of £1.5 million, although I would have done it in a different way, I have a lot of sympathy with what the Government are trying to do and I do not have a great deal of sympathy for some very highly paid executives who are screaming about it. I make that point to show that I am approaching the issue in a bipartisan way.
I want to make a few reflections that I hope will feature in all our debates in the future. The first is that the Government must recognise that their policies over the past seven years are not working. It is not just the removal of the tax credit on the pension schemes—although that has had a remarkable effect, certainly as great as the effect of the equity markets and the accountancy changes—it is also that the flight from final salary schemes, which we all know is taking place on a massive scale, puts greater emphasis on personal pensions. Frankly, the Government's stakeholder pension scheme is not working to anything like the extent that they expect. It is also the case that contracting out of the state scheme is not now providing sufficient incentive for employers to promote occupational schemes strongly. All of these issues must be faced up to and we must find new incentives and new ways to encourage employers to continue with occupational pension schemes and to encourage individuals to take out personal pensions.
Secondly, on the state pension I agree with my noble friend Lord Fowler. I think that the situation has changed and that we need to reassess the role of the state pension. I am greatly impressed by the work that David Willetts is doing. He has given some brilliant and compelling lectures which, because they do not contain soundbites, are unfortunately not getting much attention at the present time. But they are well worth considering in a non-partisan spirit. I agree that the real problem that we face with the state pension is that in due course 60 to 70 per cent of all pensioners will be on means-tested benefit, which is no incentive to save.
Thirdly—and this is a very difficult subject to embark on for 30 seconds—we need to have a different climate in which to look at all this. Of course I accept that pension mis-selling took place and that it had to be dealt with. But if we are in a climate where we
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believe that there is no risk in long-term savings, if we are in a climate in which there will be constant blame and constant demands for compensation, which is the culture we now live in, we shall not get a balanced argument in debate on these issues. I shall take one example. If someone had an Equitable Life pension that had matured in 1999 and all the proceeds had been invested in the stockmarket at that time, that individual would be in a worse situation now than if he had remained an Equitable Life policyholder. That is because investments in PEPs or ISAs do not have an expected guaranteed return and it is understood that if you invest in unit trusts or PEPs or ISAs you must face the risk of markets going down. We seem to have lost all of that in the pension field. I wish I could have said much more about that issue.
Finally, I agree that unless we face up to some of these issues young people simply will not save. They believe that their investment in their house will in some form provide their pension in due course. Frankly, it will not. They are taking a huge risk.
So I come to the final two points that I want to make. I think that we may have to face up to the fact of the need for compulsory occupational pension provision before too long. It is important that we do not waste too much time not facing up to it and saying that we hope that the situation will get better. We ought to be having that debate now.
I go back to my position in my original timebomb article. We must recognise that perhaps the biggest factor of all, and the one that is causing so much difficulty for the providers of private pensions, is longevity, the fact that year after year we are all living longer. That is a very good thing from every point of view, except for pensions. We must now address the likelihood, in my view, that the state pension age will have to go up from 65 and the sooner we face up to that, the better. We must also face the likelihood that one of the things that is reducing the returns on occupational pensions is longevity and we must take that into account.
7.10 p.m.
Baroness Dean of Thornton-le-Fylde: My Lords, I, too, welcome the opportunity of this debate. I console myself with the fact that we have the Pensions Bill coming probably just after Easter and that we will all probably have much more time to debate the issues then. So, like the noble Lord, Lord MacGregor, I shall try to skate very quickly over some of the key issues.
I think there is wide cross-party support for the aim of the Motion. We have to encourage more people into occupational and personal pension funds because of the demographic time-bomb, which has been mentioned, and a host of other reasons including the savings factor. I think that two words will help—trust and confidence. When I was a young union officer in Manchester, both words were a given in company pension funds. Workers had trust in the funds and they had confidence that they would get their pension at the end of the day. I think that those have been severely damaged. I have great sympathy for the 60,000

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workers in the case mentioned by my noble friend Lord Brookman. I do not believe that we need to wait for the Pensions Bill to address that issue. The matter is so important that it should probably be dealt with in parallel with the legislation. I urge the Government to address it. I know that they are concerned about it.
The noble Lord, Lord MacGregor, took a little trip down memory lane, but it was a very limited memory lane. I should like to go a little further. I think that three Members present in the Chamber will remember our debates on the then Conservative government's Pensions Bill, when we sat on that side of the House and the noble Lord on this side. I think that the noble Lord, Lord Tordoff, was in the House then. My noble friend the Minister sat on the Front Bench and I was her humble number two in the debates on that legislation. I suggest that that Bill—nicknamed the Maxwell Bill because of the Maxwell scandal, which was why I was involved in the pensions discussions—was very badly flawed. It is also part of the jigsaw puzzle concerning the current lack of confidence in pension schemes.
Provisions in the previous government's pension arrangements allowed companies to take from their pension fund any surplus above 5 per cent. The trustees could do nothing about it. Removing money from the funds at a time of huge surpluses obviously had a direct impact on the funds. Moreover, the Act introduced in the mid-1990s encouraged people to pull out of occupational final salary schemes and go into money purchase schemes. That was the root of the mis-selling. It happened because the insurance industry had a clientele bonanza which it never in its wildest dreams expected. Another consequence of the legislation for occupational pension schemes was the drawing out of younger scheme members to whom money purchase schemes were more attractive. Those arrangements entirely distorted the profile of occupational pension schemes. That is sometimes forgotten. If we are going to have a debate, let us have a wide one.
There was another factor. At that time, my noble friend Lord Eatwell—who I am delighted to see in the Chamber—spent a lot of time arguing for what was called a central discontinuance fund. After Easter, when we get the Pensions Bill, we will be able to debate the pensions protection fund. If the Opposition Benches had listened then, perhaps we would not be in the current position as regards those 60,000 workers.
At that time, my noble friends Lord Eatwell and Lady Hollis also argued that the minimum funding requirement—which, it was said, had to be included in the Pensions Act—was too rigid and not sufficiently flexible and could severely damage pension funds. Both of those debates have come home to roost in the mature situation in the pensions field. We also argued—I say this as a side issue—that, on divorcing, women should have a fair share of the pension fund. It took a Labour Government to introduce that because the then Conservative government refused pointblank to do so.
I believe very strongly that this is a cross-party debate. However, let us not pick and choose which parts of the debate we want to talk about. I believe that
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the Pensions Bill will be helpful. It will be criticised, of course, but it goes a lot further than current arrangements to protect people and, we hope, to encourage them into pension funds.
One issue on which I strongly disagree with my own Government and strongly agree with the noble Lord, Lord Fowler, is that of annuities. The argument that annuities affect only a small group of the highly paid will just not run in the light of current demographic changes. The Association of British Insurers has published a survey showing that people are taking annuities before 65 as though they welcome it. I think that it is a slanted debate. People like to arrange their affairs. They like to know where they are and the point they have reached. We also read in the press that returns on annuities are decreasing. Therefore, many people believe that they should get in now before they lose yet more money.
I strongly urge the Government to readdress the annuities issue. I gather that the age limit of 75 was established when people could expect to live to 70, so only a few reached the limit. I believe that we have to protect the government of the day against a situation in which we must look after and fund those who have used the sum or given it to their families. We have to ring-fence a sum to protect their pension income.
I welcome this debate. The issue could be, and should be, a cross-party one.
7.16 p.m.
Lord Freeman: My Lords, I declare an interest as chairman of the pension fund trustees of an industrial company's defined benefit scheme.
I congratulate my noble friend Lord Fowler on introducing this debate. Indeed, I am getting used to following him and my noble friend Lord MacGregor. I agree with what both have said. I shall not repeat their arguments, save to remind my noble friend Lord Fowler of his remarkable achievement, 20 years ago, of introducing the personal pensions legislation. It has had its problems, but it was a great initiative. He will not remember that, 20 years ago, I introduced a 10-minute rule Bill on the same subject. Of course it failed, but afterwards he came up to me and said, "Well done, my boy; you'll go far". I have tried to follow in his footsteps ever since.
We are witnessing the slow demise of defined benefit schemes. Most of them are closing to new entrants. In 20 or 30 years' time, they will all effectively be closed-end funds with no new active members. Some 10, 20 or 30 years ago, our defined benefit schemes—our final salary schemes—were the envy of the world. For a variety of reasons, and I am not going to play party politics, we have seen their demise. I very much regret it. It is in sharp contrast to the public sector where the Government are the sponsor and guarantor of public sector final salary pension schemes.
I am looking very much indeed to the introduction of the Pensions Bill. Under the leadership of my noble friend Lord Higgins on the Front Bench, I look forward to burning the midnight oil with the Minister. However, I should like to put up three small red flags

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about the Pensions Bill. As the noble Baroness, Lady Dean, said, this debate is, in a sense, a trailer to that important Bill.
The first point is on the pensions protection fund. This is not a small point but a point of some seriousness. Of course the fund must be welcomed. I think that all noble Lords who have spoken in this debate have welcomed its introduction. However, it is effectively a payroll tax on employers. That is how it will work. We will debate what proportion will be flat rate and what proportion will be risk proportioned, but—at £300 million it is a payroll tax.
I have reread what the Minister said in a debate a year ago on this subject and her more recent comments on the Green Paper. I just do not believe that the savings that were mentioned by the Government to offset the £300 million cost are justified. I do not think that there is any credibility to the figure of £370 million claimed as an offset by limiting the price indexation cap to 2.5 per cent. We already have inflation at about that level and I do not see where those savings are going to come from. I also do not see where the £100 million of benefit is going to come from by dropping the MFR and therefore expecting funds to move from bonds to equities. In fact, just the opposite is the case.
First, if the Government are saying, "Here is a protection fund", if a company wishes to continue providing a defined benefit scheme—I hope that they will still continue for existing members—it must pay into a protection fund. With this additional net burden, some accruing benefits may well be lost. I believe that employers will inevitably look to offset some of that cost. I believe that the solution is for the burden to be shared more broadly. I argue that public sector pension funds should be included within the ambit of the protection fund, and hence the Government, Her Majesty's Treasury, will effectively make a contribution.
My second point concerns the excellent Paul Myners report. He made a number of recommendations to the Government about the role of trustees, all of which are very important. I welcome the recommendation in the Bill being debated in another place that there must be a continuation of member nominated trustees. That is democratic and right. However, we need more professionalism and perhaps more independent trustees to bring their outside experience to boards of trustees. I plead with the Minister not to introduce legislation concerning the role, the responsibilities and training of trustees. Let us have a jolly good code based on Myners and let us bring up the standards of most pension funds to the best.
I very much welcome the Government's initiative in taking powers to ensure that everyone in the country has adequate pension provision. I suggest that on people's 30th, 40th and 50th birthdays, they should be reminded of how much they have already set aside for their future pensions. I am amazed to find a growing consensus on both sides of the House in favour of some compulsion in this regard. Our savings rate is far too low. I would support a government initiative in
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co-operation with employers but funded by the Treasury to ensure that information was provided more generally on what people have saved.
I find myself in disagreement with some members of my party who have welcomed the Government's intention to remove employers' responsibility at least to offer additional voluntary contribution schemes. For heaven's sake, if we are trying to improve the rate of savings, to throw away the responsibility on employers—frankly, it is a relatively light responsibility—at least to offer employees the chance to save more seems to fly in the face of the logic of the arguments advanced by the noble Lords, Lord Brookman and Lord Lea of Crondall, the noble Baroness, Lady Dean, and those who have spoken on this side of the House. I am afraid that in coming years some degree of compulsion will be needed to raise the retirement provision of our population.
7.23 p.m.
Baroness Turner of Camden: My Lords, I welcome the opportunity to participate in this debate. I thank the noble Lord, Lord Fowler, for introducing it.
Those of us who were members of a final salary scheme who are now receiving pensions from such schemes are fortunate. Others may not be so lucky. Final salary, or rather defined benefit schemes are becoming a rarity, particularly in the private sector. Many firms are closing them to new entrants who are being offered—if they are offered anything at all—membership of money purchase or defined contribution schemes where the final result is often not known, where the employee takes the risk personally and where few people seem to know just how much has to be contributed to enable them to qualify for a reasonable pension on retirement.
The sense of crisis has arisen because in a number of firms that have become insolvent, scheme members have seen their eventual entitlement substantially diminished, even after 30 years' membership. Those cases have led to an enormous amount of public concern and a further lessening of trust in pension providers. What most concerns pension scheme members is the security of their investment. Until quite recently it was commonly felt that security was guaranteed by membership of a final salary scheme. That sense of security has been eroded. That is the latest event in a catalogue of concerns about pension provision affecting occupational as well as personal pensions.
I still strongly believe that the pension structure put in place under a previous Labour government by my late noble friend Lady Castle of Blackburn was probably the best we have ever had in this country. SERPS had flaws but they could have been put right. But instead that structure was destroyed by subsequent administrations. Moreover, in its attempt to "individualise" pension provision through the promotion of personal pensions, the government of the time contributed to a further lack of trust in the purveyors of pensions and compensation had to be paid to those who had been misled into leaving good occupational schemes in favour of poor personal provision. According to research undertaken by the ABI, 8 million working people are now not saving for

