Westminster Hall Sitting of 1 November 2000

Preamble
[MR. MICHAEL LORD in the Chair]

Peru
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Robert Ainsworth.]
9.30 am
Mr. Tom Clarke: We last had a debate on Peruvian elections, which is still an ongoing issue, at my request on 19 April in this Chamber. The hon. Member for East Londonderry (Mr. Ross) and I had just returned from acting as observers at the election that was held on Sunday 9 April. We gave what we thought was a fair, but sadly, not a very inspiring account of a rigged and unsatisfactory election. We, along with several important bodies from the European Union as well as almost every international organisation involved in such matters, called for a re-run at least between the two main candidates, Mr. Fujimori and Mr. Toledo.
We pointed out that, if a re-run were to take place, it should be held on the basis of the need for that second round to be free and fair and seen to be so. The hon. Member for East Londonderry and I stressed that the democratic process, not personalities, was the key to our objectives, and that the inequality between the Peruvian Opposition and the huge state machine should be addressed.
Mrs. Cheryl Gillan: On a point of order, Mr. Deputy Speaker. Will you advise me how we should proceed, given that the Minister who is to reply to the debate has unfortunately not made it into the Chamber this morning? How will the Minister be able to respond adequately to the debate, given that he has already missed the opening remarks of the right hon. Member for Coatbridge and Chryston (Mr. Clarke)?
Mr. Deputy Speaker: The hon. Lady is quite right. The Minister should be present in the Chamber to hear the debate from the beginning. However, I understand that he is not very far away, so the debate will continue.
Mr. Clarke: I understand the concerns of the hon. Member for Chesham and Amersham (Mrs. Gillan), but, because of the storms, traffic conditions are appalling in London. The Parliamentary Private Secretary to the Minister, my hon. Friend the Member for Rotherham (Mr. MacShane), and the Government Whip, who are both present, have assured me that when the Minister arrives they will acquaint him with the beginning of my remarks. Such procedure is not unknown on the Floor of the House and the importance of the subject and the fact that a debate on such issues may not be held for a long time suggests that the procedures, as you have outlined them, Mr. Deputy Speaker, are correct and that we should continue.
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I shall return to the main points of the report on the first round of elections. The hon. Member for East Londonderry and I argued strongly for a second election to be held in the cause of true democracy and said that it was absolutely essential that European Union monitoring should continue to be crucial. I hope that I shall have the opportunity to re-emphasise that point later in the debate.
Decisions were not taken as rapidly as we would have wanted following the earlier debate. For a time, there was no proposal for a second round despite the ambiguity and unfairness of the first. Then there was a predicted and predictable political crisis in Peru, which intensified, I am sad to say.
Eventually—it seemed good news at the time—a second round was declared for 28 May. Mr. Toledo was the main challenger to the incumbent, President Fujimori, and all the other candidates withdrew on his behalf after the first round, due to their concerns about its nature. Unfortunately, for reasons that I fully understand, Mr. Toledo withdrew shortly before the polling date, saying that the electoral process was still flawed and that it was impossible to put the electronics and computers right in time to have a fair election and a fair result. He said that the second round was another sham and so refused to take part.
There was a great deal of support for Mr. Toledo's view. No evidence showed that lessons had been learned from the previous election and its unacceptable nature. The President insisted that the election would take place, reminded the world that voting was compulsory, and a result was then declared, seemingly on his behalf. It was a truly remarkable result: Fujimori received 51.2 per cent., Toledo, who had said that he was not standing, received 17.6 per cent., and 31. 2 per cent. of the ballot was spoilt papers, most in support of Toledo or decrying the nature of the election.
The crisis, which had already been identified, became more intense. The election was unacceptable and its result was not regarded as fair. Fujimori's standing was in question among large sections of the people of Peru and in the international community. The crisis came to a head on 28 July, on what was to be Mr. Fujimori's new investiture as President. There were widespread riots, and the scene was nasty. [Interruption.] I welcome the Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Leicester, East (Mr. Vaz). I understand the reasons for his seven-minute delay and know that he is now being informed about our debate.
Six people died and more than 100 were injured in the riots. The situation was clearly unacceptable. It brought into question where Peru was headed, whether there was real democracy, and the credibility of the so-called elected president. On 16 September, Mr. Fujimori bowed to international pressure and called new elections. He said that he would not be a candidate, and there was a widespread sigh of relief. In many respects, that feeling of relief was short-lived, and will be until the position is clarified further. Mr. Fujimori's action may have been genuine, and the military was seen to back it, which I hope remains its position as its role is important.
The Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Leeds, West (Mr. Battle), who is responsible for such matters, is

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abroad. He played a major role and is entitled to great credit for the current turn of events. His statement during the first elections, his reply to our previous debate and his contributions elsewhere have been most helpful in getting us thus far, although I do not want to crow too much about where exactly we are.
The role of the European Union and the Organisation of American States remains extremely important, and I know that the Minister will give due regard to their role in future events and to the need for the crucial, democratic election.
I agreed strongly with my hon. Friend the Member for Leeds, West when, following the announcement by President Fujimori of fresh elections, he said:
I hope that the Peruvian authorities will recognise that there is a continuing role for the Organisation of American States in facilitating and strengthening the position of Peruvian democracy.
That remains the case and I hope that the Minister will enlighten us on the matter. However, it must be said strongly that some of us are deeply worried that on 14 October, Eduardo Latorre, the OAS permanent representative in Peru, announced that he was suspending talks with the Peruvian Government about reform and democratic elections, which had been agreed in an OAS-brokered accord. Mr. Latorre was worried that the Peruvian Government had passed through Congress a motion extending its present session by two weeks. That begged the question what is it all about. Are the elections for real? Does Fujimori intend to do what he said he would do? Does the military support him? Will the country have that precious democracy? Some saw the two-week postponement as Fujimori playing for time; he would not hesitate to do that if it were necessary to his strategy. He would play for time, for example, to help to protect some of his friends in the military, a subject to which I hope to return.
I share the concern about stability, which is important, especially in respect of the military. So is justice, however, and we are seeking both. As I said in April, whenever the elections take place, the democratic process should be seen to be the victor rather than any individual. As it stands, Mr. Toledo appears to be the main challenger for the post. During our visit for the first election, and given the view of the other candidates when they withdrew in his favour, it was clear that he represented the hopes of those who were in favour of peaceful change. Those of us who saw Mr. Toledo on the Sunday evening when things could have become even more difficult—there could have been even more bloodshed on the streets—felt that he behaved with grace, responsibility and understanding, yet he was, nevertheless, able to feel the pulse of the majority of people in Peru who genuinely wanted a democratic election leading to a democratic result.
During the Democrats convention in Los Angeles to choose the presidential candidate, I met Mr. Toledo briefly, in the presence of the former Vice-President Walter Mondale. I obtained from our brief conversation Mr. Toledo's acceptance of the fact that in Peru today, mindful of his influence, people acknowledge the need for that transparency and pluralism. What Mr. Toledo rightly demanded for his own candidature should be extended to all the other candidates, who should be free to enter into new elections. He agreed that the rights of
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all candidates were paramount. Mr. Toledo's position will be enhanced if he continues to express that view, and I have no reason to believe that he will not. In line with the European Union monitors and the international community, I believe that when the next election takes place, there must be balanced access to the broadcasting media. Unlike during the previous election, candidates should be entitled to fair coverage on television, radio and in the press. They should not be subjected to state-sponsored smears. The atmosphere must be right for a free election, which it certainly was not last time.
I wish to ask my hon. Friend the Minister an important question about the timetable for the election. The Peruvian Opposition are calling for the election to take place in January 2001, whereas the Peruvian Government prefer May 2001. It is legitimate to argue about the timing, but should not the priority be to establish a democratic framework rather than have an election as soon as possible just for the sake of it? However, the other side of the coin is that—consistent with the electoral machine performing to 100 per cent. efficiency, and with transparency and fairness—the people of Peru must feel that their senate and president are truly democratically elected. I look forward to hearing the Minister's response. I wonder whether the British Government have a particular view about the appropriate date or whether, like myself, they are still asking questions about it. If they do have a view, I look forward to hearing it.
I move on to the role of the European Union. I hope that the UK and the EU continue to work together to ensure that the election is seen to be fair. In August, the EU issued a declaration:
The European Union reaffirms its support for the efforts made in the framework of the Organisation of American States to consolidate democracy in Peru. It hopes that all sectors of political life will be able to show their maturity and constructive willingness to begin to implement, as soon as possible, the timetable proposed by the High-level Mission of the OAS for strengthening public institutions and democratic coexistence in Peru.
It continued:
The European Union calls on the Government of Peru to implement the democratic principles referred to in the Rio Declaration, which form the basis of a partnership between the European Union and Latin America.
I should like to ask my hon. Friend the Minister a few questions on that. In the light of the OAS suspending talks with the Government, can my hon. Friend shed light on any discussions that may have taken place between the EU and OAS in recent weeks, which sought to encourage the OAS to continue its role in Peru? What is the latest position on the partnership between the EU and Latin America? What ministerial discussions have been held with EU colleagues on recent circumstances in Peru? Finally, does my hon. Friend accept that when the election takes place, it is important for international observers to be present? Does he believe that the UK should be represented?
I now turn to the role of the European Parliament. Consistent with the role of the European Union, the European Parliament adopted resolutions—one on 15 June and another in October—on the presidential elections in Peru. They were occasioned by the crisis following the announcement by President Fujimori of his resignation and the intention to hold new elections.
Significantly, the European Parliament expressed its surprise at the turn taken by events, in particular the request to the Republic of Panama to grant political

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asylum to the former national intelligence service adviser, Vladimiro Montesinos. I was pleased that Mr. Montesinos' request for asylum was refused, especially given accusations of his involvement in the trafficking of arms and drugs.
What is the view of my hon. Friend the Minister on the role, or better still the absence, of Mr. Montesinos in future? Considering his influence, he is a truly remarkable person. He is dangerous and sinister. Nevertheless, some aspects of the current circumstances are not without humour. On Friday 27 October, The Scotsman, a newspaper that would not usually be expected to report on such matters, produced an extremely interesting article that read almost like a novel. It was headed: "Fujimori leads search for former spymaster". In it, Fujimori was presented as a sort of Sherlock Holmes, trying to find Montesinos, a sort of cross between the Scarlet Pimpernel and the Artful Dodger. However, we are no nearer to finding out exactly where Montesinos is and what he is doing, and that could be serious.
Jeremy McDermott's excellent piece states:
Peru's president has launched a manhunt for his former spymaster, shining light into the shadows where his former adviser once wielded power equal to his own.
The president, Alberto Fujimori, surrounded by tight security, led the operation to find Vladimiro Montesinos, heading a search party on Wednesday night and into the early hours of yesterday, with sniffer dogs combing suspected hiding places while helicopters hovered in the vicinity.
That was an extremely important search. Later, the article states:
Mr Montesinos has eluded capture, perhaps with the connivance of Peruvian security forces, the upper echelons of which he personally appointed over the last eight years
—not ideal circumstances for finding the suspect.
Worryingly, the article states:
Fujimori critics see the hunt for Mr Montesinos as mere window dressing, and insist the spymaster is still in charge of the all-powerful military and the judicial system, and the president is either still in touch with him, or totally impotent.
It is extremely worrying if that last part is true, and any help that my hon. Friend the Minister can give in providing a United Kingdom input to deal with the problem would be welcome.
The European Parliament called on the European Union to undertake a special programme to give active support to the new phase of the democratic process in Peru and to co-ordinate the initiatives taken by member states. It added that it
proposes to send a delegation to the Republic of Peru in order to obtain first-hand information regarding the actual political situation and the prospects for peaceful change.
I should like my hon. Friend the Minister to give us the latest information on the initiatives supporting democracy in light of recent developments and to tell us whether a delegation has visited Peru on behalf of the European Union, and if so what conclusions it reached.
I am reaching the end of my comments, Mr. Cook—
Mr. Deputy Speaker (Mr. Frank Cook): Order. It seems to be a weekly event, but I must remind all right hon. and hon. Members that the House, in its wisdom, when it agreed to hold parallel sittings here, decided that
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the meetings should be presided over by Deputy Speakers unless substitute Chairmen needed to be recruited.
Mr. Clarke: Such is my respect for you, Mr. Deputy Speaker, that I feel suitably humble about such a dreadful lapse. I apologise sincerely.
I am aware that other hon. Members wish to speak and I turn now to three important issues, which will impinge upon the election campaign itself, but which will not necessarily be resolved once the result is declared. My hon. Friend the Minister will not be surprised when I touch on the issue of human rights in Peru. Many things have been said, to their credit, by Amnesty International but here in Britain—and I pay tribute to them—the Peru Support Group has been immensely proactive and helpful.
Peruvian society has been suffering for a long time from systematic human rights abuses and a lack of good governance. Future relations between the European Union and Peru must be based on respect for human rights and democratic principles. The European Union has the right to say those things, if only because of its humanitarian contribution. The hon. Member for East Londonderry and I saw evidence of that when we were in Peru. I want that humanitarian aid to continue, but when we visited some of the shanty towns and saw that water was at last being delivered and roads were being provided by EU funding, I found it a little perverse that Mr. Fujimori was turning that into a vote-catching exercise. He took credit for what was being done, and by implication for the resources that were being made available by the EU. The role of the EU in giving that humanitarian aid is nevertheless underscored by that point.
In congratulating very warmly my right hon. Friend the Secretary of State for International Development and her Department on an excellent contribution that is reflected elsewhere in South America, I turn to an issue that that will be close to her heart. It is the sterilisation programme carried out by the Fujimori Government, which might be described as an anti-woman policy. I understand the population problems and the debate about them, but programmes should be based on consent. Information should also be available to men. The sort of enforcement of which there is clear evidence involving women is wholly unacceptable. It is an infringement of human rights and is repugnant both to our Government and to the international community. What measures will the Government take together with the EU and human rights organisations to establish programmes based on consent? Can my hon. Friend also enlighten us about the reforms recently announced by the Peruvian Government to their population and reproductive health programmes?
I want to turn finally to the issue of terrorism, on which, oddly enough—and I do not for one moment wish to be sparing of my praise even for Mr. Fujimori—every candidate in the election paid tribute to him. Without exception, they said that he had dealt with the matter and dealt with it well. Nevertheless, the way in which he wanted to alter the constitution was unacceptable, and inconsistent with their values.
Early in the 1980s internal stability was threatened by the emergence of the Maoist group Shining Path, which attempted to undermine the country's return to a