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retirement and a further two million are saving at too low a level to provide an adequate retirement income. Some 46 per cent of women are non-savers.
Clearly the Government are taking steps to deal with some of these problems and we await the new Pensions Bill to be debated in this House. One of the most discussed elements in the Bill—it has already been referred to several times in the debate—is the proposed pensions protection fund designed to provide compensation for members of schemes wound up in deficit after the insolvency of an employer. The PPF will be funded by a levy on DB schemes. The PPF is a very welcome new idea, but problems remain. The scheme will not come into operation until April 2005 and there is no retrospection. That means that employees who have lost out recently—some of them within sight of retirement—and have lost absolutely everything will be left in a truly dire situation.
The Government are saying that the PPF is an insurance scheme and there can therefore be no retrospection. Unions representing members in that situation refuse to accept that nothing can be done and are pressing for provision for retrospective cases. I was very interested in the scheme to which the noble Lord, Lord Fowler, referred in his opening address. There is also the fact that the compensation the PPF will provide is limited initially and potentially can be varied during its operation.
Furthermore, the statutory inflation proofing ceiling for pensions, called limited price indexation, will be reduced for all schemes from 5 per cent to 2.5 per cent. I am opposed to that. We have no idea that the present low level of inflation will persist; the signs are that it could increase. The measure, if carried through, could mean a worsening of standards, particularly for older pensioners.
I agree with the concept of a new pensions regulator to replace OPRA. The new regulator is, apparently, to have greater powers than previous bodies of a similar kind—certainly more powers than the Occupational Pensions Board, of which I was a member, and more powers than OPRA.
It is proposed that all schemes must make provision that at least one-third of the trustees must be member nominated. There will be a code of practice for that requirement, but, of course, it will not be legally binding. My union has suggested that one-half should be member nominated. Criticism in the past of member trustees has been in my view undeserved. Many are very fully committed people who often become extremely knowledgeable about their own scheme and pensions legislation generally. Of course, there should be training. That is already provided by many unions.
However, the difficulties experienced by some schemes in recent years have not been the fault of trustees. They were often opposed to contribution holidays taken by some employers in the good years, but had to go along with them after being told by actuaries that eventual pension entitlements were fully protected. Moreover, they were not responsible for the Chancellor's move on ACT which netted very substantial sums indeed for the Treasury and which led to a reduction in pension fund assets.
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On the issue of stakeholder pensions, it does not seem that these have been as successful as the Government would have wished. I think that the reason is fairly obvious. The legislative requirement on employers is simply to provide access. There is no requirement for employer contributions. Practically everyone with an interest in pensions agrees that in cases where the employer does contribute, membership of stakeholder schemes increases dramatically. I hesitate to use the word "compulsion", but could not more be done to ensure that employers accept responsibility to make a contribution on behalf of employees?
Finally, I quote the ABI, which said:
"A successful private pension system can only work if it sits on the foundation of a strong and viable state pension system—yet our current state pension system is over-complex, sends out mixed messages about whether saving for retirement is the right thing to do and will result in over 60 per cent of the population being reliant on means-tested benefits by the middle of the century".
I agree with that view. Low-paid workers, including large numbers of women, can look forward to only the state pension. As that is dependent on the contribution record, which may well have been interrupted by spells spent caring for others—children, partners, elderly relatives and so on—the level available for many women is one which inevitably results in poverty in old age, although I agree that the pension credit was intended to deal with that situation. However, it of course relies on means-testing.
Incidentally, I am glad that the Opposition now support the idea that the basic state pension should be substantially increased and thereafter linked to the wages index.
We need to look seriously at all the problems not completely addressed in the Bill which will be before us shortly, but we must remember that genuine and lasting pensions reform demands that there should be as wide a consensus as possible among the major political parties.
7.31 p.m.
Lord Hunt of Wirral: My Lords, I congratulate my noble friend Lord Fowler on a most impressive and effective opening speech, and thank him for giving us the opportunity to have an important debate on pensions. I was also very pleased to follow the noble Baroness, Lady Turner of Camden, with whom several of us serve on the All-Party Group on Insurance and Financial Services. I should mention that I am a former chairman of AIFA, chairman of Beachcroft Wansbroughs Consulting and senior partner of Beachcroft Wansbroughs.
I would like to concentrate on personal pensions and the smaller group personal pension schemes. In the recent Budget, it was pleasing that we saw some signs that the Government had recognised at last the need to create better opportunities for people to save for their retirement. But sadly, they seem ready to come forward with proposals that benefit only the much better-off in society. Their priority should have been to bring forward credible proposals for the majority of people who are not that well off but are still able, reasonably, to save for their retirement.

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Unfortunately, the debate has become confused by the seeming wish of the Government to put in place mechanisms allegedly to improve, as the first priority, the efficiency of the industry. Sadly, further down the agenda is the need to secure outreach to middle-income savers. So, since 1997, the only initiative in operation has been the so-called stakeholder pension. Notwithstanding the usual defence of its position by the Government, that has not been the wonderful success claimed. No objective observer would regard the initiative as anything other than a miserable failure.
One major life and pensions company invested more on TV advertising of its stakeholder pension than did the Department for Work and Pensions. It is now withdrawing from the market rapidly. Why? First, saving for retirement out of limited incomes is always going to take a significant amount of budget planning and personal sacrifice for individuals and families in a world where most advertising extols consumption now. Secondly, without any serious market research, the Government imposed a price cap of 1 per cent on an industry which globally has an expense ratio of nearer to 2 per cent.
Indeed, international comparisons would have revealed that the UK industry was no less efficient than any other. Distribution is expensive because pension saving runs against the consumer tide in developed economies. Therefore, it seems perfectly reasonable for any multinational life and pensions provider to remove its risk capital from the UK and use it in markets which, even on a risk-weighted basis, offer a much bigger return.
The question of efficiency simply does not go away. Some observers have noted that under conditions of low inflation, the industry cannot take 2 per cent from the yield if equities yield no more than 7 per cent. To do so would leave the investor with 5 per cent—little better than they could achieve with a very low risk investment such as gilts. The industry needs to develop an effective answer to that challenge, and I will not dispute now the Government's right to be interested in the efficiency of the industry.
The lines of argument that the Government have put forward seem rather thin. They would do well to consider the market failure that gives rise to the controversy and their difficulty over pensions savings. Consumers do not shop around for savings products. That transfers market power away from them and towards others in the market. The product providers have also exercised weak market power because of severe competition among large numbers of them. I must add that that dynamic is changing fast as the number of providers falls quite rapidly.
Market intermediaries have exercised strong market power, reflected in the levels of remuneration they receive. I am sure many will wonder at that remark, given my past affiliation. It is, however, nothing more than market forces working together to create some form of equilibrium—in this case, putting substantial resources at the disposal of those who must spend
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considerable time persuading and genuinely advising reluctant savers that they need to save, or need to save more. I do not deny that commission-driven selling is to be criticised where it damages the interests of the consumer, but the reality is that outreach has to be incentivised in some way. Salaries that do not reward results are inefficient and FSA research shows that many consumers are not ready to pay fees for advice.
It is easy to pour scorn on that outcome, but I remind the Government that there are two types of consumer detriment. The first arises from buying the wrong product, or the right product at the wrong time. The second arises from not buying the right product at the right time. In their endeavour to avoid the first type of detriment, they are simply creating the second. They do so through simply failing to analyse the structure of the market when the price cap is set. Simply, there cannot be an intermediated market for pensions at 1 per cent, and we must presume that that is the Government's misguided aim.
No doubt some will point out that part of the market works at 1 per cent. That is where employee-benefit consultants advise large employers. I am afraid, however, that that is rather like saying that everyone should enjoy the same bulk discount as a car-fleet operator enjoys when he buys 1,000 cars, although most of us can buy them only one at a time. Not everyone who needs to save works for a large employer.
Several noble Lords have mentioned the ABI. Its director general said in a speech at a conference this morning that equities and other traded assets continued to offer the best prospect for investment growth over the long term. The ABI produced a document last year entitled Better pensions for all, which sets out 10 steps to better pensions. I commend it as very simple, sound and clear advice.
Finally, I turn to the Sandler group or suite of products. Mr Sandier saw three ways to simplify the product; I will not go into details, because we know them already. I remind the House that the market failure that we are addressing is on the demand side; consumers just do not shop around for pensions. The FSA's conduct of business regulatory regime does not address that as such. Rather, it creates a countervailing force by controlling supply-side consequences. Price caps clearly reveal the Government's lack of confidence in that countervailing force, as they introduced another. Mr Sandler skilfully points out that the first countervailing force must be reduced if the second is to operate satisfactorily. But I gather that Mr Sandler is already concerned that the FSA might not create a sufficiently reduced light-touch regime.
I conclude by saying that there is a need to work together to create a real and effective solution.
7.38 p.m.
Lord Lucas: My Lords, I found that a most impressive speech. My noble friend draws attention to a very major problem at the heart of personal savings for pensions, which is that the necessary costs, if one is going for individualised private pensions sold in the market, are such as to eliminate all the additional

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return that one might expect from equity and similar investments. That simply makes the product not worth while for the people who are supposed to be investing in them.
I have long had a hankering to look at things a different way—as my noble friend said, to move to the pooled-fund concept. Those of us lucky enough to have pensions from employers use that. We do not go out and get our own pensions; they are provided as part of a big pool. One thereby gets much cheaper costs of management and much lower costs of marketing.
I do not see any reason why we should not have a national invested pension fund—run not by the Government but independently—managed competitively by fund managers so that one would introduce the market at that stage, in the same way as big companies. There would be proper professional management, offering different funds that people could swap around as they wished, but with different ways of limiting that to ensure that one never ran into illiquidity or the "Equitable Life" problem of people receiving more out of the fund than was deserved. It would address the cost problems and we should look at that, if we were to go down the route of compulsory saving. Otherwise, all that we are doing is defrauding people.
We have really been defrauding people over many years with defined benefit schemes. The noble Lord, Lord Oakeshott of Seagrove Bay, and I had desks next to each other for a while in this business. I remember—and it is a long time ago—how conscious one was of the iniquities of defined benefit schemes. They were extremely unfair and severely penalised people who changed jobs. At the end of the day, as has been noted by several noble Lords on the Benches opposite, the real iniquity is that the pensioners do not own anything. They do not own any of the assets, merely a promise—and in many cases that promise is broken. Defined contribution schemes are closer to pensioners owning real assets. That would also be taking an honest view of the risks of investment. There is no such thing as a safe, high-return investment.
The pattern of performance of stock markets down the years is such that, looking at their history, in any 30 or 40-year period—which is what one is contemplating with regard to a pension fund—a third of the time markets will underperform their trend rate by more than a third. In other words, there are bound to be long periods of substantial underperformance from markets relative to peoples' expectations. There is no way that employers can make up for that. The resources do not exist and one will merely penalise the current workforce for the sake of leaving one's pensioners in comfort. That is not fair. We have to recognise the inherent risks in investment and share them fully.
Tracker funds are also not to be encouraged. All they do is destroy the market. They mean that people are not taking market decisions based on the worthiness or otherwise of the companies concerned, but merely on whether they are in the index. If there is too much of that, one will shift the benefit of market movements to the likes of hedge funds, so that all of the
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profits will start accruing to people other than the pensioners—those who are using the newer financial instruments—and the price signals, which the market is supposed to offer to the companies within it, are destroyed. That is an entirely destructive approach. We must all recognise that investment is a risk and people must take that into account in their decisions.
Returning to the main issue—how we encourage occupational or personal pension provision—we cannot do that by threatening people with the thought of penury in old age. No one believes that anymore, although it may be true. People are not reacting to that as a stimulus. We need to offer them the confidence that if they put money aside now, they will be able to enjoy a significantly better standard of living when they retire. It is important that all governments stick to that. My real difficulty with the Chancellor's £5 billion raid on pension funds is that he broke that implied promise. If we are to have a system where a significant proportion of pensioners will be in the benefits system, we must ensure that those people who have saved see themselves as substantially better off than those who have not. The taper on the benefits system has to be generous. Otherwise, why should a person on a low income scrimp and save and put together in the course of their life a fund of, say, £100,000? Think about all that they have foregone to put that money together, yet in the end it is worth nothing because they have had to buy an annuity which then deprives them of state benefits, leaving them no better off. We cannot make people face that prospect and expect them to save.
We must deal with the annuity problem, as some of my noble friends have said. It should not be imposed on people as long as they have enough income to be out of the state net. In contrast to my noble friend Lord MacGregor, I believe that we have to allow for the fact that people will regard their houses as the substantial part of a pension. The pattern of living in houses fits extremely well with a pension—one downsizes to a smaller property when one starts becoming feeble and eventually one uses equity release. We ought to regard that as part of pension provision.
My time is up. We will continue the debate when we consider the Pensions Bill.
7.46 p.m.
Lord Oakeshott of Seagrove Bay: My Lords, I thank the noble Lord, Lord Lucas, or Ralph Palmer, as I knew him, for making my declaration of interest for me already as a pension fund investment manager for the past 28 years. I do not remember thinking that we were defrauding pensioners, if that is what Ralph thought at the time. Indeed, we were working on making small company investments for the National Coal Board pension fund, which is a good example of how the separate, ring-fenced British pension fund has worked well. There is now no coal mining industry left, but the pension fund is in good health.
I am also delighted to respond to my noble neighbour—if I can call him that—the noble Lord, Lord Fowler, who sets a great example to us all of active retirement, both in this House and as he strides along Seagrove Bay on the Isle of Wight.

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To a remarkable extent we have spoken with one voice in this debate. The most eloquent on the Benches opposite were the noble Baronesses, Lady Dean and Lady Turner, and the noble Lord, Lord Lea of Crondall, who in particular described the collapse of confidence in private pensions and the scale of the problem that we face to rebuild it. One voice also from my noble friend Lady Barker and the noble Lord, Lord Fowler, who attacked the disincentive that the Government's heavy and growing reliance on means testing provides for private saving for old age.
Today's debate is typical of the wider debate on the future of pensions. Almost all serious commentators who are pensions professionals agree that present pensions policies are not sustainable. The all-party report, Aspects of the Economics of an Ageing Population, published in this House by the Select Committee on Economic Affairs, makes that clear in its devastating and comprehensive analysis of present policy. But, like little Johnny in the column of soldiers marching over the bridge, the Government still insist that they are the only people in step. The committee concluded that,
"the proposed reform to the regulatory and tax environment of occupational pensions will come too late to reverse, or even stem, the tide of closure of defined benefit pension schemes".
Pension scheme closures are not all the fault of this Government or previous governments. The Treasury was too keen to stop surpluses accruing in pension funds in the fat years; and it seems to see tax avoidance around every corner, when that was not the case at all. Since 1997—as the noble Lords, Lord Fowler and Lord MacGregor, and the noble Baroness, Lady Turner, have pointed out—the Government have year by year eaten away at pension fund solvency with their dividend tax.
Last week's Budget changes on pensions taxation were a useful improvement on the Chancellor's first shot over a year ago. He backed down in four separate ways on his original proposal of a £1.4 million lifetime savings limit, under heavy fire from these Benches, the CBI, the entire pensions industry and, ultimately, no doubt, the Prime Minister. Mr Brown has cut the marginal tax rate on pension savings over the cap from 60 per cent to 55 per cent; he has put that off for a year; he has lifted the limit to £1.5 million, rising to £1.8 million over four years; and in practice, because of the way he has fixed the multiplier, he has lifted the cap for people retiring from defined benefit schemes to about £2 million. The National Audit Office concluded that twice as many people would be caught by the cap as the Treasury claimed and described the Treasury estimate for future numbers being affected as having "a thin evidential base". I rather like that. Next time, the Chancellor should bluster less and consult more.
Simplified rules for pension taxation help only people who already want to save. The real problem is the millions who have lost confidence in the private pensions system altogether, or who never joined it in the first place, as is the case in particular with so many of the young today. I still remember the blank look from my daughter when I tried to talk to her about
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pensions when she started her first, quite well-paid job last year. "A pension, Dad?", she said. "Get real, I'm 21!". Our parents' generation had savings books; our children's have credit cards.
So the pension protection fund is the centrepiece of the government's efforts to encourage occupational pension provision, together with their Pensions Bill, which we look forward to scrutinising and revising with vigour when it reaches your Lordships' House.
Let me make it crystal clear from the start that we on these Benches support the fund. Why, incidentally, does it have to be based in southern England, as the advertisement in the Sunday Times for the new chief executive and chairman stated? I can tell your Lordships that there is no shortage of top-class actuaries and lawyers in Leeds, Glasgow or Edinburgh. But we support it and we have been moved by stones such as that told by the noble Lord, Lord Brookman, about the ASW members who paid into their fund for many years only to lose most of their benefits just before they retired. That was partly because of the unfair order of priority on wind-up, which we are waiting to have sorted out.
I saw a particularly shocking example this week, not of a struggling steel company but of a highly profitable multinational company, Felix Schoeller, which makes photographic papers on seven production sites in Germany, Canada and the United States. It did a really brutal asset strip on the Glory Paper Mill in Wickham. It bought the mill in 1995; closed it in 1999; moved the machines to East Germany; wound up the pension scheme in 2002; left 350 members with a £12 million deficit; and then flogged off the site for housing and a luxury health club. That was a particularly vicious and wicked example and I am not surprised that the chief executive of OPAS called it scandalous.
I do not have time to go into the details of that, but the clear message is that the law must be changed to stop firms, British or foreign, walking away from under-funded subsidiary pension schemes for at least five years after they have sold them. The "moral hazard" will be dealt with when the PPF comes in, but this sort of exercise is widespread and almost a part of the way of life of American sharp financiers who leave the environmental liabilities with the state and the pension liabilities with the pension benefit guarantee corporation. We need to be careful to avoid that.
We need the PPF, but we equally need to get it right at the start when we set it up. The Government plan to set it up with all funds, strong and weak, prudent and profligate, safe and risky, paying the same flat rate per member—a poll tax on pension funds in fact. They plan to duck the hard job of getting the balance right between what different funds pay to the board of the PPF a year or more after it had got going. I am afraid that that is not good enough. That really is asking Parliament to approve a menu without prices. It is not a minor job to be left to the technicians later. We must get a real feel for how the risk-based levy will work, what the weaker firms will have to pay and fund, to

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judge whether the whole scheme is viable on the basis the Government propose. There is, remember, no government guarantee of any kind.
The Government stand behind the Pool Re reinsurance scheme, which provides insurance cover against terrorist incidents. Why is it unthinkable for them to do that in the case of the PPF? Public confidence in savings really would collapse once and for all if the Government ever allowed the PPF to default on its obligations. Why not build in a contingency plan now to avoid that disaster rather than have an inevitable panic reaction, back-of-the-envelope rescue by government, which we all know would happen?
Let me conclude with a brief welcome and a warning about new vehicles for pension savings in property. As regards commercial property, with well-spread portfolios of different commercial property, that is welcome. But the proposal to select investors for individual buy-to-let houses or flats, or even their own second homes, into their tax-sheltered pension funds could be playing with fire in an over-heated housing market and wide open to abuse. The concentration of risk involved, when you have already got most of your assets in one house and then having one more house, does not bear thinking about. No one who advised people to put all their pension funds into two single shares would be other than guilty of the most gross mis-selling. I strongly advise against that.
Given that in the debate we have heard of the depth of concern about the future, although we all want to work together to solve it, let me make clear that in my view we will never be able to build a solid private pension structure on top of the morass of means-testing in public pension provision. As the Select Committee put it, the Government's heavy and growing reliance on means-testing the pensioner population is regrettable because it sends a clear signal to many current workers that it is not in their interests to save for their own old age.
7.55 p.m.
Lord Higgins: My Lords, I, too, congratulate my noble friend Lord Fowler both on providing a debate for us on the subject and on the way in which he introduced the proposals. As has been pointed out, there have been a considerable number of debates on the subject over time. Nearly all the usual suspects have managed to arrive on schedule, but we are also joined today by the noble Baroness, Lady Dean. We listened with great interest to what she had to say. Also my noble friend Lord Hunt, who does not always participate on these occasions, made some interesting points.
In winding up a debate on pensions, one is seriously up against time. I was inclined not to spend much time on the Pensions Bill provisions because I assumed that we would have reasonable time in this House to deal with them in due course. However, I express the hope that the other place also has adequate time and is not programmed out of existence as has been the case with previous pension Bills. They must be able to scrutinise it properly before it arrives in your Lordships' House.
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Almost half of those who have spoken today have spoken about the Pensions Bill, including the noble Baronesses, Lady Barker and Lady Dean, and my noble friend Lord Freeman. I do not want to anticipate the debates on that Bill, but I want to make one or two particular points. A serious moral hazard argument is involved. Less sensible companies may well tend to take risks they ought not to take if they believe that at the end of the day the protection fund will pick up the pieces for them. A number of people, including the noble Baroness, Lady Barker, stressed that it may well be unfair on prudent companies because they will be paying into a fund and not claiming on it when less prudent companies reap the benefit of the protection.
I have a great deal of concern that this ought to be risk-based; there ought to be a risk component in the contributions. It is unfortunate that the Government have said that that will not be the case for the first year. I would almost rather see the provision delayed and then start on a risk-based system because I have a nasty feeling that it will continue as it began and never be risk-based.
In addition, the proposals in the Bill may result in some companies which have defined benefit schemes deciding that they would rather not join in this operation and therefore change to a defined contribution scheme. It is therefore likely to be a deterrent to good pension schemes, rather than the other way about.
A number of other points have been made, particularly on the savings ratio which has been halved. A point which no one has mentioned is that in recent years many people have invested in PEPs or ISAs rather than pension schemes because of the considerable advantages in terms of liquidity and so forth. It seems to me extraordinary that, when under this Government the pensions ratio has halved, the Chancellor of the Exchequer chooses this particular moment to reduce the tax benefits on ISAs and to reduce the amount which can be invested in t hem. That seems an extraordinarily paradoxical way to go about things.
Other noble Lords have commented on the decline in the number of final salary schemes. My noble friend Lord Freeman referred to it as a slow decline. Alas, I fear that it is anything but; it is a massive and rapid decline which gives considerable cause for concern. In addition, a number of Members commented on final salary schemes in the public sector. I noted with interest a few days ago that for the first time since the 1970s the number of people participating in public sector defined benefit schemes exceeded the number of people in the private sector participating in private sector schemes. There is growing concern at the disparity which is becoming apparent between those schemes, which gives rise to considerable disquiet.
I was fascinated by the remarks of the noble Lord, Lord Brookman. As changes have taken place, there has been an increasingly active interest on the part of trade unions. They have always had an interest but the pensions issue has not been in the forefront of their minds in the way that it is now. I welcome that; it is of tremendous importance. However, it has to be done sensibly.