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civilian administration with violent attacks on Government and army locations. In 1995, President Fujimori introduced tough new laws to combat terrorism, aimed mainly at curbing the activities of Shining Path, which have apparently succeeded in reducing the number of deaths brought about by terrorist violence. Several prominent members of the group have been imprisoned. As I said, there was praise for the stand that the President took.
Nevertheless, a legacy remains to be dealt with. In May 1998, the President initiated a new anti-crime campaign, headed by the intelligence service appropriately enough called SIN. We were told that the reason for that was to deal with terrorism, but it went much further, interfering clearly and blatantly with individual civil rights. For example, it attacked several left-of-centre political groups. The International Confederation of Free Trade Unions, based in Brussels, says that the President has deliberately targeted trade unions. The ICFTU noted the widespread use of child labour in Peru today, which has continued even in the face of the elections. On 1 May 1998, Fujimori agreed new draconian laws, including sentences of up to 25 years for 16-year-olds, and trial of civilians by the military courts.
I expect that we all want to erase such past occurrences, and make progress. How do the Government plan to use their influence to end child labour in Peru, something for which they have campaigned very well elsewhere? What measures does my hon. Friend propose to ensure that military trials for civilians are ended, and replaced by procedures that meet international human rights standards? It would be helpful, in the context of those draconian measures, if the three judges who had the courage to go against President Fujimori when he sought to distort the constitution, and who declined to uphold his appeal, were at the very least reinstated and given the opportunity to continue with their work, instead of being penalised for attempting to prevent what is recognised as an outrage to Peru's democratic process.
I hope that the Minister will see that many hon. Members look forward to the forthcoming elections because they are important not only for Peru—of course the emergence of democracy in all its forms is important—but for South America. They are important also for this country, which rightly has the reputation of trying, when the case presents itself, to push the boat that bit further towards democracy, transparency and fairness. My heavens, nowhere more than in Peru is that approach needed.
10.3 am
Dr. Desmond Turner: First, I must declare an interest. It gives me pleasure to do so, because I was recently invited by the Peru Support Group to visit Peru on a fact-finding mission with an ad hoc delegation including Lord Avebury just before the inauguration of President Fujimori and the marcha de los cuatros suyos, which was one of the events that precipitated his standing down. The mission was sponsored by Christian Aid, by the Catholic Agency for Overseas Development—CAFODߞand by War on Want. I am grateful to those organisations for making
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the visit possible because, as with most of us in Britain, my knowledge of Peru was extremely limited. One rarely sees a reference to matters Peruvian in the British press or media; the country does not normally show on our radar screens. That is unfortunate because it does matter, even if it is remote to us, because it is a crucial part of a region where democracy has a chequered history.
There is probably no country in South America about which one can say that democracy is truly established and flourishing—it certainly has not flourished in Peru for a long time. However, that country has presented a facade of democracy to the outside world, and I found the truth behind that façade profoundly shocking. The form of government could best be summarised as a quasi-military dictatorship pretending to be a democracy, and the manipulation done on every stratum of Peruvian society to achieve that result is truly shocking.
The visit showed me how appalling the social cost of the failure of democracy can be. Over the past 10 years, Peru has not progressed as most countries gradually do—in fact, it has regressed. Fifty-four per cent. of its population live in abject poverty, as defined by the measure of a dollar or less a day. That percentage is appalling and staggering. It must be the highest percentage of people living in poverty in any countryߞhigher even than in Indiaߞyet Peru is internationally perceived as not poor, but a middle-income state. Owing to the appalling maldistribution of wealth, there are a few wealthy people and millions of very poor people. The percentage of poverty has increased alarmingly over the past 10 years, partly as a direct result of Fujimori's Administration and the unbridled application of what are laughingly called "neo-liberal" economic policies, which I would characterise as Thatcherism gone mad. For example, when the mining industry was privatised with massive job losses, where did those workers end up? They ended up in the shanty towns around Lima and other large cities, with no visible means of support because there is no social net.
Fujimori managed to control Shining Path, but at a massive cost, because members of the Peruvian military did not stop to draw a distinction when they came to a village. They did not stop to ask villagers whether they supported Shining Path or were loyal to the Government, but assumed that the villagers supported Shining Path and acted accordingly, with the result that nearly 1 million people were displaced from villages in the remote areas in which Shining Path was active. Those people also ended up in the shanty towns, living on less than a dollar a day.
The land used for peasant farming has been largely depopulated because farmers cannot get a realistic price for their produce. They cannot eke a living out of the land, so they end up in shanty towns around the major cities, with no water, depending on food aid. Lima has one third of the Peruvian population—more than 9 million people. Most live in shanty towns that have grown up during the past nine years. It is one of the most appalling places that I have ever seen, almost entirely as a result of its Government's policies.
The landߞthis is a nice trickߞis reverting at knockdown prices to the people from whom it was originally distributed. When we visited the city of Ica, we saw large asparagus fields, owned by the daughter of

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the President. I have taken to avoiding buying asparagus labelled Peruvian when I go to Sainsbury's, because I know where the profits are going and they are not going to the Peruvian people.
As my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) said, it is supremely ironic that the President has used the issue of international aid to his electoral advantage. He has created massive poverty, but has turned it to his advantage by manipulation so bizarre that I am still trying to get my head around it. My right hon. Friend has described some of the extraordinary features of the Peruvian elections. However, it is not just a question of bent elections; the whole country has been bent. There is no way that such a bent election could be tolerated if the whole social structure of the country had not been systematically corrupted and perverted, which sadly is what has happened in Peru.
The fraudulence of the election beggars belief. We are all familiar with counts in our, fortunately, well and tightly controlled elections. If the returning officer finds one ballot paper too many or too few, he goes through agonies until he can account for it. However, in the Peruvian election, a million more votes were counted than there were people on the register. In this country, we would be delighted if we could get anywhere near 100 per cent. turnout, but if anyone tried to claim 110 per cent. turnout, we would smell a large rat. On that index alone, the election was completely fraudulent.
My right hon. Friend the Member for Coatbridge and Chryston gave the voting figures in the second round of the election, in which only one candidate was declared. It is even doubtful whether Mr. Fujimori received more than 50 per cent. of the votes in that round, because I am told that exit polls showed a lower figure for Mr. Fujimori. In the first round of elections, there was a large discrepancy between the figures recorded at exit polls and the actual figures that were finally declared.
We heard allegations of extreme ballot-rigging. The name of Mr. Toledo had been cut off several hundred thousand ballot papers. People may have wanted to vote for him, but his name simply was not on the ballot paper. Several hundred thousand papers were issued with a mark already made against Fujimori's name. Other marked papers were given to the women responsible for running the community kitchens in the barrios distributing European food aid; they were told that if they handed over their marked paper and voted for Mr. Fujimori, they would be given a new paper in return and if they showed that they would be paid. Those are small indications of what happened on the day.
Computers counted and registered the votes; there were difficulties with electronic counting in the London mayoral elections, but in this case there were allegations, which I take very seriously, that the numbers in the computer were altered, which is easy to do, especially if observers are not allowed into the count. My information is that international observers did not monitor the counting process. Thus, there was an election in which the ballot was not secret, and the counting process was not transparent and monitored. An election cannot possibly be fair under such
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circumstances, especially as most of the electoral sins were committed long before the election day.
A good example is the misuse of international aid to which we are a major European contributor. The aid is largely in the form of food, sent in packages clearly marked "EU" with the blue circle and the ring of stars. It used to be distributed through non-governmental organisations, notably Caritas, which still has the warehouses and the capacity for distribution. However, the responsibility for distribution was assumed by the Government, who set up their own agency for distribution, called PRONAA, which repackaged the food labelled with that name. The community kitchens depended on PRONAA for their primitive equipment and for the food.
The system was run by women, some of whom we talked to. We met a cross-section of Peruvian society, from generals whom Fujimori had sacked to community kitchen workers who had also been sacked because they expressed their opposition to him.
Community kitchen workers who did not support Fujimori and put up his picture in their kitchen did not get supplies and were not allowed to operate. People had to survive on the rations, which did not include meat, a luxury that they could not afford. They were living on vegetable stew and if they were lucky they could add stock, made by boiling up bones. They were poor people, living on a poor diet. The irony is that Fujimori got most of his votes from those poor people. That is one example of the misuse of aid.
I found the way in which American food aid was used equally disturbing. I take this as truth, as the US ambassador carefully explained it to me. The American aid, which presumably came from the mid-western grain belt surpluses, was sold on the market in Peru for prices that undercut those of native farmers. That forced more peasants off the land, into the barrios, and into dependence on food aid. The proceeds of the sale of food were used for agricultural projects. That was used by the Fujimori Government as yet another opportunity for clientalism, because only Fujimori supporters receive the benefit of support for their agricultural projects.
One cannot have an open lead-up to an election unless there is open access to the media. That has certainly not existed in Peru until now. Opposition candidates are denied access to all the terrestrial television channels. They have only recently been allowed access to a cable channel. It carefully followed our visit to Lima, but I do not know how it managed to survive under the Montesinos regime. A couple of terrestrial channels that showed programmes exposing some of Fujimori's misdoings were confiscated from their owners, who were prosecuted.
If journalists were bold enough to put their heads above the parapet and print anything seriously critical of Fujimori, they were harassed, tortured and even killed. Most tried sensibly to keep their heads just below the parapet, so the Opposition parties could get their hands on little printed media. A couple of brave titles survived—I do not know how—but with only limited circulation. The so-called prensa chicha, the yellow press, is read by vast numbers of the population,

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especially those with a low standard of literacy. It is a little like some of our less salubrious press titles, being a mixture of pornography and Government propaganda.
Mr. Denis MacShane: Which one is that?
Dr. Turner: I know that there is such a thing as parliamentary privilege, but I had better be careful
We heard strong allegations that the prensa chicha was funded by the Government. There were also manipulations of Government advertising. In the lead-up to the elections, the Government's especially large advertising budget went only to organs with the right editorial policy. Lo and behold, the supply of advertising revenue stopped immediately when the election started.
I could go on and on listing the pre-election abuses, but the systematic human rights abuses are most important, too. More than 250 people are in prison and have been there for about 10 years. As far as one knows they are quite innocent; they have been locked up without any evidence because of alleged association with terrorism. They have not been tried and their cases have not been reviewed. An independent tribunal has recommended 58 of them for release; it found that there was no evidence against them. They are still in prison.
There is no permanent independent judiciary in Peru. The only judges are on provisional appointments. That somewhat colours their judgment in court. If they give the wrong judgment their appointment is not renewed. There was a system of appointing permanent judiciary, but that has gone. We receive bitter and worried messages from the Society of Advocates in Peru. The intelligentsia, as represented by all civil institutions, universities and so on, have been systematically corrupted by Fujimori. All senior university appointments are Government appointments. At the same time, more than 6,000 lecturers were dismissed.
A great concern when it comes to replacing Fujimori with a stable democratic alternative is the fact that there is no concerted Opposition, only a generalised feeling that it is wrong and has to change. That is because Fujimori has also systematically repressed political parties so that there are no genuine political party structures, as we would recognise them, and no identifiable Opposition manifesto for alternative government. Those are serious weaknesses if the country is to be revised.
We need to look at the role the international community can play in trying to help Peruvians resolve their problems. In the last analysis, only Peruvians can do that. But there is a great deal that we and the international community can do. We must take a long hard look at the way in which international aid goes to Peru to ensure that it cannot be used by the Government as an electoral weapon. There are strong NGOs on the ground in Peru. I would certainly advocate that they should be the conduit for all aid to Peru in future. With clear international accountability no accusations can be levelled.
We must do something, although I do not know how, to try to support democratic parties in Peru. Above all we must impress on the Organisation of American
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States that its role as envisaged by the suspended concordat is no less critical now than it was before Fujimori appeared to stand down and to promise new elections. Until Fujimori and his Government are prepared to stand back and allow internationally organised and accountable election processes, there will always be a nagging doubt that Fujimori is trying to retain his power by another method, as he has consistently over the past 10 years.
I conclude by stressing the need for us and the rest of the international community to help to secure a stable future for Peru and for the continent of South America. That need is as pressing as it ever was. I hope that the UK Government will play a full role in the process.
10.30 am
Mr. John McFall: I am grateful for the opportunity to make a short contribution to this morning's debate. In common with some of my colleagues, I have visited Peru on several occasions. It is eight years since my last visit, but, sadly, this morning's comments are as pressing now as they were in 1992.
Peru's problem lies in the combined rule of President Fujimori and Vladimiro Montesinos—a corrupt core that has infected the whole body politic. I have seen that for myself, with respect to the judiciary, the military, the economic sphere and civil society. In the judicial sphere, there has been considerable comment from the American Bar Association and international jurors about the military courts. I saw the results of those military courts when I visited Castro Castro prison in Lima and spoke to innocent people who found themselves behind bars for 20 years or even for the rest of their lives because their neighbour had reported them to the authorities. Back-up, witnesses or evidence were not necessary to condemn those people. I have spoken to them and I know that the judicial system is corrupt.
My right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) and my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) mentioned human rights. I visited the valleys outside Lima in which bodies were dropped after being torturedߞand it is still going on. We heard about farmers leaving their farms to go into shanty towns. Drugs are a huge problem in the country, but we shall never overcome it if we allow a system under which farmers in Huagua valley, for example, can earn more for coca growing than for ordinary crops. We in the international community must deal with that pressing problem.
As to the economy, it is shameful to call it a privatisation programme. It is simply a rip-off with thousands of people losing their jobs. There is no genuine party political structure, only bribery on a country-wide scale. The international community must recognise that that is what is happening in Peru. We must establish fraternal political links, particularly with non-governmental organisations and the good indigenous people of Peru. The country needs to be built up democratically from the floor. The international community should acknowledge the corruption, but realise that there are good people in civil society—in the barrios, for example, where women help by working in the soup kitchens. I took those memories back with me. The international community must demonstrate solidarity and ensure that not just a veneer, but real democracy takes root in Peru.
10.33 am
Mr. Mark Oaten: I start by congratulating the right hon. Member for Coatbridge and Chryston (Mr. Clarke) on securing this debate. It is the second occasion on which he has raised these important issues in this Chamber. His insight into what is happening in Peru has been invaluable. I also congratulate the hon. Member for Brighton, Kemptown (Dr. Turner) on his contribution, particularly his detailed and absorbing analysis of what took place in the elections. He demonstrated clearly how rotten to the core is the electoral system in Peru. His knowledge, based on such recent visits, was invaluable.
None of us who attended the previous Westminster Hall debate on Peru could have expected the dramatic events of the past six months. Just as the world had become resigned to the depressing conclusion that Mr. Fujimori had steamrollered through the extension of his presidency, the wheels appear to have fallen off during the past couple of months. Mr. Fujimori's announcement that he would stand down on 16 September—less than two months into his third presidential term—has suddenly given the people of Peru some fresh hope, but their understandable optimism must be sobered by the assessment of the scale of the task ahead. The stark realities of turning that window of opportunity into a genuine democracy will be very hard, as the contributions to this morning's debate have demonstrated.
It is now a month since Mr. Fujimori's so-called resignation and it is clear that both he and Vladimiro Montesinos, the former chief of the national intelligence service, will not disappear from the political scene as easily as we would like them to. Peru is an apple that is rotten to the core, not only in terms of bribery and corruption and the way in which its election system operates, but in terms of the severe poverty that we have heard about this morning. Since 1992 when Mr. Fujimori temporarily closed the Congress and the supreme court, and relaunched state institutions under his control, the army has enjoyed a central role in running Peru's affairs. Mr. Montesinos has hand-picked many of the army's commanders. Four regional commanders were former classmates at the military academy and even his brother-in-law was put in charge of the garrison in Lima.
How can some of the difficulties be resolved? The diagnosis is clear: Peru needs a democratic framework if the next elections are to stand a chance of being fair. Transitions from an authoritarian rule are invariably messy and, at the very least, Peru now faces several months of instability. The key question is whether the armed forces can be persuaded to accept the genuine democratic reforms that are needed. Reforms in the media, the electoral authorities and the courts will all have to take place if elections are to be meaningful. I strongly believe that the army should have no place in politics, but achieving that position in Peru will clearly not be easy.
Last weekend, Mr. Fujimori sacked key chiefs in the army, air force and navy who had been loyal to the disgraced Mr. Montesinos. However, we should treat such sackings with caution because it has been suggested by observers that all Mr. Fujimori has done is to replace those chiefs with other supporters.
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On 16 September, Mr. Fujimori promised that he would deactivate the national intelligence service, but that action was not signed into law until a month later, thus generating fears that supporters of Fujimori, agents and equipment had been smuggled out into various military installations during the intervening period. Let us not forget that the national intelligence unit is believed to be responsible for ordering death squad killings, taking protection money from drug traffickers, manipulating the media and corrupting the armed forces. It is deeply disturbing if individuals from the unit are still active.
The Government and military in Peru must be separated, which involves removing army commanders who are linked to the previous era. The resulting military and intelligence service must be made as transparent as possible and that should be coupled with the establishment of an independent prosecution service and judiciary. It could begin with the reinstatement of the three constitutional tribunal judges who were dismissed by Mr. Fujimori after they had attempted to block his changes to the constitution.
Other steps need to be taken. The elections need to be fair and democratic. That requires the handing back of the private television company to its ousted owner. Next time, Opposition parties that try to fight fair elections must be guaranteed airtime on popular television stations. At the time of the previous election, the costs were set at deliberately high levels to preclude that from happening. In addition, the discredited electoral authority needs to be fully reformed. One head is currently under investigation and the other head has resigned. It is important that a new head is appointed who can then begin to tackle the whole electoral process that we have heard about from the hon. Member for Kemptown and ensure that there is an accurate electoral register.
It is important that the international community plays its part in solving the problems in Peru. It is vital that outside bodies, such as the Organisation of American States, promote productive discourse between all parties. A genuinely democratic order must be based on an effective system of checks and balances. As Peru attempts to begin such a transition, it is important that outside forces, including Britain and the European Union, play a major role in attempting to put the country in the right direction. I hope that the Minister will comment on the action that we plan to take. A solid start would be to persuade the Administration to return to the jurisdiction of the Interamerican convention on human rights. There are clear human rights problems, which need to be solved.
We need to recognise that if the current issues are to be resolved and if democratic elections are to take place, perhaps the Opposition parties will need help with techniques for fighting a proper campaign. There are major difficulties ahead for Peru, but the first priority is to ensure that Peru can lay the foundations of a new and lasting democratic order, beginning with urgent reform of its flawed institutions.
10.39 am
Mrs. Cheryl Gillan: First, I join the hon. Member for Winchester (Mr. Oaten) in congratulating the right hon. Member for Coatbridge

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and Chryston (Mr. Clarke) on securing the debate. His passion for Peru is well known in the House and he was ably supported by the hon. Members for Brighton, Kemptown (Dr. Turner) and for Dumbarton (Mr. McFall); the latter obviously has an abiding interest in the country's future.
I am delighted that the Minister is with us. I hope that in addition to providing us with an assessment of what Her Majesty's Government will be able to contribute to the election process in Peru, he will, from his perspective as Minister for Europe, tell us what the European Union proposes to do in that respect.
When Alberto Fujimori took office in 1990, all was not well with Peru, as those present would no doubt acknowledge. The Administration of Alan Garcia left behind some woeful figures. The monthly rate of inflation ranged from 25 per cent. to 32 per cent. in the second half of 1989, exceeded 40 per cent. in June 1990 and mounted to an incredible 78 per cent. by July. The central Government deficit increased from 4 per cent. of gross domestic product in January 1990 to 9 per cent. by May. The money supply of the country increased six times over from January to the end of July and the new Fujimori Government had to act quickly. They did so, as we have heard, with some criticism from many quarters. They acted on privatisation, deregulation and structural adjustment and those were painful measures. However, from an economic perspective, Peru had been taken by the scruff of the neck and there were improvements.
The figures speak for themselves. Gross domestic product went up from $28.8 billion in 1989 to $57.2 billion in 1999 and inflation came down from a staggering 2,926.6 per cent. in 1989—and then 7,650 per cent. in 1990—to 3.8 per cent. in 1999. We must ask ourselves why, with success like that, anyone would want to tamper with the so-called democratic process. Sadly, that is exactly what Fujimori did. On 5 April 1992, following a disagreement with Congress over proposed economic and political reforms, the President staged a military-backed self-coup, shutting down Congress and the courts. A new election was set and not surprisingly he won his first term on 9 April 1995. I say that it was his first term; the new constitution that he drew up allowed a President two consecutive terms and his supporters argue that his first term did not count since he was elected under a previous constitution.
The election in 2000 was set for 9 April with a second round on 28 May. As we have heard, the Opposition candidates faced major handicaps. One was the media. With a few brave exceptions they are completely subservient to Mr. Fujimori. The television has been cowed by threats of withdrawal of Government advertising. For example, Mr. Baruch Ivcher, an Israeli-born immigrant, was stripped of both his Peruvian nationality and his televise on station after it screened reports concerning Montesinos, Mr. Fujimori's intelligence chief. Mr. lvcher's former station now carries a diet similar to that of the yellow press and other stations simply ignore the activities of Opposition candidates. It is quite unacceptable.
Alejandro Toledo, the Opposition presidential candidate, soon discovered how the system works. On the campaign's final day, the President's closing rally
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was at one point being transmitted simultaneously by all seven free access television channels. Those of the Opposition candidates did not appear at all. On election day, only one free access channel provided full coverage, and it switched abruptly to a Mexican comedy film when Mr. Toledo's protests began. For ordinary Peruvians, there was a complete news blackout.
Another handicap is that Mr. Fujimori has built a powerful political organisation that blurs the division between Government, state and party. Known as Peru 2000, the machine has been set up on corporatist lines, working in shanty towns and among peasant farmers and small businesses. In Lima's poorer surburbs, once independent community leaders have been won over with the offer of paid jobs distributing Government food aid in return for supporting the Fujimori cause. Mr. Fujimori also has the backing of the armed forces, an expensive and sophisticated intelligence service and a pliant congressional majority.
Many hon. Members have discussed the abuses of the elections in 2000. Three days after the presidential election, the authorities announced that with almost 98 per cent. of the ballots counted, Mr. Fujimori had 49.84 per cent. of the vote, just short of an absolute majority, which meant a run-off against Alejandro Toledo. However, the first round of the presidential elections had been one of the dirtiest election campaigns in Peru's history. The Opposition complained of irregularities, and we have already heard from the hon. Member for Kemptown how Mr. Toledo's name was excised from the voting slips—one of the most blatant abuses.
Suspicions arose when the national electoral processes office, the Oficina Nacional de Procesos Electorales, which had promised a result within hours of the vote, was issuing partial results showing Mr. Fujimori within a whisker of an absolute majority, despite observers finding that most of the ONPE's computer centres were closed. Mr. Eduardo Stein, head of the observer team sent by the OAS, said that the results were "coming out of nowhere" and that "something very sinister" was going on. It is hardly surprising that Mr. Toledo withdrew from the run-off, as the right hon. Member for Coatbridge and Chryston said, and that Fujimori claimed victory.
Events move quickly in Peru. A month ago, Fujimori seemed to be firmly in charge. He had fired Montesinos, the former head of intelligence. It does not help someone's political cause when his spy chief surfaces on a video, allegedly paying $15,000 to buy the political support of an Opposition member of Congress. He announced the dissolution of the intelligence service, which has the appropriate acronym SIN, and called new elections in which he pledged not to participate. I suppose that he should be congratulated on that. Indeed, Peruvian Opposition leaders and the United States Government hailed his decision to step aside and hold new elections, while Montesinos fled in disgrace to an uncertain exile in Panama.
Sinister events have overtaken the delicate democracy. With his claim for political asylum rejected, Montesinos seems to have turned the tables on Fujimori, and has returned to Peru and gone into hiding. Varying reports have been received about what is happening to him. However, there is a belief in certain quarters that although Fujimori says that he is firmly in