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In my previous role as chairman of a pension fund I was rather disturbed when this issue arose. I managed to persuade the company concerned to retain a defined benefits scheme. However, on grounds of costs it decided either to increase the contributions paid by the employees and by the company or to say that they would contribute the same amount and keep the same benefit. As chairman, I thought that the important point was that they should be given the choice. I am glad that the leaflet issued by the National Association of Pension Funds refers to that particular case. I was rather disturbed that the British Airways union has been proposing to take industrial action even in the face of being given that choice. That company has very large pension liabilities at present.
Many noble Lords referred to stakeholder pensions. Given the amount of time we have spent on this, the fact that 90 per cent of those have no members, assets or contributions but are mere shells is as big a disappointment to me as it must be to the noble Baroness who is to reply to the debate. My noble friend Lord Hunt pointed out that one of the reasons for that was the very stringent restriction on the 1 per cent rule which the Government imposed. However, the fact that these are just so many empty boxes is obviously very worrying.
I am concerned at the way in which the Government are pushing stakeholder pensions. To some extent, that is a mis-selling operation. On previous occasions the noble Baroness and I have discussed how much of a savings fund one needs to ensure that one eventually receives some benefit and that it is not all means tested away. Over time we have had some dispute as to what is the exact figure. However, is it not true to say that if someone has accumulated a stakeholder pension but no other pension provision, of say £30,000, all of that is likely to be means tested away—perhaps not means tested away but they will not receive any benefit as a result of it? The way that the means testing system works remains a serious deterrent.
I was going to make a speech on Equitable Life and the Penrose report. I was going to be very rude about a number of people including, I confess, Lord Penrose, who in his postscript seemed to me to have missed the object of the exercise, and also to attack the Parliamentary Ombudsman, who was being very wishy-washy on this issue. We have reached the stage where that matter should go to the Parliamentary Ombudsman. Despite her reluctance and the way in which she and her predecessor have behaved, it really should be the case that that should be resolved in that way.
In conclusion, I merely take up the point made by the noble Lord, Lord Lea of Crondall. He quoted Keynes saying that in the long term we are all dead. That is so, but, if we are lucky, before then we may draw pensions. That at least explains the great concern which exists on this issue.
8.6 p.m.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham): My Lords, I deeply regret that with such an interesting debate we are confined to two hours and do not have an extra half hour. That means, for example, that I have only 15 minutes and I am not sure that the noble Lord, Lord Fowler, will receive even one minute. I must therefore endorse even more than usual my apologies for any discourtesy in not seeking to address issues and questions. Like the noble Lord, Lord Higgins, I too was expecting to say rather more about the Pensions Bill. I have dumped all of that. I have taken about three-quarters out of my speech and perhaps I can do more if I go faster.
This is a welcome debate, and I am glad that we have had it. I am amazed at how much of the speeches from the Opposition Benches I find myself agreeing with, particularly the description by the noble Lord, Lord MacGregor, of the landscape, to which I shall return. That was particularly enriched by the role reversal which was going on in which nearly everyone from the Opposition Benches called for compulsory pensions which apparently did not cross the Government's agenda or papers in their long years in power and responsibility. However, I suppose that the privileges of opposition allow a loosening of such mental structures.
I shall start with the points made by the noble Lord, Lord MacGregor. I agree that the landscape we face, which he described very accurately, is one of stock market pressures, although recently they have somewhat abated. That is affected by the demographics of rising longevity: 18 months to two years for every decade that we progress, and by labour market mobility, which is increasing among those in their twenties, though not so much by older people.
I was curious that none of the noble Lords opposite remembered that the situation has also been made worse by the severe and growing inequality that occurred among pensioner incomes between 1979 and 1997. We know that during that period real wages rose by 36 per cent and pensions rose by some 64 per cent—I pay tribute to the previous government. But that concealed widening inequality among pensioners, of whom the bottom one-fifth saw their incomes rise by only 30 per cent, while the incomes of the top one-fifth rose by 80 per cent. This Government face pensioner poverty, market problems as regards confidence in second pensions and issues of longevity.
Central to seeking to meet those very real demographic, economic and social justice challenges, we must give people the information and confidence that they need to plan for their retirement and the flexibility to do so in a changing environment. Our informed choice agenda will ensure that all people of working age have access to personalised information tools, web-based retirement planners and pension forecasts to help them to understand what they need. I agree with everything that noble Lords have said: only when people realise just how little income their savings may buy them will they be tempted to put more aside.

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Our Pensions Bill will improve confidence by strengthening the protection offered to members of pension schemes. The PPF will mean that for the first time ever individuals in DB schemes based in the UK will know that they will receive a meaningful pension, even if their company becomes insolvent and leaves the pension scheme underfunded. Like my noble friend Lady Dean, I am delighted that the current Government are at last responding to the calls which some of us were making in 1994 for provision such as central discontinuance funds, on which the noble and learned Lord, Lord Mackay, outvoted the Opposition Benches—although I should like to think that he did not out-argue us.
However, a number of noble Lords, particularly the noble Lords, Lord Oakeshott and Lord Higgins, and the noble Baroness, Lady Barker, were concerned that PPF increased the risk of moral hazard. I wish to make two points. First, the risk-based levy is designed to address that. I share with the noble Lord a wish that we could have gone immediately into a risk-based levy assessment. But we are dealing with 10,000 DB schemes; it takes time; and the alternative would have been to leave other schemes without the sort of protection that my noble friend Lord Brookman called for so movingly for people whose pensions are at risk.
I shall make one further point on moral hazard. There are sometimes calls for the Government to stand behind such a pension protection fund. That would invite every marginal employer to know that the Government would pick up the pieces. Put another way, if the Government were to pick up the bill for asbestosis claims, you could be damn sure that no employer would seek to improve protection for employees against asbestosis. We all understand the moral hazard issue. That is why the Government believe it right that the industry should be helped to police itself within the framework laid out by the pension regulator.
The Pensions Bill will also enable greater flexibility by replacing the inflexible minimum funding requirement with scheme-specific funding requirements, as my noble friend Lady Dean said. That will allow schemes the freedom to adopt the most appropriate funding strategy within a rigorous—that is part of the EL debate that we are not having tonight—regulatory framework of risk analysis, rather than chasing nugatory offences as at present. I was told by the chairman of OPRA that around 50 per cent of offences involved chasing employers who were three or four days late in paying their contribution. If we could get rid of some of that graffiti, if you like, and get into the real issue of addressing companies at risk, we could more honourably serve the needs of people in DB schemes.
We need to ensure that people will be confident in our pension protection fund schemes. My noble friend Lord Lea was absolutely right on that. I am glad that, for the most part, the schemes have been welcomed tonight. I wish to address the four main comments and criticisms that I think noble Lords have made. First, there has been a bundle of comments on the wider points about the savings regime, including the savings ratio, ACT and capping. Secondly, there have been comments about the structures of our current systems,
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with regrets expressed about moving from DB schemes to DC schemes, issues about annuities at age 75 and stakeholder pensions. Issues have been raised about regulation, particularly ASW and Equitable Life—I shall not speak to that, as noble Lords did not particularly address EL tonight. Finally, there were calls for an increased, strengthened basis in state provision. I think that it would be fair to say that nearly all the comments raised by noble Lords have fallen under those four broad headings. I wish to have a go at responding to them.
I turn first to the savings ratio. My noble friend Lord Lea of Crondall, and the noble Lords, Lord Freeman and Lord Higgins, said that the savings ratio in this country has halved over recent years. It is worth taking a moment to deconstruct that argument. What do we mean by the savings ratio? It is not what most of your Lordships assume that it means. I hope that people will not continue to use this as an indictment of Government policies.
Precautionary savings, bank account savings, building society savings, stocks and shares are included in the savings ratio. However, pensions, by far the most important form of saving for retirement, are only included in the savings ratio as a net concept, once pensions in payment have been deducted. Pensions savings—people's deferred income for their old age have only a modest effect on the savings ratio. Most private pension provision, which is what really matters, is not central to the savings ratio at all. It is determined in the work place, it is employer-driven, and its contributions tend to be stable. Occupational pensions coverage has remained stable, and I would be surprised—although we still need to do further work on this—if the proportion of GDP reflected by occupational pension contributions has changed much over the past 20 years or so.
That is one of the key assets that we take into old age. The second key asset is the value represented by housing. In this country, 71 per cent are owner-occupiers, compared to 45 per cent in France. That too is a significant asset not included in the savings ratio. The savings ratio only reflects the difference between the denominator and numerator, the income and expenditure on pensions, together with precautionary savings. Those precautionary savings fall if people think that they do not need to take precautions because they are confident about the economic situation, as indeed they are.
When we come to talk about the savings ratio in the Bill, I hope that your Lordships will concentrate instead on what seems to matter to me, which is what assets people take into their old age in order to ensure that they have a comfortable life accustomed to their expectations. The savings ratio is possibly the least useful indicator of that when people enter their old age. I have spent a little time on this, but it seems to be a source of much misunderstanding. No doubt we will explore it when we come to the Bill. I hope that we will concentrate on what really matters, which is the pension asset and possibly even the housing asset.