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charge, Montesinos and his cronies, who command Peru's armed forces, may force Fujimori to step aside sooner than expected to create a power vacuum into which Montesinos can step. I hope that the Minister will enlighten us on his assessment of the latest developments.
We all hope for a peaceful transitional period and that Peru can achieve the democracy that it so desires. The latest report suggests that the election should take place no later than 8 April next year, and both the Government and the Opposition in Peru seem to have agreed on that. We welcome that development and hope that the Minister can confirm it today.
It is not all doom and gloom for Peru. Peru has come a long way, but it is far from perfect. I finish by quoting two paragraphs from a letter sent to me by the Ambassador from Peru, Mr. Gilbert Chauny, who tries to keep hon. Members informed. He should be congratulated on his work in keeping us up to speed with developments in Peru, although I do not always agree with what he writes in his letters. However, two paragraphs of a letter that he wrote in June suggest that there is a political will to move towards an improved democracy. He writes:
Nevertheless, we must recognise that all countries have not and cannot consolidate simultaneously the same level of democracy. In the case of Peru, we have met many difficulties in this regard. We are all aware of the deep crisis we experienced at the end of the 80s, which evidently slowed us in our objectives. Democracy presumes peace and reciprocal trust, it implies co-operation and common work. On the other hand, terrorism brings insecurity and fear, people change and this weakens democracy. That is why building democracy has been difficult and risky in our country. It has been necessary to start laying down the foundations for making possible a productive environment, with incentives, with a real desire to join efforts to attain the welfare of our people. We were, therefore, obliged to obtain both internal as well as external peace.
Nevertheless, much has been achieved. As Peruvians, we would like not to be judged for what we still need to accomplish in order to reach a utopian level of democracy; but to be judged for what we have already accomplished with great effort, and for our strong commitment to further improve and perfect our democracy.
I hope that the Minister will reassure us that his Government will help support the Peruvians in their commitment to further and improve their democracy.
10.50 am
The Minister for Europe (Mr. Keith Vaz): The debate has been excellent, and I am sorry that I could not be present to hear my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) open it. My right hon. Friend has taken up causes with great passion and eloquence throughout his parliamentary career. The way in which he put the case today shows the strong feelings he has about Peru, democracy, international development and human rights.
My hon. Friend the Member for Leeds, West (Mr. Battle), the Minister of State, Foreign and Commonwealth Office, wanted to be present, as he is responsible for that area. He has asked me to pass on his good wishes to my right hon. Friend. Important parliamentary commitments abroad prevent him from attending the debate, but he spoke in the previous debate on Peru and set out clearly the Government's position. In his speeches both in Parliament and publicly, he has expressed the Government's concerns about the situation in that country.
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The speech made by my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) was better than any Foreign Office brief that any Minister could receive, and was peppered by personal recollections that none of us could really gain from official visits. His insights, and those of my right hon. Friend the Member for Coatbridge and Chryston, help me to assess the situation and help my colleagues in the Foreign Office to consider future policy directions.
One matter was the subject of all contributions to the debate, including those from my hon. Friend the Member for Dumbarton (Mr. McFall), and the hon. Members for Chesham and Amersham (Mrs. Gillan) and for Winchester (Mr. Oaten), who made his usual succinct speech. There were serious irregularities in the process leading up to the presidential and congressional elections held earlier this year. My right hon. Friend the Member for Coatbridge and Chryston and the hon. Member for East Londonderry (Mr. Ross), who monitored the first round of voting in April, rightly drew attention to those problems, as have missions from the Organisation of American States, the Carter Centre, the Electoral International Reform Services and our European Union partners.
I assure my right hon. Friend the Member for Coatbridge and Chryston that my colleagues in the European Union are considering the matter carefully, but no decision has been made about a monitoring group that might attend the next elections. The EU, because of its historical connections with that part of the world, considers those matters carefully, and my right hon. Friend's comments and those of other hon. Members will be brought to the attention of the relevant Commissioner and other member states.
There are doubts about the constitutional propriety of President Fujimori's decision to stand for a third successive term. After the controversial—to judge from the descriptions of the voting procedures, the term is a lame one—second-round voting system, we have heard disturbing accounts of Congress men being bribed to defect to the governing party and other such stories. We are aware of those issues, so we welcomed the decision of the OAS Foreign Ministers in Windsor, Ontario on 4–6 June to help the Peruvians re-energise their democracy. A list of 29 points was drawn up. Eduardo Latorre, the former Foreign Minister of the Dominican Republic, who has already been mentioned, was appointed to oversee the task.
We also welcomed President Fujimori's announcement on 16 September that fresh presidential and congressional elections would be held, that there would be a thorough investigation of all bribery allegations, and that the national intelligence service would be de-activated. We remain concerned about the negative influence exercised by President Fujimori's former intelligence adviser, Vladimiro Montesinos, on the re-energising of the democracy. We have heard about the attempts to find out where he is, and are worried about the effect that his unexpected return on 23 October, after he had spent a month in Panama, could have on the situation in Peru. Whether through Sherlock Holmes or any of the methods being adopted by President Fujimori to find him, we hope that he will swiftly be located and brought before the Peruvian courts to face the charges against him.

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We have also been encouraged by the determination of all parties in the OAS-sponsored talks not to allow recent events, including the return of Montesinos, to impede progress on the talks or for new elections. The democratisation process has inevitably had ups and downs. We are glad that the representatives of the Government and Opposition appear to have agreed on the constitutional changes needed to reduce the current presidential and congressional mandates to one year, and to permit fresh elections in 2001. It is also encouraging that a specific date for those elections—8 April—is likely to be formally announced in the next few days. We shall watch the situation carefully, but I know that the announcement will please my right hon. Friend the Member for Coatbridge and Chryston and other hon. Members.
We urge the Peruvian Government and Opposition representatives to show flexibility and moderation, with a view to ensuring real progress towards democracy on the basis of the 29 points. We hope that special emphasis will be placed on ensuring that the playing field of the election in April 2001 will be much more level than that of the previous election. That especially means that all parties and candidates must have equitable access to the media, and that the reform of electoral and judicial authorities is ensured.
The British Government will continue to support efforts to aid the democratic process through expertise funded by the Foreign and Commonwealth Office and the Department for International Development. I appreciate what was said about my right hon. Friend the Secretary of State for International Development and the work of her Department by my right hon. Friend the Member for Coatbridge and Chryston. Given his background in international development, it was real praise. We want free, fair and transparent elections and to ensure that Peru moves forward. As the hon. Member for Chesham and Amersham said, we have come a long way, but there is further to travel before the people of Peru feel that they can have the Government whom they deserve.
Mr. Deputy Speaker: Order. We now move to the next debate.

Swine Fever (Norfolk and Suffolk)
10.59 am
Mr. Keith Simpson:I am delighted to have the opportunity to bring this issue to the attention of the House, because the outbreak of swine fever in East Anglia on 8 August has had a crippling effect on pig farmers in Norfolk, Suffolk and Essex and a major impact on the local farming community.
I am delighted to be joined in the Chamber by my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard), my hon. Friend the Member for North Norfolk (Mr. Prior) and the hon. Members for Waveney (Mr. Blizzard) and for Norwich, North (Dr. Gibson). Several other colleagues from the region cannot be present, although farms in their areas have been affected, including my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) and my hon. Friends the Members for Central Suffolk and Ipswich, North (Mr. Lord)—a Deputy Speaker—for West Suffolk (Mr. Spring), for South Suffolk (Mr. Yeo) and for Bury St. Edmunds (Mr. Ruffley). Many of them have been in contact with the Ministry of Agriculture, Fisheries and Food and have received representations from pig farmers in their areas.
This swine fever outbreak is expected to cost the pig industry about £20 million. About 1,200 pig producers were trapped by the movement restrictions in Norfolk, Suffolk and Essex. It is calculated that they have lost about £4 million and bank borrowings are rising every day. The United Kingdom's largest pig producing company—BOCM Pauls—says that about £2 million is owed by producers in the surveillance zone. By any calculation, that is a massive potential indebtedness, which affects not only the pig producers, but the whole farming community in our area and has a knock-on effect on the entire local economy.
To put the crisis in perspective, let me give the figures that I obtained this morning. The Minister may have more up-to-date figures. About 175,000 pigs have been killed since 8 August—115,000 of them under the welfare scheme, which means that they were clean, healthy pigs. Other pigs have been killed on the farms. That is an enormous number. Nearly all the pigs killed under the welfare scheme were killed at an abattoir in my constituency.
Pig farmers and their families in our area have been devastated by the outbreak. Members of Parliament frequently lobby or make representations on behalf of their constituents. We are all guilty of using hyperbole at times, but those of us in the area know what an impact the outbreak has had. The men and women affected had already endured a pretty awful two and a half years. They were only just recovering from the downturn in the pig market. This spring, things were just beginning to pick up and now they have been hit again. For those whose pigs were directly affected, it has been a horror story. For hundreds of others, all sorts of restrictions have meant that they stand a chance of going out of business. Many have had to lay off workers and there is a deep feeling of helplessness.
All that has happened in a sector of farming that has, by any definition, adopted the highest standards of animal welfare and efficiency, certainly compared with most UK competitors. I am sure that we can all find

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examples of pig farmers who do not meet those high standards. However, as the Minister said at the Meat and Livestock Commission breakfast, at which the national pig awards were made, Ministers accept that that sector of farming has been outstanding. Pig farmers are, therefore, depressed and angry. They look to politicians, in particular Ministers, for short-term remedies and long-term answers.
The crisis has been going on for three months. For almost all that time, Parliament has been in recess. Pig farmers in East Anglia, the local community, the media and all MPs have been frustrated at being unable to question Ministers and hold them to account. Comments are often made about the relevance of Parliament today, the fact that it has been sidelined and that Members of Parliament simply draw a large salary and do not do much else. However, it has been brought home to me and many colleagues this summer that when Parliament is not sitting, not only constituents but Members of Parliament are frustrated by not being able to get answers from Ministers. When Parliament is not sitting there is, strangely, a democratic deficit.
Dr. Ian Gibson: Would the hon. Gentleman concede that Baroness Hayman paid four visits and met pig producers in Norfolk and Suffolk in the recess?
Mrs. Gillian Shephard: It is indeed the case that the Minister of State in the other place has her second home in my constituency. On two occasions she found it possible to visit a single farmer on her way home. The visits were carried out in extreme secrecy, as the press were not informed until afterwards. At the beginning of the outbreak, Mr. Deputy Speaker, and I say this for the clarification of the House—
Mr. Deputy Speaker (Mr. Frank Cook): Order. We are already stretching the rules by having one intervention on another. I should hate to allow an intervention to become a speech.
Mr. Simpson: Obviously you understand, Mr. Deputy Speaker, that feelings are running high. I shall return shortly to ministerial responsibility, but the hon. Member for Norwich, North raised the matter. I am speaking not only as a Conservative Member, but on behalf of many pig farmers who have suggested to me that the ministerial appearances have been like drawing teeth. Indeed, at the first appearance, the Minister in the other place was going to a small meeting near Bury St. Edmunds when she was effectively forced to come to a large meeting to hear the views of several hundred pig farmers. That is well recognised.
Mr. David Prior: Does my hon. Friend also recognise that not only have Ministers failed to visit the area properly, they have failed to answer correspondence? I have written three times to the Minister and I have not had one reply.
Mr. Simpson: My hon. Friend makes a good point. I shall give an example in a few minutes.
After taking into account all the external extenuating circumstances surrounding the outbreak of swine fever, people in Norfolk, Suffolk and, until recently, Essex,
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have felt let down by Ministers. Since 8 August, I have been asked continually when would the Minister of Agriculture, Fisheries and Food come to Norfolk and Suffolk to see the crisis for himself and to talk to pig farmers. It is no good the junior Minister coming four times. The right hon. Gentleman promised today at the national pig awards that he would come to East Anglia in the near future to have discussions with local pig farmers and others.
Colleagues from other parties will say that I am merely trying to make partisan political points, but this question has been put to me by a large number of pig farmers who may or may not vote for me. The Minister of Agriculture, Fisheries and Food promised at the Labour party conference on 28 September to come and find out at first hand by the time that Parliament met on 23 October. He has broken that promise. My right hon. Friend the Leader of the Opposition was able to attend a meeting on 17 October in Norfolk to hear the concerns of pig farmers. The failure of the responsible Cabinet Minister to come and see for himself bears directly on the anger and frustration felt by pig farmers and others that this attack of swine fever has not been handled well.
The first priority for everyone has obviously been to prevent the spread of swine fever and make certain that it is completely eradicated. However, pig farmers have asked me if the policy of Ministers and officials harmed that first priority. On behalf of the pig farmers in my constituency, I have some direct questions for the Minister of State, which I want her to answer now.
Welcome though the lifting of restrictions in Essex and Norfolk have been, to date 242 pig producers are involved and more than 1,000 are still locked in to restrictions. Pig farmers and the public want Ministers to answer the following questions. What was the cause of this outbreak of swine fever? Was it caused by a pig's consumption of infected material discarded by a member of the public? Was that source an infected pig product from outside the United Kingdom? If so, what action will the Minister take to curb illegal imports of meat products and to enforce higher standards of traceability and warranty on the importers of meat products so that the United Kingdom's standards are met and can be proven to be so?
Given the slow and at times chaotic response of the Ministry of Agriculture, Fisheries and Food to the outbreak in the first few weeks, what operational procedures did MAFF have in place, based upon the previous swine fever outbreak in 1986? Will there be at least a Ministry assessment of lessons learned from the outbreak, so that if we are faced with a similar outbreak, procedures will be in place to deal with it?
Does the Minister believe that MAFF had, or still has, sufficient resources to cope with the outbreak? Farmers have given me countless examples. They are unable to get answers from MAFF, and there is order and counter order, with frequent changes of personnel. Even taking into account the fact that the outbreak happened in August, the chaos and confusion made it even more frustrating for pig farmers trying to get a common line from the Ministry.
There is particular anxiety about the time that it takes to obtain the results of blood tests on animals subject to movement—it took 27 days, on average, for results that should have been known within eight to 10 days. That puts an ever-greater strain on pig farmers.