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Precautionary savings is a relatively modest player in terms of the comfort with which people go through to old age.
We have heard some fairly predictable points about ACT. We disagree on that, and I will not repeat the arguments. Myners said at the time that the quality of management was probably 10 times more important than any tax defamations, which is what we think ACT did, by encouraging companies to go for dividends rather than reinvesting in their company. The Government's view on that has not changed.
The current cap for the year 2004–05 is £99,000. The DB scheme is two thirds of that, which is what the normal DB scheme might represent, £66,000. Multiply that by 20 to get to the £1.5 million that the Chancellor adopted before the Budget. Therefore, the lifetime's earning is effectively meant to be a straightforward read-across from that grossed up sum. The noble Lord, Lord MacGregor of Pulham Market, made a general point, and I agreed with him. There is no reason on God's earth why people should not save in vehicles other than pensions. I do not see for the life of me why someone with a pension fund worth £1.5 million, or in time £1.75 million, should also expect a further 40 per cent on additional savings courtesy of taxes paid by the rest of us. They can continue to save—what they want is tax provision of 40 per cent on top. I do not see why we should be particularly sympathetic to that plea from the best-off to have additional payments from those who possibly do not even enjoy pensions in their own right.
The old chestnut of annuities at 75 was pressed by the noble Lord, Lord Higgins, and others. If one were to take out, as I think everyone would accept, the value required to float off IRBs, whether that is £100,000 or a higher or lower figure depends on assumptions that one makes about housing costs and so on, and whether one is in a couple, if one then stripped out the tax privileges, which one would have to do, worth on average 30 per cent, and if it was then further subject to an inheritance tax at 40 per cent, I wonder whether the siren calls for removing the 75 rule would be so seductive. I will move on to some other issues. DB to DC scheme closures are a source of much regret by the noble Lord, Lord Freeman, and my noble friend Lady Turner of Camden. Yet, providing, given a mobile workforce, the level of contributions is broadly similar over time and is adequate—those are important provisos—DC schemes can be at least as good, and for many people, preferable to DB schemes. They help those who are mobile and those who are unlikely to gain from late career progression, which tends to be middle aged, middle class, middle salary men.
We should think of the money lost, as my noble friend reported, when there were contribution holidays on DB schemes. With DC schemes, there would have been no such contribution holidays, and the funds might have grown accordingly. I take the point about risk, but the level of contributions is at the core of the matter. DC schemes are not helped when—if GMB's figures are correct—a major food supermarket produces a DC scheme that is 2 per cent plus 2 per cent or one of
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our leading chain chemists companies has a DC scheme of 3 per cent plus 3 per cent. Such sums will lift nobody out of poverty in old age.
It is true that stakeholder pensions have not had the success that we would have hoped for. Some 1.8 million schemes had been bought by December 2003. There is the issue of charges, and there is, above all, the issue of employers' contributions. If employers contribute, stakeholder pensions are a success; where they do not, they are not.
I shall not go into Equitable Life, except to say that I am persuaded that the regulatory regime did what Parliament intended and ensured the solvency of the company in meeting its guarantees. At the time, Parliament did not intend that the regulatory regime could appropriately go beyond that. Only if there was a fault in the process of the regulatory regime could any charge of maladministration leading to compensation arise.
I shall take a minute to talk about the Tory Party's policies on the basic state pension. We all accept the need for a basic state pension that is a firm building block. I disagree, however, with the current Tory proposals to link the basic state pension to earnings, while tying the pension credit to RPI, in effect freezing it. That is deeply regressive. It would mean, for example, that women—only 14 per cent of whom go into retirement with a full basic state pension—would not gain from any earnings link and would lose the pension credit because it would have been frozen. It would mean that I and others in your Lordships' House would get a better basic state pension, while women forced to depend on pension credit would see those sums frozen. The sums would not be caught up by the basic state pension for something like 14 years. I hope that, on reflection, your Lordships will not find that to be the way to go.
There is a tension between helping the poorest pensioners, which needs to be done through income-related benefits, and encouraging people to save. That is why I think that the pension credit squares that circle elegantly, with its guarantee on one side and its savings element on the other, which will benefit people who have modest pots of £30,000 in their DC schemes. Only if a government can get it right and deal with the poverty of pensioners while rewarding saving can we have a future in which comfort lies in reliable, robust and adequate private pensions.
8.22 p.m.
Lord Fowler: My Lords, I thank the Minister for her reply, and I thank everybody who took part in the debate. It has been extremely useful and extremely good. There has been no substantial disagreement about the fact that we face a pensions crisis and that we must restore confidence.
The Minister has offered no hope of compensation, either in the case of companies or in the Equitable Life situation. However, I agree with all those who said that we should aim for as much cross-party agreement as possible. There will be differences, and I have just set

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out two of them. We all agree on the fundamental importance of good pension provision. With that, I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

Local Government in Scotland Act 2003 (Destination of Fixed Penalties in Scotland) Order 2004
8.23 p.m.
Lord Evans of Temple Guiting Lord Evans of Temple Guiting rose to move, That the draft order laid before the House on 25 February be approved [11th Report from the Joint Committee].
The noble Lord said: My Lords, with the permission of the House, I shall take the two orders together and—also with the permission of the House—speak to them in the reverse order from how they appear on the Order Paper.
The instruments are to be made under Section 104 of the Scotland Act 1998. Where such instruments amend primary legislation, as both do, the Scotland Act requires them to be subject to affirmative resolution in both Houses. The instruments were considered and approved in the other place on 16 March.
As is usual with affirmative instruments of this type, copies of the explanatory memorandums on each are available in the Printed Paper Office. Instruments under Section 104 are used when changes that would be outside the legislative competence of the Scottish Parliament need to be made. I should like to stress to noble Lords that these changes are consequential. They are a matter of good housekeeping by ensuring that the relevant statutes are up to date after the Scottish Parliament has exercised its legitimate power to legislate in areas of devolved competence.
The instruments before us are two in a series of consequential amendments being made in relation to the Primary Medical Services (Scotland) Act 2004 and the Local Government in Scotland Act 2003. The Scottish Executive has been making its way through these consequential changes and agreed with the relevant Whitehall departments—in this instance, the Department of Health and the Treasury—that these orders be laid for consideration so as to come into force by 1 April 2004. The orders are an example of the partnership between the Government and the Scottish Executive that continues to make devolution work so successfully.
The draft primary medical services order is being made in consequence of the Primary Medical Services (Scotland) Act 2004. As set out in the explanatory memorandum accompanying the instrument, the services provided by general practitioners to the NHS in Scotland are provided at present in one of two ways: either by way of a statutory arrangement between the health service bodies and the GPs called "general medical services" under Section 19 of the National Health Service (Scotland) Act 1978 or by way of an arrangement called "personal medical services" under Section 17C of the 1978 Act. These services are in
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substance the same, but are given different labels according to the arrangements under which they are provided.
That old regime is being replaced by amendment of the 1978 Act as set out in the 2004 Act of the Scottish Parliament, which brings all these services under a single label—primary medical services. It puts a duty on health boards to provide or secure what are to be known as primary medical services. The boards will be able to provide these themselves or secure the services by making arrangements with a GP or GP practice. The boards can choose which arrangements they make if they wish to secure the services from others. They are not limited to the particular arrangements for which detailed provision will be made in the 1978 Act.
However, two sorts of arrangement are set out for their use. These are, first, a general medical services contract under new Section 17J of the 1978 Act, inserted by the 2004 Act and replacing the current Section 19 arrangements, or, secondly, arrangements under Section 17C of the 1978 Act, as amended by the 2004 Act. Sections 17C and 17J of the 1978 Act, along with all the provisions about primary medical services, will be found in Part I of the 1978 Act. Previously the provisions about general medical services were found in Part II of the 1978 Act.
The new primary medical services regime for Scotland will come into force on 1 April. Therefore, the references in legislation to the existing regime, including general medical services under Part II of the 1978 Act, and personal medical services under Section 17C of the 1978 Act require to be dealt with. Otherwise the legislation that contains them will either refer to the incorrect regime or contain spent references to a redundant regime.
The exercise could not be undertaken in the 2004 Act of the Scottish Parliament as it involves the modification of the law of England and Wales (and Northern Ireland, where appropriate) as well as modifications of reserved law. Accordingly, it would have been outside the legislative competence of the Scottish Parliament to make such modifications. Therefore, in order to ensure that the statutes continue to work and to remove references to the old regimes from the statute book, the amendments set out in the schedule are required.
The second instrument is being made in consequence of the Local Government in Scotland Act 2003. This instrument provides for a simple, technical amendment to Section 95 of the Road Traffic Offenders Act 1988.
Section 95 concerns the destination of fines imposed in respect of certain road traffic offences committed in Scotland. This order will amend Section 95 to provide for fixed penalties imposed for the offences listed in Section 46(2) of the Local Government in Scotland Act 2003 to be paid into the Scottish consolidated fund. Section 46(2) of the 2003 Act concerns speeding and red light offences in Scotland.
The background to Section 46 of the Local Government in Scotland Act 2003 and the proposed Section 104 order relates to the funding of safety

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camera partnerships in Scotland. In 1998 the Treasury announced that revenue from fixed penalty notices issued to drivers caught speeding on camera or passing red lights could be used to fund the installation, where this is justified, of the camera equipment. The revenue could also pay the operating and administrative costs arising from enforcement. The initial pilot projects went live in April 2000, and since April 2002 safety camera partnerships have been established widely across the UK.
The schemes were set up on the understanding that there should be specific statutory powers authorising retention of the income from fixed penalties for the purpose of the scheme, essentially ring-fencing the money raised from receipts. Until such statutory cover could be provided in Scotland, the funding arrangements for the schemes to enable ring-fencing were dealt with on an administrative basis. In England and Wales, the pilot projects had interim legislative cover under the Appropriation Acts and provision was included in Section 38 of the Vehicles (Crime) Act 2001 which empowered Ministers to make payments to authorities in connection with the provision and operation of safety cameras.
In Scotland, the statutory cover was to be provided through a three-stage legislative process. First, a tailored funding power would be provided through Section 46 of the Local Government in Scotland Act 2003, which closely mirrored that already in operation in England and Wales through the Vehicles (Crime) Act 2001.
Secondly, as a consequence of the Local Government in Scotland Act, clarification that the moneys from these fixed penalty notices should be paid into the Scottish consolidated fund. This amendment was necessary because at present there is no provision in the Road Traffic Offenders Act 1988 requiring fixed penalty receipts to be paid into the Scottish consolidated fund. The subject matter of the Road Traffic Offenders Act is reserved by the Scotland Act 1998 and it would therefore be outside the legislative competence of the Scottish Parliament to amend it. The proposed order before the House will make this amendment to the reserved 1988 enactment.
Thirdly, an order under Section 64(5) of the Scotland Act 1998 would allow the Scottish Executive to keep the moneys from the safety camera partnerships. This order is necessary because at present the Scotland Act 1998 (Designation of Receipts) Order 2000 designates all fines, forfeitures and fixed penalties for the purposes of Section 64 of the Scotland Act. This has the effect of requiring Scottish Ministers to pay such receipts to the UK consolidated fund. The new Section 64(5) order will allow the receipts from these fixed penalty notices to be excluded from this requirement. Scottish Ministers will therefore be able to distribute the receipts retained in the Scottish consolidated fund in terms of Section 46 of the Local Government in Scotland Act.
The Section 104 instrument is therefore part of a three-part package to enable the funding of Scottish road safety partnerships to be constituted on a statutory basis. As noble Lords will have noted, this would have been outside the legislative competence of the Scottish
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Parliament and the Government therefore wish to make this technical amendment to support the work of the Scottish Executive in this area. I commend the order to the House.
Moved, That the draft order laid before the House on 25 February be approved. [11th report from the Joint Committee.]—(Lord Evans of Temple Guiting.)
The Deputy Speaker (Lord Tordoff): My Lords, although the Minister spoke to the orders in reverse order, I intend to put the Motions to the House in the order in which they appear on the Order Paper. Therefore, the Question is that the Motion relating to the Local Government in Scotland Act 2003 (Destination of Fixed Penalties in Scotland) Order 2004 be agreed to.
The Duke of Montrose: My Lords, I am happy that we can discuss the two orders jointly, as we are all agreed on the subject. I am grateful to the Minister for the way in which he has brought these two instruments before the House. My impression is that he has been able to make their meaning even clearer than when they were presented in another place.
I know that some may have misgivings when the words "Scots" and "money" come in close proximity. I hope that we shall not go down the road of that ancient series of calumnies which was rendered as: an Englishman is a self-made man who worships his creator; a Welshman prays on his knees and his neighbours; an Irishman may not know exactly what he believes in but he is willing to die for it; and a Scotsman keeps the Sabbath and anything else he can lay his hands on. But I have to admit that the Scots are always interested in whose pocket the money lands up.
The Minister began by considering the primary medical services order. I know that he explained to us that it was purely consequential, but I also note that during the process of scrutiny both in the Scottish Parliament and in another place concerns were expressed about how the new GP contracts are seen to be working, particularly in rural areas.
Does the new arrangement do anything to reduce the amount of paperwork and improve the morale of those working under such conditions? At present, that problem seems to show itself in understaffing and people seeking early retirement. Can the Minister comment?
Turning to the order concerning local government in Scotland, it is obviously to be welcomed if a way can be found to simplify the transfer of money in order to achieve some useful purpose. The Minister explained that the order relates to the funding of safety camera partnerships in Scotland and that it is to be ring fenced. Can he explain how that will occur?
Noble Lords would be interested to know whether, on current experience, the amount of money is expected to increase. Exactly how many safety camera partnerships are operating in Scotland at present? Is the sole criteria in the placing of those cameras the reinforcement of public safety; and is there any danger that the number may not simply be increased until they can provide finance for as many activities as can be swept in under the heading that the Minister mentioned?

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If, on the other hand, the money exceeded that requirement, what is the arrangement for dealing with any surplus? Can the Minister assure us that this cannot be seen just as a way of making money? The measures have generally received quite a good welcome from all sides, but I think the House could be more reassured if the Minister felt able to answer those questions.
The Earl of Mar and Kellie: My Lords, I am grateful to the Minister for explaining to us the purpose of these two orders. I am completely content with the narrow purpose of the primary medical services order. Like the noble Duke, the Duke of Montrose, I am well aware that the National Health Service in Scotland is a devolved matter, but there is undoubtedly concern about the delivery of rural GP services under the new contract. I cannot let the opportunity pass without mentioning what seems to be the collapse of the NHS dentistry almost everywhere—not just in rural areas. Can the Minister say something definitive about the description, "primary medical services"? That would be helpful.
Turning to the destination of fixed penalties order, I am, again, content with the narrow purpose of the order. It is devolutionary in nature not just because it transfers the proceeds of traffic fixed penalties from the Treasury to the Scottish Parliament but because it provides the opportunity to end the rumour or belief that fixed penalties are there only as a central Government cash cow. To do so, the Scottish Executive will need to propose that these proceeds are applied to transport and traffic issues and the Scottish Parliament will need to agree to that. Can the Minister clarify the simplicity of the new system?
I end on a constitutional point. These Section 104 orders are good ones for constitutional anoraks in that they are related closely to Acts of the Scottish Parliament but are evidence of the need for this United Kingdom Parliament to legislate on very narrow points to complete Scottish legislation. We must clearly watch out for these Section 104 orders in the future, not that they threaten us too much.
Having sat through the whole of the Scotland Bill, I do not remember Section 104 and its consequent orders being drawn to the attention of the House. These orders are, of course, the embodiment of the co-operation required to make devolution work—so much so that I wonder whether we would have any real right to reject them if we wanted to or felt that we needed to.
Lord Evans of Temple Guiting: My Lords, I am grateful to the noble Duke, the Duke of Montrose, and the noble Earl, Lord Mar and Kellie, for their questions. I shall attempt to answer them. I shall write to the noble Lords on any point that I do not answer.
I was asked what is actually meant by a primary medical service order. Primary medical services are those services normally provided by a GP, such as the treatment of patients who are ill with conditions from which recovery is generally expected, contraceptive services, maternity services, child health surveillance and the treatment of minor injuries. They also cover
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opportunistic health promotion, referring patients to an acute sector and continuing care after a patient has been discharged from an acute sector.
Both noble Lords asked how primary medical services will work in rural areas, an issue raised in the other place. They will understand that this is not the purpose of the order before us, which is needed to ensure that legislation that makes reference to expired provisions is brought up to date. However, as I said, this issue was raised in the other place and the Scottish Executive has helpfully provided me with information on this issue that can be shared with noble Lords.
The Scottish Executive Health Minister recently informed the Scottish Parliament that the new general medical services contract is supported by a 33 per cent increased investment in primary care over three years, allocated through a funding formula designed to respond to the needs of remote and rural communities. The contract guarantees that patients across Scotland will continue to be offered at least the range of services they currently receive and the contract's quality and outcomes framework will incentivise practices in all areas to improve these services.
A number of questions were asked in relation to the local government in Scotland order. Given that the order simplifies the administering of the transfer of money, I was asked whether the Government have figures to back up the assertion that the revenue distributed in this way is not substantially increasing. The amount of revenue generated will, of course, depend on how many people are caught by speed cameras and thus have been breaking the speeding laws.
It is important to note that noble Lords are here to determine where the money goes once it has been raised, not how much money is raised, but, if it helps, I can give the historic figures from the Glasgow pilot. Between 2000 and 2001, £450,000 was raised, which increased to £850,000 between 2001 and 2002. But it is important that I make it clear to the House that the Government believe in the use of safety cameras to minimise casualties, not to maximise income. That point applies to Wales and England as well as Scotland. We stand firmly by the maxim that the most effective safety camera is the one that raises no revenue at all.
Concern has also been expressed about the administrative arrangements for the transfer of funds and why there is a need for change. The receipts from safety camera partnerships are currently collected by the district courts, passed to the safety partnership treasurer, which is the lead local authority for the partnership, and then passed to the Crown Office. This, in turn, is passed to the UK Consolidated Fund and remitted to the Scottish Executive under the Appropriation Acts.
Under the proposed new arrangements, the money would pass to the Scottish Consolidated Fund and would be available to the Scottish Executive for approved purposes only, effectively ring-fencing the receipts to pay for the administration and operation of safety cameras.

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The legislative basis for the current arrangements are the Treasury's Appropriation Acts and the Scottish Executive appropriation orders. As a matter of good practice, these should only be used to support financial arrangements on a short-term basis, where no other legal mechanism exists. At the outset of the Scottish safety camera programme, the Government agreed that a specific statutory footing should be introduced at the earliest opportunity. The order before us is the second stage in this process.
I believe that I have answered the questions that have been asked.
On Question, Motion agreed to.

Primary Medical Services (Scotland) Act 2004 (Consequential Modifications) Order 2004
Lord Evans of Temple Guiting: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Primary Medical Services (Scotland) Act 2004 (Consequential Modifications) Order 2004 laid before the House on 25 February be approved [11th Report from the Joint Committee].—
(Lord Evans of Temple Guiting.)
On Question, Motion agreed to.

Harbours Bill [H.L.]
8.47 p.m.
Read a third time.
Clause 2 [Amendment of procedure where harbour revision orders are made by the Secretary of State of his own motion]:
Lord Davies of Oldham Lord Davies of Oldham moved the amendment:
Page 3, line 24, after "relevant" insert "nature"
The noble Lord said: My Lords, this amendment, in the name of my noble friend Lord Triesman, is a technical amendment to correct an error in Clause 2, page 3, line 24. The reference to "relevant conservation body" should read "relevant nature conservation body".
Although this is a minor amendment, it gives me the opportunity to apologise for the fact that my noble friend is not able to be present to move the amendment himself. He has played a full part in the passage of the Bill, on which I congratulate him. It is a minor but nevertheless extremely useful Bill and the Government are very pleased with its progress through this House. We wish it well when it appears before the other place in due course. I beg to move.
On Question, amendment agreed to.
Lord Berkeley: My Lords, I beg to move that this Bill do now pass.
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I thank all noble Lords who have taken part in the various stages of the Bill and for the good advice that we have had from the noble and learned Lord, Lord Donaldson, the noble Lords, Lord Greenway and Lord Bradshaw, the noble Viscount, Lord Astor and many other noble Lords. As my noble friend Lord Davies said, this is one of the first Bills since the noble Lord, Lord Triesman, joined your Lordships' House. He has been terribly helpful and everything has gone extremely well. We have not wasted too much of your Lordships' time. I hope that we have also satisfied the concerns of the Royal Society for the Protection of Birds.
Like my noble friend, I believe that the Bill will make a small contribution towards simplifying, reducing the cost of and speeding up the small changes required under the Harbours Act 1964.
Moved, That the Bill do now pass.—(Lord Berkeley.)
On Question, Bill passed and sent to the Commons.

Goods Vehicles (Licensing of Operators) (Temporary Use in Great Britain) (Amendment) Regulations 2004
8.50 p.m.
Lord Bradshaw Lord Bradshaw rose to move, That an humble Address be presented to Her Majesty praying that the regulations, laid before the House on 27 February, be annulled (S.I. 2004/462).
The noble Lord said: My Lords, I would like to ask the Minister several questions about the regulations. This seems an obscure piece of legislation, but it has significant consequences for road haulage and road safety in this country. The Minister may be able to put my mind at rest, because there is little in the regulations to describe their effect.
Why are the regulations necessary at all? Must we have them, or are they the result of representations received by the Government? I am not advising the Minister to take trips to various far-flung areas of Georgia, Croatia, Macedonia or Moldova, but what do the Government know about the licensing regimes for vehicles in those countries and for drivers who are based in those countries?
What records are kept of accidents and known breaches of regulations of drivers and the vehicles registered other than in the UK? I understand that no records are kept by the police because there is no space on the forms that they use at the sites of accidents or checks to record whether a foreign vehicle is involved or one based in the UK. It is important to know about the behaviour of vehicles registered abroad.
I appreciate that vehicles from most of these countries have not yet arrived here, but plenty of vehicles from Italy, Spain, Portugal and other places are here. When penalties are imposed on such vehicles, are they paid here or to the government of the country where the vehicle is registered? What evidence do we have that any penalties or notices of prosecution given