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The restrictions placed on the movement of pigs have led to gross overcrowding and suffering. Pig farmers are amazed that although MAFF claims that animal welfare is its responsibility, it closed the pig farms on 9 August but the welfare disposal scheme was not introduced until the end of that month. Is the Minister prepared to take responsibility for the serious decline in the standards of pig slaughter? Slaughterers are paid £1 per pig, and slaughtering consists mainly of shooting pigs with a 2.2 rifle with an enlarged bore, which, to say the least, is pretty bloody.
Has MAFF been constrained in its efforts to deal with the crisis by financial restrictions imposed by the Treasury? If MAFF had been able to extract £10 million to £15 million from the Treasury at the outset, many of the operational problems could have been met.
Finally, there is the matter of compensation, which is of great interest to pig farmers—and, I suspect, to you, Mr. Deputy Speaker—but is also the cause of great frustration to them. The laggard way in which the Ministry has responded to this crucial issue is seen by pig farmers, the wider farming community and people who live in rural areas as too little, too late. Pig farmers have never been subsidised and have been proud to stand on their own feet to meet the challenges of animal welfare, but the incomes of pig farmers caught up in the surveillance zone have collapsed, while their debts have mounted through no fault of their own. Indeed, they have had to find the funds to provide the necessary accommodation for the extra pigs crowded on to their farms, which they have been unable to move.
I remind the House that the Government first offered £35 for animals that weighed more than 60 kg and £10 for smaller pigs, despite the fact that the average cost of each pig lost would have been nearly £100. As a result of pressure from the farming community, the media and politicians. Ministers were then forced to offer £50 plus an additional £15 levy.
For a month, Ministers have been considering a revised compensation scheme suggested by the National Pig Association. No reply was received. The House may be interested to know that at the breakfast attended by some of us this morning, courtesy of the Meat and Livestock Commission—it was to celebrate British pig products and bestow the National Pig Association award—I was told that the Minister of State rather than the Minister of Agriculture, Fisheries and Food was expected to make the award. However, in the event, the Minister appeared and made a statement—not to the House, but to the National Pig Association—accepting a revised scheme of compensation. My colleagues and I have not yet had a chance to study the details, but any refinement is welcome. It would have been more appropriate if the right hon. Gentleman had made a statement to the House. That, after all, is what Mr. Speaker has been saying in the past fortnight. I am not making a nit-picking parliamentary point; it is important because of the parliamentary deficit of the past three months. Although the revised scheme is welcome in general terms, the farming community and politicians on both sides will want to examine it in detail.
The crucial point for the Minister is that when the compensation will be paid is as important as how much. Initially, the National Pig Association believed that as a
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result of legal and financial problems, the first payments would not be made until spring 2001. It is no exaggeration to say that if we have to wait that long and the banks are unwilling to wait, the pig industry in East Anglia will face considerable collapse. I welcome the revised scheme, but there is a need for much greater honesty and clarity.
The past three months have been a disaster for our pig farmers. They are frustrated and angry and feel that Ministers and MAFF, having displayed lethargy and a lack of grip, lie behind the crisis. The Minister of State will doubtless say that she was working hard throughout August, September and October, which is partly true. Other questions must be asked, and pig farmers in my area do not gain that impression.
It was a mistake for the Minister of Agriculture, Fisheries and Food not to have visited our area within a few weeks to listen to pig farmers and show that he was, as he claimed, directing the situation from Whitehall. The right hon. Gentleman is in danger of being regarded, without too much hyperbole, as a caricature of a first world war general—"I feel your pain and I am dealing with the paperwork". The Minister of State is shaking her head, but if she visited my constituency and met some pig farmers, she would find that that was so. I urge the right hon. Gentleman to fulfil the pledge that he gave at the Labour party conference and again this morning—to come to Norfolk and Suffolk, meet pig farmers and understand the extent of the crisis. If a financial package is not introduced quickly, a large part of our pig industry will be destroyed, with enormous knock-on effects on the farming community. He owes it to the pig farmers, their families and the wider farming communities of Norfolk and Suffolk.
11.18 am
Mr. Alan Hurst: I am pleased to speak in this important debate. I represent an Essex division, which comes within two miles of the Suffolk border, so I hope that I shall be forgiven for intervening. Parts of my constituency have been subject to the restricted zones and, in any event, the ancient kingdom of Essex used to stretch into Suffolk. I am therefore qualified to speak.
I shall not go down the route of discussing second homes, correspondence and breakfasts. I am sorry that I did not attend the breakfast this morning, as I am not certain what was announced about the revised compensation scheme. That shows the disadvantage of political meetings so early in the day. However, from what the hon. Member for Mid-Norfolk (Mr. Simpson) said, I gather that the scheme may be along the lines of that advocated by the National Pig Association.
In many ways, this outbreak is more severe than what happened in 1986 because it comes on the back of probably the greatest depression in agriculture since the 1930s. It is the greatest depression that the pig-farming sector has faced within farming living memory and it is the one depression on top of the other that has made the crisis so acute in the eastern counties. Let us briefly consider the crisis that pig farming has suffered in the past two to three years. The price of pigmeat has fallen from the top price of 140p per kilo to way down below the perceived break-even figure of 90-odd pence per kilo.
The reasons why such a situation has come about are manifold. The ubiquitous argument about the strength of the pound comes into it, as does the argument about

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the extra costs that the sector has borne with regard to the well-advanced and well-received welfare standards that our pig sector introduced way ahead of many of our competitors. There may have been a misjudgment on the back of the BSE crisis—in that more consumers would switch to pigmeat away from beef. That did not occur on the scale that was anticipated. In any event, owing to the strength of the pound we were not able to take advantage of contracting the Danish or Dutch shares of our domestic market. All those problems existed in any event and those of us who represent pig farming constituencies will know that the industry has been in severe crisis for some time.
The problem amounts to a tragedy of almost Shakespearian proportions. Classical swine fever came along at the very moment that the corner was being turned, when the price was rising and edging up towards £1 per kilo and when there was a streak of hope about what had been a bleak prospect. Pig farmers in my constituency understand that the industry has not been subsidised for many years for various historical reasons. I do not think that they want the industry to be subsidised. We are in a unique situation in that the industry has received a double blow, which requires a broader view to be taken of what might be possible. There was a real risk beyond what we are facing now—that confidence in the product would have been undermined. I was most grateful to learn from the various radio shows that I listen to while driving around my constituency that the disease poses no danger to humans. Fortunately, for once, there has been no irresponsible scaremongering. It has been accepted that the disease cannot threaten humans and, consequently, the price of pigmeat has remained steady and on an upward position, as it was throughout the summer.
I shall not go into the more polemical parts of the speech of the hon. Member for Mid-Norfolk. That is for Opposition Members to do and for my right hon. Friend the Minister to resist. I certainly can say, however, that she has replied to my entreaties in correspondence within a relatively short time. I am a supporter of the scheme that has been advanced by the National Pig Association: that compensation should take the form of a headage payment. There should be a sliding scale based on the weight of the pig. I do not know the figures that were announced today, but £12 per head and 55p per kilo have been advanced. That seems an eminently sensible way in which to proceed.
As for the industry levies, they should be introduced in good times to provide an insurance fund for bad times. These are bad times in pig farming, and difficult times to collect such a levy. I understand the Ministry's trepidation that the fund may not yield what is predicted and that the £15 may not be paid. The Ministry may take a chance, if it is allowed to do so by the Comptroller and Auditor General, and advance the money on the basis that other matters will fall into place and the levy can be collected.
There is a case, however, for taking a longer term view about the possibility of a levy to be used as a fund against future outbreaks of swine fever or other diseases. One pig farmer in my area mentioned the outbreak of another disease some years ago. He asked me whether the levy that was made then had all been paid out. I have yet to ascertain the facts and ask my right hon. Friend the Minister of State to inquire further
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about it. A longer term levy at an appropriate rate, that could be adjusted in bad times and increased in good ones, may be an appropriate answer to the problem.
It does not help, during the current agricultural crisis, to make party political points. The problems for those involved in the industry are so severe that they will want to hear about the steps being taken that will benefit them now and in the long term. My right hon. Friend the Minister is sympathetic to the position in which the pig sector finds itself, so I hope to hear a positive and progressive response from her.
11.26 am
Mrs. Gillian Shephard: I begin by congratulating my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) on securing the debate. As he says, the difficulties and problems suffered by the pig industry in our constituencies since the end of July have been compounded by the fact that we have been unable to get comments or facts from the Minister for Agriculture, Fisheries and Food. This debate has provided us with our first opportunity to confront Ministers with the problems that our constituents have suffered since the end of July—for that, thanks be to Parliament.
I congratulate my hon. Friend also on the comprehensive way in which he covered not only the unfolding of a situation that brought many farmers in my constituency near to ruin, but the problems that remain. The hon. Member for Braintree (Mr. Hurst) added some pertinent points, which may not have referred precisely to Norfolk and Suffolk, but which showed that his heart is with us.
We are all pleased that the outbreak was contained. Local farmers, with whom I have been in constant touch since the end of July, appreciated the regular briefings that they received from vets and other officials. When the emergency operation centre at Bury St. Edmonds was set up, farmers found that they could approach it with some ease. Of course, we have not had such an outbreak for 14 years. We all—producers, the Opposition, Ministers and Ministry officials—hoped that there would be no need to introduce arrangements for dealing with this difficult notifiable disease. However, it is also true that the machine had to cranked up—vets had to be brought in not only from other areas but from other countries. One wonders what might have happened had there been an outbreak in Cornwall or Devon—thank goodness, there was not—that could not have been managed from the same operations centre at Bury St. Edmonds.
Dr. Gibson: Will the right hon. Lady consider being more positive about the action taken over the outbreak? The BSE crisis extended across the country, but the actions taken in this instance prevented an extremely infectious virus from spreading from Norfolk and Suffolk to other parts of the United Kingdom, so compliments are due. I remind hon. Members of Baroness Hayman's visit to pig producers, from whom she brought extremely positive answers back to the Ministry.
Mrs. Shephard: Obviously the hon. Gentleman did not listen to what I said, as he was preparing his question

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instead. I had just said that we were all pleased that the outbreak was contained, and that farmers appreciated the briefings from officials and others.
Dr. Gibson: I missed that.
Mrs. Shephard: Yes. Such measures were appreciated, and I took the trouble to write to the Minister in the other place at the beginning of the outbreak to make the point.
My hon. Friend the Member for Mid-Norfolk painted a telling picture of the outbreak's devastating local effect on agriculture and the rural economy. I shall be brief, but I want to underline some of what he said. The financial effects of the outbreak must be set against a background in which, according to the Eastern Daily Press of 18 September, local farm incomes have fallen 50 per cent. since 1996. The figures are taken from a report by Larking Gowen, a Norwich-based firm of accountants, and it is pointed out that farmers in East Anglia currently earn less than the statutory minimum wage. That also underlines the point made by the hon. Member for Braintree, who said that the pig industry was hardly in a happy situation before the outbreak.
That figure—farm incomes falling by 50 per cent. in the past four years—was calculated before the financial effects of the swine fever outbreak or the Government's fuel tax policies had been taken into account. The Ministry will be aware that, before the outbreak, the pig industry was only starting to recover from its own crisis and survived thanks to the determination and good husbandry of producers involved. Although farmers certainly appreciated the co-operation and helpfulness of officials at the containment centre in Bury St. Edmunds, farmers themselves should be congratulated. They showed great responsibility by complying with requests made to them in containing the disease, despite the heavy financial effects that those requests imposed on them.

Owing to the regulations imposed by surveillance zones and movement restrictions, the impact on cash flow for farmers whose livestock has not suffered from the disease has been devastating. Neville Kemp, a constituent of mine from East Harling, expressed the problem at a farmers' meeting on 17 October, saying, as reported in the Eastern Daily Press of 21 October:
When this outbreak happened some 10 weeks ago, no one could have anticipated the mayhem that this was going to cause. The whole thing has been a catalogue of disaster.
We are three km from the original infected site. We've not had swine fever but have suffered from the consequences of it.
Our cashflow stopped 10 weeks ago—and it has cost the business in the order of £25,000 a week because pigs could not be moved off and sold.
The report continues to explain:
Pigs have been put into the welfare disposal scheme with over-finished pigs fetching £50 per head or a fraction of their value.
Mr Kemp said that the impact of being forced to keep larger numbers of pigs on the farm resulted in much higher pig mortality.
There have been gross problems of animal welfare. Mr. Kemp said that pig mortality,
went from five per cent overall to nearly 28 per cent at the peak when we were keeping pigs in barns where they shouldn't have been.
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All we could do was to keep piling these pigs up. I'm not alone. There are hundreds who are in the same situation.
Another farm in my constituency that has been adversely affected is the old, established farm Pilgrim's of Banham, which has calculated that its loss over the period amounts to £168,461. That is the most extraordinary loss to expect a company to bear and survive. It is a matter not only for pig producers but for the rural economy. The knock-on effects if such a company had to cease trading would be felt in employment and haulage, by suppliers and throughout the rural economy, which is already suffering because of fuel tax and other difficulties.
At the beginning of the outbreak, the Minister of State in the other place attended a meeting of producers, despite much reported hesitation. It has been difficult to hear by rumour that she has visited on other occasions and for us to be unable to meet her because her meetings with individual farmers have been reported only after the event.
Despite repeated invitations, the Minister of Agriculture, Fisheries and Food has been notable by his absence. He has apparently been unable to reply to letters from colleagues. I was interested to hear that the hon. Member for Braintree had received replies to his letters. Clearly he was wise to address them to the Minister of State, the right hon. Member for Gateshead, East and Washington, West (Ms Quin). The matter is not trivial, because we are trying to help producers and answer their questions. I was driven to tabling a parliamentary question as soon as the House returned to ask when I might receive a reply to my letter to the Minister of 31 August. I had one of those wonderful replies that told me that he would answer as soon as possible. Today, the day of the debate—what magic, the power of Parliament again—I received a letter from the Minister, although it took four days to arrive from Smith square, which must be something to do with the rain. It is of course dated after 31 August. It did not arrive until 1 November, but it is dated 27 October. A terrific mystery is involved. As my hon. Friend the Member for Mid-Norfolk said, the Minister promised to visit on 28 September, but regrettably he has not done so. Earlier today he again promised to do so, and it will be welcome if he manages to fit a visit to that hard-pressed area into his equally hard-pressed diary.
Many unanswered questions remain. The Minister made an announcement at the Meat and Livestock Commission meeting this morning. I do not know whether he should have made it to Parliament, but had he done so we would have been able to question him on the content and the point of it. We shall not have the same opportunity today with the Minister of State, because her contribution comes at the end of the debate. However, I shall ask her some questions now that relate to the legislative arrangements necessary to bring into force the compensation package, which will include a levy from the industry.
I understand, and expect the Minister to confirm, that legislation will be necessary to bring into force the levy from the industry. When is that due to be considered and when will it come into force? Will the levy cover all notifiable diseases and any human-health related diseases, as producers have apparently been told? The eastern region chairman of the National Pig Association

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has written to the Minister about that, but naturally has not received a reply. The right hon. Lady will be able to tell us this morning.
Does the agreement of the Scottish Parliament and the Welsh Assembly have to be obtained? If so, is that likely to be forthcoming given that there has been no trace of the disease in those parts of Britain? Given the uncertainties of the timing and availability of the levy, do the banks accept it as a bankable proposition? Is it fair that pig farmers have to bail themselves out because, as they believe, a consignment of pork reached this country illegally from abroad and caused the disease? What responsibility do the Government take? The pig industry clearly needs answers and it needs them fast.
I hope that the Minister will be able to enlarge on the announcement made elsewhere this morning by the Minister of Agriculture, Fisheries and Food. As far as one can tell, there seems to have been some restructuring of the compensation arrangements but it was not clear whether additional money is to be provided for compensation and what the ceiling for compensation per animal is to be. It is welcome that the right hon. Gentleman has listened to concerns about the structuring of the compensation from the industry, but there are other questions. The Ministry will have to think about the implications of consequential losses that result from this kind of disease. The worst losses have been incurred by those whose herds have not had the disease. That is the point. The Ministry must take account of that. According to veterinary sources, climate change is likely to bring about more unusual and unexpected outbreaks of disease. The Ministry will have to come to grips with the question of consequential loss.
I am grateful finally to have had the chance to put these concerns directly to a Minister. The right hon. Lady will answer them conscientiously—that is her reputation and that is how she always responds. However, I cannot emphasise enough the disappointment and sense of let-down felt by pig producers because of the lack of ministerial response at a time when their livelihoods are tumbling down around their ears.
11.42 am
Mr. David Prior: It is a great honour to follow two excellent speeches by my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard) and my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) who have covered many of the issues that I wanted to raise this morning. We all know that the pig industry is a roller coaster. Prices go up and down from great extremes. The difference in the past three years has been that until very recently prices have been stuck at an incredibly low level. For about three years the pig industry has been on its uppers and unlike any other sector of agriculture in this country it receives no subsidies. The situation has been made worse for pig producers because they have to compete with imports that do not have to comply with the same high hygiene and welfare standards as our pigs. Our pig industry has not been supported by the degree of honesty in labelling that could have been expected.
The past three years have been extremely difficult. Farmers with mixed farms have had little joy in other parts of agriculture, with wheat at £55 a tonne and sugar
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beet down to £27 a tonne. There is great uncertainty about the future of the sugar regime, allied to the fact that the cost of fuel has been rising steeply. The cost of ammonium nitrates and other chemicals has meant that the farming industry has been going through a crisis and a depression the extent of which is unmatched, certainly in my lifetime, and probably not seen since the 1920s and 1930s. The fact that swine fever came on top of that was the last straw for many producers, so it has had a disproportionate effect.
The impact on individual families involved in the pig industry has largely been one of cash flow. Their sole source of income stopped. As my right hon. Friend the Member for South-West Norfolk said, many pig farmers have received no money at all for some 10 weeks. A typical farm with about 300 sows receives a regular income of £10,000 and that income has just stopped. The problem has caused a great deal of hardship. Barclays bank estimates that the level of indebtedness of pig farmers in Norfolk and Suffolk increased by £2 million during August and September. The impact of the problem has been felt not only by the pig farmers, but by their suppliers, the feedstuff suppliers, other related industries and by the pigs themselves. Figures show that pig mortality in some herds has increased from 5 per cent. to nearly 30 per cent. The implications of dealing with that level of mortality are horrendous for the men involved.
What has been the Government's reaction to the problem? I have tried to get in touch with the Minister of Agriculture, Fisheries and Food since the end of August, but I have not yet received a reply. My right hon. Friend the Member for South-West Norfolk received a letter from him today, but I have received no communication at all. To me, as a Member of Parliament, that shows a lack of interest and understanding and it is absolutely disgraceful. What am I supposed to tell my constituents who work in the pig industry? Their livelihoods are severely compromised, but the Minister cannot even be bothered either to visit them or to reply to correspondence. It is a disgrace.
The Government will have to come up with a lot of answers about the handling of the dispute. Why is the testing for swine fever taking almost a month, when it could be done in 10 days? Why has it taken so long to kill the confirmed units? Why are there stories of dead pigs being left overnight with crows and foxes feeding on them, spreading disease?
Mrs. Shephard: Reports in my constituency have circulated about dead pigs being left in fields for far longer than overnight. Apparently, they have been left for four days, and carrion seekers have pecked at the bodies and carried the disease heaven knows where.
Mr. Prior: I have heard stories about dead pigs being left for more than 24 hours, but obviously four days is much worse than that. The story about the 24 hours happened in the Quidenham zone, where literally hundreds of pigs were left in a heap overnight. As my right hon. Friend said, they are a prey to carrion. One of the problems in Norfolk and Suffolk has been the great expansion in outdoor pigs over the past five to 10 years, partly in response to welfare regulations. It has made the containment of the disease that much more difficult.

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The compensation package should have been designed to contain the disease as much as possible. It has clearly not done that. Had farmers been irresponsible, there would have been a tremendous incentive to contract the disease and claim full compensation or to shift pigs out of containment zones before they were announced by the Minister of Agriculture, Fisheries and Food. It is only because pig farmers have taken an incredibly responsible attitude to the problem that the containment and restriction zones have worked. There has been an incentive for farmers to keep pigs weighing more than 100 kg. That has resulted in the welfare problems that we have discussed and has cost the Government more. It would have been much better had farmers put smaller pigs into the scheme without suffering a financial penalty. Perhaps the Minister of State will say something about that when she replies to the debate because the Minister of Agriculture, Fisheries and Food may have changed the compensation rules.
Will the Minister of State explain what happened in Holland? When the same problem arose there, what compensation was made available to its pig farmers? I have been told that that the compensation programme was much more generous and, instead of simply including a profit element, compensated farmers for the full cost of production. It would have amounted to about £100 for a 100 kg pig.
The Government will need to answer many questions. They have been fortunate that the disease has not spread further because there is nothing in the compensation scheme to prevent that from happening. Many farmers feel bitter and upset that the Government have not been prepared even to visit them, let alone answer their questions, so I look forward to hearing what the Minister has to say.
11.49 am
Mr. Colin Breed: I add my congratulations to the hon. Member for Mid-Norfolk (Mr. Simpson) on raising this issue and on his miraculous timing. The debate is taking place only hours after the Minister's important statement at breakfast this morning.
I agree with many hon. Members that pig farmers are a special breed of people. I say that from one Breed to another. In recent years, they have complied with everything that has been thrust on them. They cooperated almost immediately with the stall and tether bans, investing huge sums of money to comply with them. They grappled with meat and bone meal feed and high abattoir charges, which were not their fault, but due to BSE.
Having ensured that their industry met welfare and health standards, pig farmers were subjected to perhaps the ultimate insult of seeing imported meat re-labelled as if it were British. A couple of weeks ago, we heard about a farmer from Honiton in Devon who was effectively acting as a trading standards officer, because he identified a product in Tesco as wrongly labelled. After complying so quickly and efficiently with everything that was asked of them after this outbreak of classical swine fever, pig farmers feel, not unnaturally, rather disappointed that the compensation and the way in which things have gone have not helped them much.
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I welcome the Minister's announcement this morning that the Government have accepted the industry's compensation package. I suspect that there are many lessons to be learned from the Phillips report on BSE, but one is that compensation has a significant effect on the motivation and intention of farmers who receive it. Part of the problem with BSE was that the compensation package changed and did not compensate farmers fully. If the pig farmers had not responded so magnificently, this outbreak might have been more significant.
The compensation package lacks one final aspect, which shows the way in which the Ministry views BSE and classical swine fever. Almost everything has to do with timing, which in commercial terms manifests itself in cash flow. There is a relentless rise in borrowing from the bank, because of lack of income. That places various additional costs on top of interest and banking costs and the inability to pay bills. There is a knock-on effect throughout the sector.
Although a compensation package has been announced, people fear that it may not secure for the industry all the benefits that it should, mainly because of timing. An important element is the levy payment of 20 per cent. from the industry, which must be collected at a time when things are difficult, processed and paid out. That 20 per cent. may not be available for many months, yet the industry has major cash flow problems.
I hope that the Minister will respond positively to the idea of what in banking is called a bridging loan. Farmers could receive that portion of the compensation more quickly. The MLC could pay it out and repay the Treasury later when it has collected it. The securing of compensation payments will be a key element in the industry's continued success after this disastrous episode. However, there are lessons to be learned and, as we have found from the Phillips report, they are wide and many. I have a few questions in addition to those that other hon. Members have asked, many of which were on my lips too.
I want to raise the issue of pre-planning. We heard this morning that the pig industry had changed significantly since the previous swine fever outbreak. That is true. In a commercial context, "what-if exercises can be carried out, to establish what would happen in certain circumstances. The Ministry should address itself to pre-planning for the relevant scenario, not least to ensure that with the new format of closed MAFF offices, other parts of the country will be equally well served if a similar outbreak occurs. Does the Ministry have a proper pre-planning exercise to ensure that swift action can be taken throughout the country?
Because the compensation package is new, a monitoring system will be necessary to ensure that all the appropriate needs are met and that the Ministry stays close to the situation. Many pig farmers are on the brink and they will be highly dependent on their business planning. They will need to ensure that compensation payments and their business plans in relation to the bank can be properly relied on and that the Ministry will provide the compensation package quickly.
The origin of the outbreak seems to have been in some imported infection. What closer scrutiny of imports is now being undertaken? What regulations are being tightened?

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I have been thinking for some time, not least because of the problems of farming incomes generally and the way that prices have been driven down by supermarkets among other factors, that the value of mixed farming should be recognised. We seem to have departed from that. When farmers engaged in a variety of farming activities they were cushioned from the effects of a problem in one sector by their operations in another. We seem to have arrived at a stage of specialisation, be it in dairy, pigs or poultry, whereby farmers depend principally on one activity for their income. A problem in that sector affects them massively.
It is now being suggested that the industry should raise a levy or that other ways of providing compensation could be pursued. The greatest cushion for many businesses is the opportunity to derive income from a variety of sources, such as having customers in different places or engaging in different activities. There is certainly merit in examining the way in which over the years we have arrived at a way of farming so specialised that each sector is vulnerable.
Mrs. Shephard: I much appreciate the hon. Gentleman's thoughtful presentation. However, while undoubtedly over the years a steady concentration and specialisation of farming activities has taken place, at present every sector has taken a nose dive. The result is that even being in mixed farming—and many farmers are—is not much help.
Mr. Breed: That is also a thoughtful contribution, but in general terms it should be recognised that the stability of businesses depends on a wide customer and activity base. I hope that perhaps there will be some investigation of that line of thought, if only to eliminate it.
11.59 am
Mr. James Paice: I congratulate my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) on obtaining the debate and the opportunity to question the Minister, and on the way in which he opened the debate. He clearly set out the state of affairs in the pig industry, in particular in Norfolk and Suffolk, although there are peripheral effects in Essex and, potentially, consequences for the rest of the country.
I am the only former pig farmer in the Chamber—and probably the only one in the House. My pig unit would have been in one of the restricted areas, so I come to the debate with some empathy for those who are so seriously caught up in the situation. As my hon. Friend said, the pig industry is not normally subsidised; however, it is not true that it has never been subsidised. At one time, it was subsidised to the tune of 50p a score—a now outdated measurement of pig weights. My hon. Friend will not be surprised to learn that that occurred in the late 1970s, under the previous Labour Government, because of the state of the industry.
As several hon. Members have said, this outbreak of swine fever follows two and a half years of serious losses. About 26 per cent. of the breeding herd in England has gone and, as has been emphasised, farmers have no reserves on which to call to carry them through the new crisis. Although the hon. Member for Braintree
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(Mr. Hurst) chided my hon. Friends for being, as he put it, partisan over the issue, the music has for the moment stopped and we have these Ministers in charge of the Ministry of Agriculture, Fisheries and Food. If there are criticisms of the way in which the situation has been handled, they should be made.
My right hon. and hon. Friends were justified in making an issue of the Minister's failure to visit the area—in such a crisis, one would have expected him to do so. There is evidence that farmers would prefer the organ grinder—I will not continue the analogy. The Minister told the meeting that was referred to earlier that he cancelled his holiday. That is a noble gesture, but not many farmers would believe that he had to sit in his office for the whole of August without being able to visit the area.
On 4 September, I wrote officially to the Minister on behalf of the Opposition and pointed out, among other issues, that the £66 million outgoers scheme announced by the Government at the end of March has still not been put in place and farmers have not received a penny of it. That potential cushion is still not available to farmers and probably will not be for several months. Hon. Members will not be surprised to learn that it took seven weeks for me to receive a reply, even to an official letter from the Opposition. The letter came from the Minister of State, the right hon. Member for Gateshead, East and Washington, West (Ms Quin), but was signed by her private secretary. Unfortunately, it did not even mention the outgoers scheme and, what is worse, it was factually incorrect in its references to the proposals of the National Pig Association. I shall return to that issue.
My first question to the right hon. Lady has to be when she expects the outgoers scheme to begin to deliver to farmers, who are in desperate need of that small extra support. Furthermore, will farmers who have been slaughtered out because of the swine fever outbreak and who have decided not to restock because they do not wish to continue pig farming also be eligible for the outgoers scheme?
As my hon. Friend the Member for Mid-Norfolk said, around 170,000 pigs have so far been slaughtered under compulsory slaughtering and under the welfare scheme. Although the scheme is in the interests of welfare—I understand the reasons for that—the restriction orders create huge costs for the industry. Cash flow, to which the hon. Member for South-East Cornwall (Mr. Breed) referred, is crucial. Farmers have no cash flow for extra feed, labour and housing costs.
David Hodgetts of Barclays bank was present at the meeting that my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) attended. As reported in Farming News, Mr. Hodgetts told my right hon. Friend:
The average producer in restricted areas was losing up to £9,500 a week, and borrowings by East Anglian pig producers had risen by £2 million pounds.
Those are the words not of the politicians but of the bankers, which puts the matter into context. There is a temptation for farmers to hang on to their stock in the hope that restrictions can be lifted. That is not necessarily the best way forward, but it is a direct result of the fact that the compensation scheme was not properly structured.
The scheme on which the Government made an announcement this morning was submitted to them by the NPA almost a month ago. We may all question why