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here actually result in justice being administered here or abroad? Does giving people penalties have any effect whatever?
I have looked at the history of the enforcement efforts of Thames Valley police. I know that the police obviously target the most suspicious vehicles—they do not stop vehicles from Sainsbury's because they know that the transport manager would get the sack if anything were wrong. However, I was surprised to learn that, of the vehicles stopped, 34 per cent, 52 per cent, 37 per cent and 55 per cent were found to have defects or to have committed an offence.
It occurs to me that I should be asking whether the Minister is satisfied that sufficient resources are being targeted at the problem. Only five checks are planned this year in the whole of the Thames Valley area—and we cover a lot of motorways, including the M4, the M1, the M40 and the A34, which are significant roads carrying a large proportion of the country's traffic. The checks reveal quite a lot of criminal intelligence as well as offences relating to the vehicles or drivers themselves. Should we be making more checks? I believe that it is the case that the industry itself has said that it would pay for more checks through operator licences—provided that the Government undertook to devote the money raised by such an increase on actual checks. Those vehicles operating at the fringes of the law undercut the whole business and drive down the prices in the business.
Knowing the Minister's background, I wonder to what extent he believes that the low wages in the countries on the fringe of eastern Europe, where wage rates are very low, and possibly the low standards of vehicles of those foreign-based operators—the maintenance of vehicles, the operation of tachographs, the use of untaxed fuel and so on—undermine our own laws relating to wages, vehicle suitability and so on.
Is there any evidence that vehicles such as heavy lorries driven from the left-hand side are involved in more or fewer accidents than those driven from the right? I am not sure that that is recorded, but it appears to be a subject that should be recorded, because it is a matter of concern.
Lastly, I understand that it is a fact that in the accession countries—although I accept that some of the countries mentioned in the regulations are not accession countries the average fatality risk that is attributed to heavy lorries is three times greater than the EU average and five times greater than that in the UK. One's chances of being killed by a lorry from one of those countries appears to me to be very substantial. Are the Government right in exposing UK citizens and road users to those risks, when I am sure such things would be unimaginable in aviation or the railway industry? I beg to move.
Moved, That an humble Address be presented to Her Majesty praying that the regulations, laid before the House on 27 February, be annulled (S.I. 2004/462).—(Lord Bradshaw.)
8.56 p.m.
Lord Berkeley: My Lords, I have a lot of sympathy with the comments made by the noble Lord, Lord Bradshaw. I see why the regulations might be necessary to apply to accession countries—the 10 that will be joining the European Union on 1 May. The figures that the noble Lord gave for road accidents applicable to those countries, saying that there is a five times greater risk of an accident than in the UK, are very serious. I suspect that if one extended that comparison to Macedonia, Georgia, Croatia and Moldova, which are the four countries listed in the regulations that are not among the accession countries, one would find that the accident rate was even greater there. That is pretty serious.
I cannot understand why we have to have these agreements with those four countries, which are not joining the European Union in the next month. Have all the other member states of the European Union brought forward similar regulations with respect to drivers from Macedonia, Georgia, Croatia and Moldova? If not, why have they not? Is it the usual business that we are complying with perceived European regulations and nobody else is?
I support what the noble Lord, Lord Bradshaw, said about the industry offering to pay for more checks to ensure safer lorries here. It is a serious problem, and I hope that my noble friend the Minister can put our minds at rest, particularly with regard to the countries that are not accession countries. Frankly. one could easily extend that list to the rest of the world. No doubt they all have equally efficient DVLAs as we have in Swansea. Where do we stop?
There is also the question of driver rates. It is unfair on UK drivers when people coming from these countries not only come here with loads but then probably play cabotage for quite a long time, whether they are allowed to or not. I know that this was a big problem in Germany a couple of years ago when a company called Willi Betz apparently more or less decimated the German truckers market. There are some serious questions to be answered and I look forward to my noble friend's response.
9 p.m.
Earl Attlee: My Lords, I am grateful to the noble Lord, Lord Bradshaw, for introducing his Prayer this evening. I declare an interest as president of the Heavy Transport Association. I was a little surprised by the slightly xenophobic attitude of the noble Lord, Lord Bradshaw, because these countries may have their own reservations about our lorry drivers driving over there.
My first observation is about the complexity of the order. Why are there different rules for different countries? Why do we not have one standard rule for countries with which we want to have an international transport agreement? The Explanatory Notes are not very illuminating or helpful in that regard.
The noble Lord, Lord Bradshaw, mentioned the effect of competition. It is important not to underestimate the effect of one or two very low cost operators on the market rate for international transport. The noble Lord

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also mentioned the difficulties of driving a left-hand drive vehicle in the UK. I think that we need to be careful here because we are the odd man out in Europe as we are driving our right-hand drive vehicles on the Continent, although it has to be said that many of our international operators buy left-hand drive vehicles for international operations. But I think that we need to be careful about that criticism. I am proud of my small part in introducing impounding for illegally operated good vehicles. It was targeted at UK-based cowboy operators and a particular concern was tipper vehicles. At one point after we introduced this legislation I became concerned about cowboy operators using vehicles with Irish registrations. The problem was that UK authorities might be unable to determine whether a vehicle stopped at a multi-agency check was covered by an Irish operator's licence. I am not now aware of problems with Irish vehicles and hope that, due to the effective action of VOSA, the problem has disappeared. But I want to know how the UK authorities—VOSA—will be able to determine whether one of the vehicles covered by the order is covered by an operator's licence from, say, the Moldovan authorities.
I expect that local EU authorities—France, Germany and Belgium have close co-operation on "O" licence data with our authorities. But if, say, a Moldovan vehicle is stopped at one o'clock in the morning Moldovan time, will VOSA be able to find out from a database whether that vehicle has an operator's licence? If it does not have an operator's licence then that vehicle can be impounded. If we need to have access to a foreign "O" licence database, we will have to offer the same facilities to them, and online. That would involve the TAN21 database—it may have changed its name, but I think that we know what we are talking about. I do not see any arrangements in the order for sharing data on whether operators have a licence. The noble Lord, Lord Bradshaw, expressed concerns about accidents and vehicle defects. Those points were well raised and they are an anxiety for me.
I am a Tory Euro-sceptic but I am not a Euro-phobe or a xenophobe. However, I hope that the Minister has more confidence in the Georgian vehicle operator licensing system than he does in their election system.
Lord Roper: My Lords, I had not intended to intervene in this debate, but it is none the less a matter of some importance. Having listened to the interventions of my noble friend Lord Bradshaw, the noble Lord, Lord Berkeley, and the noble Earl, Lord Attlee, I have one or two questions.
It seems to me that the Czech Republic and Slovakia—which are of course accession countries that are coming in on a straightforward basis—fall into one group. Having visited Moldova, which is an interesting but not totally developed country, and having heard a little about some Georgian practices, I have to ask why it is that the UK develops its own policies towards these countries. Unlike the noble Earl, Lord Attlee, I am not a Euro-sceptic, but it seems to me that this is the sort of area where the European Union ought to be developing a common policy so that
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we approach them together. I am glad to see that on this issue I have persuaded the Euro-sceptic, the noble Earl, Lord Attlee, to see the value of the European Union. This is an issue on which a common policy seems to have some value. I look forward with great interest to the Minister's reply.
Lord Davies of Oldham: My Lords, I am grateful for the opportunity provided by this short debate to consider the safety of lorries on British roads and other related issues. I thought that the noble Earl, Lord Attlee, was a little savage on the noble Lord, Lord Bradshaw. I think that "xenophobic" is putting things a little strongly. "Illiberal", perhaps; or "a lack of understanding of the mutuality of benefit from these regulations and arrangements" may have been an appropriate charge.
Earl Attlee: My Lords, I did qualify my comments with liberal use of the word "slightly".
Lord Davies of Oldham: I must have missed that, my Lords; it sounds a little like an afterthought. However, I have no doubt that the noble Lord, Lord Bradshaw, is suitably chastened, even in such a mild form.
The first and most important question is why we need these regulations and why they are framed as they are. The regulations cover three states that will be joining the European Union and four which are currently not client states. However, I begin by welcoming the noble Lord, Lord Roper. He makes a most welcome contribution to our deliberations and speaks from a position of great authority on the European Community. The simple fact is that the European Community has not made sufficiently rapid progress in standardisation of these issues. It has plans to do so. The noble Lord was right, of course, that a desirable benefit of the European Community would be standardisation of policy right across all member states. If that were the case, tonight we would be discussing the issue with regard only to the four states that are not applicant members. However, we are not presently in that position. Individual states sign these bilateral agreements and the United Kingdom follows that pattern.
We sign bilateral agreements because, believe it or not, British lorries go abroad to these countries. There are conspicuous advantages in having agreements that aid our operators going to those countries, just as there are in aiding and regulating operators who come to this country. So the basis is one of mutuality. Why are the regulations being considered now? We are doing so now only because they represent consolidation and make British law compliant with treaties signed over a number of years. The effects of the treaties come into force in each signatory country when the treaty is signed. We are in a sense with this measure consolidating practice that Britain already applies, as does Moldova and other states. However, we need the regulations to ensure that United Kingdom law is compliant with treaties that have been signed. We need to ensure that agreements are fully enforced. That is the central question. It also explains

791
why the measures do not contain an immense amount of detail. The detail is contained in the relevant treaties. The regulations merely give effect to the treaties.
Noble Lords are fully entitled to ask questions about the implications of the treaties that are now consolidated into law, assuming that the noble Lord, Lord Bradshaw, does not propose to annul the regulations. I give way to the noble Earl.
Earl Attlee: My Lords, the Minister is being extremely helpful and I am grateful to him for giving way. However, the noble Lord, Lord Whitty, signed an agreement with the Slovak Republic on 11 January 2001. Why has it taken several years to come up with the order?
Lord Davies of Oldham: My Lords, the noble Earl may have noticed that the order does not concern just Slovakia; it concerns seven countries. It takes time for all of the issues to be brought together. The noble Earl will recognise that for general convenience we have brought together all seven countries into a single order. It would not be an appropriate use of parliamentary time to lay in the form of an order before the House every treaty that was signed on a bilateral basis. Many bilateral measures exist that go way beyond the realms of those concerned with goods vehicles. I believe that we have quite enough secondary legislation without seeking to multiply it several times. If the noble Earl had his way, every time such a treaty was agreed, we would produce further legislation. I should point out that we gain benefits from the treaty as soon as it is signed.
A number of other questions were raised. As regards whether I would be enthusiastic about visiting some of the countries that we are discussing, I had the enormous pleasure of visiting Slovenia immediately after the army of the former Yugoslavia had withdrawn and in so doing destroyed practically everything in its tracks. I considered the country staggeringly beautiful and a wonderful tourist location then. I have no doubt at all that in the intervening years it will have improved beyond bounds. If noble Lords opposite are eager for me to go there and are prepared to produce the necessary funds to enable me to do so, I assure them that I would go with the greatest enthusiasm. I would address myself to the lorry issue once I was there and even report back. However, whether I would report back from this Dispatch Box in those circumstances is a different matter. The issue of why some of these countries are not in the European Community is merely a question of the signatories of the relevant treaties; they all raise the same issues.
A question was raised that referred to supposition rather than the use of statistics. I think the noble Lord who raised the matter would say that he did not have statistics because we are not particularly prone to publish such extensive statistics. I emphasise that on the whole, so far as law enforcement in this country is concerned, overseas lorries pose a very limited problem. The noble Lord will know, with his vast experience, what difficulties we have had on compliance issues for lorries as a whole. We know that the situation has improved significantly,
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and the House will be aware of the measures that the Government have brought in in recent years to enhance enforcement.
I hasten to emphasise that if European lorries, from whichever country, fall foul of the law, they pay their punishment here. We are the beneficiaries of fines paid, just as the noble Lord would expect that a British lorry driver guilty of breaking the law in Moldova would pay the price of the law there. I seem to recall that when lorry drivers have been caught in very unfortunate circumstances indeed in other countries, we have been all too well aware of the fact that they have been in prison there, no doubt entirely rightly in most cases. Noble Lords will recall one or two cases when lorry drivers who were innocent had been in prison for a considerable period abroad, and we were under great pressure as a government to do our very best to see that justice was done. In one or two cases, we had to intervene very effectively.
The question of the database was raised. Of course we hope, through modern technology, to be able to exchange levels of information. It will be recognised that we ourselves need to improve the quality of our information on accident statistics and so on. Noble Lords have an entirely valid point when it is stressed that it would be helpful if we were able to exchange information. Whether we would be doing that at one o'clock at night Moldovan time, I am not clear. However, I am not so sure that Moldovan time is that far out from British time; if it is inconvenient for the Moldovans at one o'clock in the morning, it might be pretty inconvenient for the British at eleven o'clock or whatever time in the evening here. Normal hours operating, I concur with the general proposition that we ought to take advantage of the opportunities to exchange information.
I hope that I have reassured noble Lords about the issues. I am not in any way suggesting that safety is not of very great importance. Concern over the use of mobile phones while driving was partly triggered off by the absolutely horrendous example of a German lorry driver causing the deaths of several of our citizens. He caused a horrendous accident while on the telephone back to base in Germany. The case attracted a huge amount of attention, and there are many other reasons, in terms of our own safety, why that issue has changed the law of the land.
We benefit from having mutuality of legal provision between countries. I understand when it is said that some of the lorries come from countries that have nothing like the per capita income that this country has. It is a fool, however, who puts an ill equipped lorry on to the roads for a journey of 50 miles in the UK. It is some really stupid operator who intends to send the same lorry 2,000 miles across Europe to come to the United Kingdom. Therefore, if one sends lorries over such distances, the tendency with international haulage is for the lorries to be rather better looked after, equipped and maintained than lorries that do the daily round over shorter distances, where risks might be taken and sometimes are, but ought not to be.