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it has taken the Government so long to reach a decision; perhaps the Minister preferred to announce it on a platform rather than address the urgency of the situation. However, the Government have now decided to ask the industry to fund a levy. In passing, I say to the hon. Member for Braintree that a levy was raised on an earlier occasion during an occurrence of Aujeszky's disease that caused serious problems for the industry. There is still money outstanding from that levy, which the Government have failed to make available.
My right hon. Friend the Member for South-West Norfolk (Mrs. Shephard) referred to the legal procedures needed to get the levy in place, which will be long and drawn out. Consultations are going on, and the industry has already requested that the Government provide a bridging loan. I believe that they have refused to do that, but I ask the Minister to reconsider that decision. We are talking about only £2 million, which will be recouped through the levy and will make a great deal of difference. After all, it represents 20 per cent. of the compensation that will be available, according to new figures.
On the administration of the welfare scheme, among the articles that have come out of various discussions and meetings taking place in East Anglia is one from Farming News, written by Mr. Brian Rivett of Fakenham, in Norfolk. The author lists a catalogue of what might be called administrative overkill, which I shall not detain hon. Members by detailing. He refers to the fact that people count the pigs out and in again and, if there are any errors, go back to square one. More people are supervising the killing than doing it.
My hon. Friend the Member for Mid-Norfolk, supported by my right hon. Friend the Member for South-West Norfolk, mentioned pigs that are left around at risk of carrion feeders, which could then spread the disease. Has a Minister or a senior official gone to watch the procedures and seen what is happening? There can be no smoke without fire and, although—Who knows—there may be some journalistic licence in those articles, there is almost certainly some truth behind them. I hope that the Government will respond to those matters.
I must refer, as others have, to the cause of the outbreak. From the letter placed in The Veterinary Record by Ministers' officials, it seems certain that it was caused when a pig in an outdoor unit ate an imported pork product. I believe that the unit has been identified. It is ironic that the supposedly more welfare friendly scheme in which pigs are kept outdoors may have been the cause of the infection, which has had such damaging consequences not only for farmers but for pig welfare. Clearly, pigs kept outdoors are more prone to scattered waste than those kept indoors.
The aspect of the letter placed by people from the State Veterinary Service in The Veterinary Record that most astonished me was the statement that the
most likely source of infection is thought to be an infected pork product. A review of legal imports has failed to reveal a potential source from the Far East. However illegal imports can occur and may include contaminated products.
That is clear and, unless there is more recent information, we assume that that is still the view of Ministry scientists and officials. I come now to the
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question of how that position can arise. There could be only two sources of that illegal product: either an individual brought in a pork pie or a sandwich that contained pigmeat from the far east or the pigmeat was imported in an unprocessed form and turned into a pork pie or sandwich filling. I believe that the latter case is the most likely.
For the past three years, the Opposition have been challenging the Government about the quality of our imports and the control of standards. When the Food Standards Bill was considered in Committee, I tabled an amendment to ensure that the Food Standards Agency had the same controls over imports as it had over domestically produced food. At the time, the right hon. Lady's predecessor, the right hon. Member for Birmingham, Perry Barr (Mr. Rooker) said that the Food Standards Agency
will have all the powers that we now have for checking what is coming into the country. —[Official Report, Standing Committee B,15 July 1999; c. 334.]
Well, if the agency has such powers, they are not being applied satisfactorily. If the very serious outbreak of the disease in East Anglia was by illegally imported foodstuffs, what else is being imported illegally into this country that might have even more serious and far-reaching consequences for animal or human health? I hope that the right hon. Lady will now do as some of my hon. Friends have suggested and tell us what the Government are doing to improve dramatically the quality of control over imported food. We cannot continue to have such problems.
The catalogue of delay and indecision by the Government has made matters worse. There has been little criticism of how the control of the disease has been managed by the officials of the State Veterinary Service and others, but there is plenty of evidence to show that the decision-making process and the delays have caused more serious consequences for pig producers than would otherwise have been the case.
The hon. Member for South-East Cornwall referred to the Phillips report, which cost £32 million. One of the clear lessons that has been learned from the report is that one has to make timely decisions and make them urgently on the best advice that is available at the time. The record of the past three months has not shown that the Government have learnt from the report. Ministry vets have taken admirable action, but there has been woeful inactivity by Ministers. Although the Minister of Agriculture, Fisheries and Food parrots his concerns, and did so again this morning, in his understanding and warm, emollient style, he and the Government will be judged on the way in which they have delivered results to the farmers.
My right hon. and hon. Friends have posed some questions this morning and I have added to them. The Minister of State now has a certain amount of time to answer them. They have not been made up by us; they are being asked by pig producers throughout East Anglia, who are suffering seriously from the outbreak. I hope that the right hon. Lady will now seek to redeem the Minister in the eyes of the farmers and produce some results so that they can begin to see a way forward.
12.13 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): We have had an important debate this morning and I shall try to respond

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to as many of the points that have been raised as I possibly can. I completely understand the concern and the depth of feeling that right hon. and hon. Members have expressed about the plight of the pig industry in their constituencies. I do not accept some of the comments that were made about ministerial approaches to the situation, which I shall outline shortly. Nor do I accept the charge that procedures have been slow, chaotic or confused. That is not the case, but I recognise the depth of concern expressed by right hon. and hon. Members about the problem. After two difficult years faced by the pig industry, the situation has rightly been described as serious and tragic.
First, I shall explain the nature of classical swine fever. Secondly, I shall summarise the steps taken by the Ministry to control and eradicate the outbreak in East Anglia. Thirdly, I shall deal with pig welfare issues and the steps adopted by the Government to help farmers to cope with them. In addressing those three elements, I shall endeavour to respond to issues raised by the hon. Member for Mid-Norfolk (Mr. Simpson) and other hon. Members from all political parties.
As hon. Members know, classical swine fever is a highly infectious and contagious viral disease, which can result in very high mortality rates. It occurs worldwide, but until this year there has been no outbreak in this country since 1986. Several hon. Members mentioned the 1986 outbreak this morning.
The disease cannot spread to humans—well known to hon. Members, but an important message for the wider public who may be following the debate. My hon. Friend the Member for Braintree (Mr. Hurst) mentioned attempts by radio broadcasters and others to disseminate that crucial public safety information. The Food Standards Agency has advised that classical swine fever poses no risk to consumers.
Procedures for controlling classical swine fever are set out in European Union legislation. All pigs on holdings where the disease is evident must be killed and destroyed. The carcases of all slaughtered pigs in East Anglia have been destroyed by rendering. Movement controls must be imposed within a minimum of a 10 km radius of each infected holding to prevent the spread of the disease. Hon. Members have understandably pointed out the contrast between farmers whose holdings are infected and those whose holdings are subject to the restrictions arising from the surveillance and wider measures in the area. I shall endeavour to deal with both elements in my response.
The source of the infection must be investigated and, where possible, identified. The extent of the spread must also be established. Controls cannot be lifted until the competent authority is satisfied that infection is no longer present in the zone. Let me assure the House that in dealing with the present outbreak, we have scrupulously followed European Union rules.
The current outbreak started on 8 August with a confirmed case of classical swine fever on a holding in Suffolk. All pigs on the holding were slaughtered, and pig movements to and from the holding were traced. These tracings led to a number of other confirmed cases and to further movement restrictions.
Various comments were made about the source of the infection. Investigations suggest that the original infection was introduced in early June to a breeding unit
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in Norfolk. Infection then appears to have spread to four pig-rearing premises through the movement of infected weaned pigs. Lateral spread appears to have taken place from one of these to two neighbouring holdings. Others were infected either by the movement of infected pigs or by the movement of vehicles or people.
The first priority of the State Veterinary Service, and of Ministers, has been and remains to eradicate the disease. Protection zones of 3km were placed around all infected premises, within which initially any movement of livestock was prohibited. Wider zones have also been established, within which all farms with pigs are inspected and kept under surveillance. In total, classical swine fever has been confirmed on 15 premises during the outbreak: one in Essex, six in Suffolk and eight in Norfolk. Nearly 60,000 pigs have been slaughtered as infected or as dangerous contacts. The Essex outbreak has been dealt with and the surveillance zone around that outbreak was lifted on 22 September, as my hon. Friend the Member for Braintree recognised.
I am also glad to say that the zone around one of the Norfolk outbreaks, the breeding unit where the infection is thought to have originated, was lifted on 28 October. It is encouraging that there have been no new cases of classical swine fever since 4 October. Provided that we see no more, the State Veterinary Service hopes to lift the remaining zones by the end of November. One thing that unites us all here is our keenness to see that timetable implemented if at all possible.
Throughout the outbreak, veterinary investigations have been made more difficult by the fact that, in its early stages, classical swine fever looks similar to another pig disease known as PDNS—porcine dermatitis and nephropathy syndrome. The State Veterinary Service has, therefore, had to adopt a very cautious approach to ensure that PDNS was not masking swine fever before releasing holdings from restrictions.
So far, investigations have been unable to identify the precise origin of the virus that caused the present swine fever outbreak. Using molecular techniques the Veterinary Laboratories Agency at Weybridge has precisely typed the strain of swine fever virus responsible for all the confirmed cases in East Anglia. It is not the same strain as caused the much larger outbreak in the Netherlands in 1997. It may be of Asian origin, and may therefore be linked to imported meat products, but at the moment the exact route of its introduction remains uncertain.
Throughout the course of the outbreak, Ministers, the Chief Veterinary Officer and MAFF officials have been kept in close touch with representatives of the pig and meat industries and all other interested parties. My right hon. Friend the Minister met pig industry representatives on several occasions in August in the early stages of the outbreak. My noble Friend Baroness Hayman visited the area on four occasions to meet pig farmers and see the problems for herself. As she is the Minister with responsibility for animal health it was entirely appropriate for her to fulfil that role.
Officers of the State Veterinary Service, including the Chief Veterinary Officer, have also attended many local meetings of pig farmers in East Anglia to keep them

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informed of progress. Indeed the Chief Veterinary Officer was in Diss two days ago when he made the important announcement about the timetable that we hoped to implement for the remaining areas. That was welcomed by the industry in East Anglia. Indeed, contacts have been invaluable in ensuring that Government and industry have worked together to eradicate the disease. I should like to join with other hon. Members who have paid tribute, as the hon. Member for South-East Cambridgeshire (Mr. Paice) did, to the work of the State Veterinary Service and veterinary officials. Other hon. Members pointed out the responsible attitude of pig farmers in the areas concerned. I concur with those remarks and am happy to endorse them.
We have also put in place a helpline for farmers, and information is provided by Ceefax and on the website of the Ministry of Agriculture, Fisheries and Food. We have made great efforts to keep farmers as informed as possible, to help them through the difficulties caused by the outbreak.
Several hon. Members referred to animal welfare and related problems. I accept the fact that existing regulations provide more compensation for those on infected premises than those caught in the surveillance zones. For that reason, in learning lessons from the outbreak, it is important to do what we can to set up a long-term system so that the discrepancy does not recur. Previous Governments have not attempted such a system, but I hope that we can try to find a long-term solution. The hon. Member for Mid-Norfolk talked about the importance of short-term measures, and of the longer term. I agree. We have taken effective short-term measures, but the Government and the industry are keen to tackle the long-term issue together. I hope to talk about that shortly.
Obviously, the movement restrictions that had to be introduced to control the outbreak of swine fever pose severe economic problems for the farms affected. When animals cannot be sold or moved from premises as planned, accommodation or space needs to be found for an increasing volume of them. Careful management of farms is needed to avoid overstocking and the consequent increased risks of poor welfare and disease.
On 29 August, the Government introduced the pig welfare disposal scheme to deal with the potential welfare problems, in recognition of the exceptional circumstances affecting pig producers because of the movement restrictions required to eradicate the outbreak of swine fever. The measures are important. Several hon. Members referred to the outbreak of classical swine fever in 1986, in which there were 10 confirmed cases, but no compensation was paid other
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than that for pigs slaughtered. There was no animal welfare scheme of the kind that the Government have introduced.
We also introduced the scheme reasonably quickly. The hon. Member for South-East Cambridgeshire understandably referred to some of the frustrations involved in achieving European clearance for the pig industry restructuring scheme. Part of our motivation for bringing in the animal welfare disposal scheme was that we could get it up and running quickly. It was therefore frustrating for me to be charged with "chaos, slowness and delay" when we wanted to work with the industry to give some relief and support to farmers whose premises were not infected, but who were caught up in the wider surveillance measures.
As of the end of October, 134,000 pigs had been offered to the scheme and claims worth £4.1 million had been submitted for payment. That money is substantially in excess of that paid out in the 1986 outbreak.
Mr. Keith Simpson: Obviously, because of the time restrictions, the Minister will be unable to answer all the many questions asked. Will she assure us that her officials will answer those questions as soon as possible, so that we can pass the answers to our constituents?
Ms Quin: I am more than happy to give that assurance. When I saw that I had 15 minutes in which to reply, I knew that I would not be able to deal with every question. In no sense do I want to try to avoid them; we have good answers to them.
I was taken to task about correspondence. I am fairly certain that I remember signing a letter to the hon. Gentleman who raised the issue. However, if having read that reply he wants to pursue further issues with me, he can do so.
I hope that the modification to the scheme that my right hon. Friend the Minister announced at the Meat and Livestock Commission breakfast this morning will be welcome. It has been worked out with the industry. It is not a change of policy or a new scheme but a modification to the rate of the existing scheme, which was why my right hon. Friend the Minister felt that he could tell the industry this morning. It was not the sort of statement that it would, as hon. Members said, have been necessary to present to Parliament. It is simply a modification of an existing scheme.
As promised, I shall endeavour to write to hon. Members about outstanding issues raised and I shall place copies in the Library. The Government have acted speedily to help farmers who have infected premises and who are outside the immediate infected area to ensure that the problem is tackled as speedily and effectively as possible.
Mr. Deputy Speaker (Mr. John McWilliam): Order. Time is up.