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We cannot see the issue of foreign lorries, in terms of safety in the United Kingdom, as outstandingly difficult. In so far as it is difficult and needs to be controlled, the fact that we have reciprocal treaties—I hope that they will be consolidated in UK law if the Motion is withdrawn is of advantage to us all. I therefore hope that the noble Lord, having made his points, will withdraw his Motion.
Lord Bradshaw: My Lords, I thank the Minister, the Captain of the Yeomen of the Guard, for his contribution, with which I go along to an extent. I still believe that we are probably extremely attentive to our duties in passing these matters into law. I imagine that that is not the case in many other countries. However, I still have reservations over the safety of lorries. Generally, I am not picking out foreign lorries, as the noble Earl, Lord Attlee, suggested, because I am equally concerned about British lorries. But, I hope that the Minister will accept that I will occasionally
794
bring to him evidence of lack of safety and non-compliance with the law. I hope that when I do that, it will be treated seriously and not brushed aside, because it will be solid evidence—not my wanderings in the night, as it were. It will be evidence that I have gathered from roadside checks, and so on. I believe that there is a serious mismatch between the safety record on the fringes of road haulage and other transport operators. Having said that, I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.

European Parliamentary and Local Elections (Pilots) Bill
Returned from the Commons with a Lords amendment to a Commons amendment disagreed to with a reason for such disagreement; the Commons reason was ordered to be printed.
House adjourned at twenty-one minutes past nine o'clock.

  Northern Ireland: Co-ownership Scheme
  Northern Ireland: Co-ownership Scheme
  Iraq: Prisoners Held by Allied Forces
  Iraq: Prisoners Held by Allied Forces
  Bosnia-Herzegovina
  Bosnia-Herzegovina
  Belarus: Arms Exports
  Belarus: Arms Exports
  County Councils: Multi-Member Wards
  County Councils: Multi-Member Wards
  Regional Assemblies
  Regional Assemblies
  Toxicology
  Toxicology
  NHS: Working Time Directive
  NHS: Working Time Directive
  Liverpool School of Tropical Medicine
  Liverpool School of Tropical Medicine
  Working Holidaymaker Scheme
  Working Holidaymaker Scheme
  Weapons Trafficking
  Weapons Trafficking
  EU: Common External Tariff
  EU: Common External Tariff
  Cormorants
  Cormorants
  Bees
  Bees
  BSE: Forbes Report
  BSE: Forbes Report
  Mink Farming
  Mink Farming

  e-diplomacy
  The Minister of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean)
  In our last information and communications technology (ICT) strategy published in 2000 we set ourselves the goal of transforming the FCO from a headquarters with outstations to a single global online organisation. We have come a long way towards achieving that goal. The FCO telecommunications network (FTN) together with our desktop system (Firecrest) provides a dedicated global network that connects our UK offices with over 200 overseas posts and to the rest of Whitehall. On it we send over 1 million e-mails and download gigabytes of data every day, and run a number of applications including Genie (for issuing passports).

  Following publication of the FCO strategy in December last year, we have reviewed what we need from our ICT to enable the more flexible FCO envisaged in that strategy. E-diplomacy explains how we will introduce greater flexibility to our ICT infrastructure and enable more flexible use of information. This includes more use of mobile and remote-working technology and new applications to make information more accessible, while keeping it secure. We will continue to improve our project management skills and develop closer working partnerships with the private sector to ensure that we provide the most cost-effective service to FCO users. We will also work with other government departments to achieve efficiency savings wherever possible.

  The plans we have set out in e-diplomacy are challenging but achievable. We believe that they are crucial to the overall effectiveness of the FCO.

  Copies of e-diplomacy have been placed in the Library of the House. It is also available on the FCO's web-site www.fco.gov.uk.

  Dental Charges
  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 Written Ministerial Statement of 12 February 2004 covering National Health Service charges in England informed the House that we planned to raise the maximum patient charge for a course of dental treatment from £372 to £378 from 1 April 2004.

  In order to minimise changes and to avoid any confusion for patients, dentists and their practice staff, we are deferring the increase in the maximum charge for a course of dental treatment from 1 April to I May 2004
  WS 38
  so as to coincide with the implementation of the Doctors and Dentists Review Body recommendation for dentists fees. The fees will be backdated to 1 April 2004 but the new charges will be effective from 1 May 2004 and there will be no retrospective increases to charges already paid by patients.

  The Chief Dental Officer will be writing to all dentists advising them of the 1 May 2004 implementation date for the statement of dental remuneration and the increase in the maximum charge for a course of dental treatment.

  Public Audit (Wales) Bill: Clause 54
  Lord Evans of Temple Guiting
  Clause 54 was included in the Public Audit (Wales) Bill to ensure consistency in the criminal law across England and Wales. The Government have brought form, arcl an amendment to Clause 54 to make clear the link 'with the present legislation that currently applies across England and Wales—Section 49 of the Audit Commission Act 1998. It also ensures that any relaxation of the restrictions in the Audit Commission Act can be applied at the same time in England and Wales, following consultation with the National Assembly for Wales of course.

  The Government acknowledge the concerns that have been raised about this clause. Indeed, Section 49 of the Audit Commission Act is already being considered as part of a much wider review of statutory restrictions on disclosure that the Government are undertaking. This is the Department for Constitutional Affairs' review into existing statutory prohibitions on disclosure. Such restrictions can be removed by order under Section 75 of the Freedom of Information Act 2000 in the case of Acts passed before or in the same Session as that Act. The DCA's Second Report to Parliament on the Review of Legislation Governing the Disclosure of Information published in November 2002 is available at http://www.dca.gov.uk/foi/foidoirpt2.htm. Section 49 of the Audit Commission Act is specifically referred to in Part 11 of that report, "Listing by Lead Department", under the Office of the Deputy Prime Minister heading.

  Following preliminary consideration and consultation, the Government's preferred treatment for Section 49 is to amend it so that it is consistent with the spirit of the Freedom of Information Act, which has an overall presumption in favour of disclosure. The Department for Constitutional Affairs currently plans to publish a final report on its review in the autumn. The Department for Constitutional Affairs is also intending to bring forward the first order to be made under the freedom of information legislation later this year, and the Government will include the proposed amendment to Section 49 in that order. When Section 49 is amended, the Government amendment to Clause 54 will allow the relaxation of the restriction on disclosure to apply also in Wales. The Government are therefore following the proper process to address this issue, and are already well advanced in doing this.

  IMF and UK
  The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)
  My right honourable friend the Chancellor of the Exchequer has made the following Written Ministerial Statement.

  I am today publishing the fifth annual report to Parliament on UK operations at the IMF, Growth For All—Towards a Stable and Fairer World: the UK and the IMF 2003. Copies are available in the Library of the House.

  Defence Estate Stewardship Report
  The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach)
  My honourable friend the Parliamentary Under-Secretary of State for Defence (Mr Ivor Caplin) has made the following Written Mnisterial Statement.

  The 2003 Defence Estate Stewardship Report is published today. This report outlines the continuing progress that the Ministry of Defence is making in implementing the estate strategy that was launched in 2000.

  The Ministry of Defence is continually examining ways of improving military capability and value for money for the taxpayer. As part of this approach, we want to keep the size and location of our bases under review. Building on initial work that has been done to identify the MoD's core sites, the department is now undertaking further work to examine where estate rationalisation may be possible. This work is consistent with the department's contribution to the Government's independent review of public sector rationalisation—the Lyons review.

  The work now under way is looking at consolidating defence activity at a smaller number of more densely utilised locations in order to achieve the optimum use of land and facilities. This ongoing review will necessarily involve the examination of a number of proposals for the potential collocation and relocation of units. It will also take into account existing relocation studies that have already been announced. It is important to recognise that any options that are considered will need to meet operational requirements as well as representing value for money.

  The department is currently at an early stage of this wider review and each proposal that emerges from this work will be subject to full consultation in the normal way. This consultation is essential to determine whether the options under consideration are viable in the widest sense, for instance, in relation to transport, education, health and the future use of potential surplus MoD sites.

  No decisions have yet been reached on any site but as this matter progresses I will ensure that right honourable and honourable Members are advised of progress where such an issue may affect their constituency.

  A copy of the report is in the Library of the House.

  Kosovo: Deployment of British Forces
  Lord Bach
  My right honourable friend the Secretary of State for Defence (Mr Geoffrey Hoon) has made the following Written Ministerial Statement.

  Last week saw a deterioration of the security situation in Kosovo. Violence broke out between ethnic Serbs and Albanians in Mitrovica in northern Kosovo, which subsequently spread to other ethnic Serb populated areas in Kosovo. The violence has resulted in deaths within both communities, as well as hundreds injured, including some KFOR troops. The situation in Kosovo, although still tense, now appears calmer.

  The troops already in Kosovo were heavily committed in dealing with the situation. Commander KFOR therefore took the decision to authorise the deployment of his in-theatre tactical reserves to assist with the situation. NATO also issued instructions to reinforce KFOR with additional SFOR troops from Bosnia, including a UK company of 1st Royal Gurkha Rifles, a US company and a company from the Italian Multinational Support Unit (Carabineri).

  In the early hours of Thursday 18 March. NATO called upon the Operational Reserve Force (ORF) Ready Battalion. The ready battalion role is one that the UK has responsibility for during the first six months of 2004. This means that, as part of our overall commitment to the Balkans, the UK provides NATO with a battalion that could, in circumstances such as these, be rapidly deployed into either Bosnia or Kosovo. The lead elements of the ORF, totalling approximately 150 men and 12 Land Rovers, departed from RAF Brize Norton on Thursday afternoon and landed in Kosovo late that evening. The vast majority of the ORF battalion of around 660 men has now deployed. 1st Battalion The Royal Gloucestershire Berkshire and Wiltshire Regiment are providing the core of the battalion group. There are now around 1,100 UK Armed Forces personnel deployed in Kosovo.

  The purpose of this deployment is to restore calm to the province and prevent unrest spreading to areas outside Kosovo—the type of task for which the Operational Reserve was designed. UK troops will conduct routine patrolling, the guarding of sites (such as the UN mission) and public order duties, as tasked by Commander KFOR.

  Further to the deployment of the UK battalion, NATO has requested that an element of the NATO Strategic Reserve Force, provided by a French battalion, also be deployed to Kosovo. NATO has also requested the deployment of the three standby battalions that make up the full Operational Reserve Force. These battalions are provided by the US, Germany and Italy. The German battalion has been deployed to Skopje, Macedonia, in the first instance.

  It is for NATO to determine how long reserves will be required, but in terms of an initial estimate, and with the situation changing, we believe a sensible course of action is to initially plan for a deployment period of approximately 30 days.

  Service Museums
  Lord Bach
  My honourable friend the Parliamentary Under-Secretary of State for Defence (Mr Ivor Caplin) has made the following Written Ministerial Statement.

  The business process review of the six principal Service museums has been completed. The review
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  confirmed the value of the museums and recommended their continued support by the MoD. The review also recommended a number of measures to improve communication between the museums and their relevant sponsor branch, to provide assurance of value for money and to facilitate longer-term planning. These will be taken forward by the Deputy Chief of the Defence Staff (Personnel) in conjunction with the three Service sponsor branches.