HMS Prince of Wales and HMS Repulse
12.30pm
Mr. Patrick Nicholls: On 10 December 1941, one of the Royal Navy's newest battleships, HMS Prince of Wales, and the battlecruiser HMS Repulse were sunk by Japanese torpedo bombers off the coast of Malaya. The loss of life was substantial: some 840 men perished. It was one of the critical naval actions of the 20th century, presaging the final dissolution of the British empire and ending European supremacy in the far east.
The attack took place within 72 hours of the attack on Pearl harbour, and it meant that the British and United States' maritime supremacy in the western Pacific was destroyed virtually at a stroke. Its effect on the morale of those defending Malaya and Singapore was devastating. If ever it could be said that a naval defeat had substantial consequences, this was surely the one.
In some ways, it all seems a long time ago. I am over the age of 50, and I did not fight in the war; I was not even born then. Equally, it would be common ground between us all here, including myself and the Minister, that the fact that we are here having this debate is due directly to the sacrifice of people such as those 840 men.
Although it is a long time ago to us, for some people the loss is every bit as poignant today as it was at the time, and it was thought that the site would be a final resting place for the men who died there. Such people include Shirley Ward, a senior staff reporter on the Mid-Devon Advertiser in Newton Abbot. Her father was Lt Horace Ward, the ordnance officer on HMS Repulse. His death was not the first tragic incident for the Ward family. Her uncle, Warrant Officer Roy Ward, had died when HMS Courageous was torpedoed off the coast of Ireland in the first days of the second world war. For some people, those memories remain fresh. Those who lost relatives, husbands, uncles, brothers or sons would have expected and hoped that the wrecks would remain the final and undisturbed resting place of their relatives and friends.
Sadly, it was not to be. Time will not allow me to describe the various depredations and spoliations that have taken place on the sites, but I can give a suggestion of them. There is substantial evidence of not simply minor pilfering of personal mementoes, but serious commercial plundering. I understand that some 8 tonnes of the port-side propellers of HMS Repulse have already been removed commercially, and some press reports, which I cannot verify today, suggest that the propellers on both sides may have been taken. There is no doubt that numerous personal belongings have also been lifted.
One of those who has campaigned hard on the issue, and I pay tribute to him for doing so, is Lord Clifford of Chudleigh, whose father was instrumental in having such sites designated war graves in the 1970s. I am indebted to Lord Clifford's briefing, which drew to my attention that Japan, a defeated and beaten nation, took steps immediately after the war to recover the bodies from the wrecks of their ships. That says something about how Japan regarded the sites. My attention has been drawn to a publication by an organisation called Scapa Flow Technical and John's Characters which shows that the MV Karin is available for dives on HMS
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Repulse and HMS Prince of Wales. It states that the ships lie in shallow waters and an article written by one of the divers states:
On one of the excursions aft we see sinks in cabins as we look through the portholes, left open for escape now fallen in to the ship as the hinges pull clear, signs of human occupation with cups. etc. and a toilet, I feel that we are the first to see these things since that day in 1941.
The article continues:
The torpedo responsible ripped open a hole of about 8 m by 5 m. The sailors inside would have perished immediately, these places are now only patrolled by the fish.
The Press Association reported the comments of a survivor, Albert Burnell, about the spoliation of these wrecks. He said:
I loved my ship and still do. We lost a lot of brave men and they should be honoured and respected…You wouldn't have people taking handles off coffins, would you? Why is this any different?
It is not any different; indeed, it is worse. Some of the things that have been taken away amount not to taking the handles off coffins but to opening them and stripping the rings off fingers. That is the enormity of the matter that we are discussing, which Lord Clifford raised in the House of Lords as long ago as 1995. Campaigners on the issue are now calling for the sites to be designated and protected.
I am delighted that the Minister is present and I am grateful to him to for writing to me on the matter. He stated in his letter:
A request from HMS Prince of Wales and HMS Repulse Survivors Associations to have both vessels designated under the provisions of the Protection of Military Remains Act 1986 is under consideration. Once this review has been completed and I have had the opportunity to consider the findings of the report, my officials will reply to the Survivors Association.
I hope that the Minister will not take it amiss if I say that that may be a fine starting point, but as a final position it will not do; more will be required. I want from the Minister a commitment to act and, because I believe in bringing solutions as well as problems to the House, I will suggest ways in which that might be done.
I understand those who campaign on the issue who believe that the Protection of Military Remains Act 1986 may be the way forward, but I am not so sure about that, for reasons that I shall explain. I pay tribute to Professor Nicholas Gaskell of the Institute of Maritime Law at Southampton university, the leading institution on the subject in the United Kingdom. Professor Gaskell has advised the Government on similar issues.
Professor Gaskell said that the 1986 Act, useful as it is, does not do any more than protect those wrecks within United Kingdom waters that might be at risk from United Kingdom citizens or from boats registered here. Registration under that Act has its place, but it is not sufficient. Professor Gaskell told me that the Merchant Shipping and Maritime Security Act 1977— especially sections 24(1) and 24(2)(b)—is more use. Section 24(1) states:
The Secretary of State may by order made by statutory instrument make such provision as he considers appropriate for the purpose of giving effect to any international agreement which relates to the protection of wrecks outside United Kingdom waters.
I understand from Professor Gaskell that if an international agreement were reached, it could be given force under the 1997 Act.

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There is a third possible approach, for which I am again indebted to Professor Gaskell. He tells me that schedule 11 to the Merchant Shipping Act 1995 gives effect in United Kingdom law to an international convention. The relevant provision is article 19 of the salvage convention.
All the relevant law is fearfully complicated, but I understand from Professor Gaskell that article 19 would be relevant if Her Majesty's Government had reason to believe that nationals of a particular country were involved in pillaging sites. Those remain Crown property, wherever the sinking took place—subject to one proviso that I do not think I need to mention in a debate of this length. It is possible to implement the article, provided that steps have been taken in the relevant country, by way of an advertisement or article in the press or some such method, to draw to general attention the fact that the sites remain under the protection of Her Majesty's Government. Once that is done it is possible, under the convention, to sue or prosecute in the local courts. Again, Professor Gaskell tells me that there is no reason to suspect that Singapore would not be prepared to co-operate in that way. Singapore is relevant because many of the divers who visit the sites do so from there.
I have tried briefly to outline areas of law, which, although they are spectacularly complicated, suggest that, provided that the Minister can state a commitment to act, there is a way forward. Professor Gaskell, who is already in contact with the Government on related issues, assures me that if they want to speak to him about what I have described, he will be delighted to help.
This is the first occasion in recent times that this matter has been debated in the House of Commons, although Lord Clifford raised it several years ago in the House of Lords. It is an all-party matter. Labour, Liberal and Conservative Members have expressed concern about it. The hon. Member for Basildon (Angela Smith) raised it at business questions, but this is the first time that we have had the opportunity for even a short debate on the matter. It is almost a matter of concern to all nations. Lord Clifford wrote to The Daily Telegraph on 10 October about the Scharnhorst, a German battleship that went down with the loss of nearly 2,000 people. He wrote as eloquently as he always does, and concluded:
The grave should be treated just like a cemetery where, out of respect, visitors keep to the footpath. Divers should keep their distance, so that the place of rest may be honoured by family and friends.
A commitment from the Minister is needed to make progress with this matter. There will be talk—indeed,there has been talk already, I believe—of setting up yet more all-party groups, which will campaign over the years to bring about a successful conclusion. I bear in mind that the Minister, as far as he was able, and with his usual skill, hinted pretty broadly yesterday in this Chamber that an announcement may well be made shortly to bring to an end a campaign that many of us have been waging on behalf of former Japanese prisoners of war. By a happy coincidence, that may yet be achieved in time for Remembrance day. If the Minister were to give a commitment today on the matter that I have raised, it could be dealt with by Remembrance day next year.
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The poet Rupert Brooke wrote about another war, which was called a war to end all wars:
If I should die, think only this of me:
That there's some corner of a foreign field
That is for ever England.
For a great many of our constituents, what I have described is the nearest that they will get to that foreign field. What is needed from the Minister is not simply an assurance that he is reviewing and considering what might be done, but a direct commitment to the idea that what is happening to the graves in question is unacceptable. We need to know what steps have been taken or, if the process is to start today, that the Minister will write to the Governments in question and use the available law. He could go one better if he wanted to, and announce that the matter will all be dealt with by next Sunday. However, I stress in as friendly a way as I can that I should be appalled if I had to stand here again next year and learn that the same things were happening as are happening now. If the Minister will give a commitment to act, there is every reason to think that the law, complicated though it is, can be used.
12.44 pm
The Parliamentary Under-Secretary of State, Ministry of Defence (Dr. Lewis Moonie): I congratulate the hon. Member for Teignbridge (Mr. Nicholls) on securing this debate on the important subject of protecting the sites of HMS Prince of Wales and HMS Repulse. That is an important matter and an example of the interest shown in the subject of the protection of wrecked military vessels that are the last resting place of ships' companies.
I acknowledge that the matter is of increasing concern to a number of groups and individuals. I pay tribute to the efforts of various survivors' associations, the Friends of War Memorials and others who campaign tirelessly to bring the issue to the notice of Departments and Government agencies, local authorities and others—such as police forces, port and harbour authorities, museums and academic and professional bodies—which have a responsibility for or an interest in the conduct of diving and the protection of wrecks.
I pay tribute to Lord Clifford and others who have written to my colleague Baroness Symons and me about protecting HMS Prince of Wales and HMS Repulse. I shall deal with the protection of wrecks generally, before dealing with specifics. I disagree with nothing that the hon. Gentleman has said. If he wants a commitment that I shall do everything in my power to take things forward, I am happy to give it. I cannot say whether I shall be successful. If he provides me with details of Professor Gaskell's advice and location, I shall be happy to get in touch with him.
We have heard how HMS Prince of Wales and HMS Repulse were lost on 10 December 1941, following strikes by Japanese torpedo bombers. Repulse and Prince of Wales sank with the loss of 513 and 327 lives respectively. The wrecks of those vessels lie in international waters off the east coast of Malaysia. As the 60th anniversary of that sad loss approaches, I am glad to note in passing that the Royal Navy was able to conduct a service of remembrance at the wreck site and HMS Newcastle laid a wreath in commemoration on 31 July.

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I state unequivocally that the Government share the widely held view that war graves should remain undisturbed and protected so far as that is practical and that diving on any other wreck should be unobtrusive. I would find it abhorrent if human remains in war graves were disturbed, unless there were overriding imperatives of marine or environmental safety. I am certain that the vast majority of people feel likewise.
The sport of recreational diving has recently enjoyed a significant growth in popularity. Technological advances in the equipment and navigational aids used by modern sports divers allow them to dive on sites to a greater depth and with greater precision than before. I have little doubt that the vast majority of sports divers are decent law-abiding people, who would wish to associate themselves with the remarks made by the hon. Gentleman about the protection of wrecks.
I pay tribute to the diving associations and the responsible and positive action that they are taking to educate their members about wreck protection. The three major associations have this year developed and launched a code of practice for their sports diver membership, which gives clear guidance about the need to respect and not to intrude on wreck sites. We welcome and encourage that initiative. I wish the code of practice every success, because, in the short term at least, a regime of informed self-regulation deserves to succeed. My officials and those in other Departments have supported that enterprise and will continue to do so.
It is imperative that the diving community and survivors' associations work together to ensure that due respect is paid to wreck sites and that they are not pillaged. Legislation alone is not the solution, although it can help. Respect through education is the best form of protection, certainly in the first instance, backed by legislation and the clear indication that action will be taken if necessary.
In a similar vein, I welcome the proposal by the Marine and Coastguard Agency to promote a wreck amnesty. Legislation provides that any wreck recovered from UK territorial waters, or brought within them, must be reported to the receiver, who is an official of that agency. The amnesty will encourage finders of wrecked material and artefacts who were perhaps ignorant of the law to come forward and report past finds. It should also allow the receiver of wreck to clarify the correct procedures to finders, and to encourage future compliance with the procedures.
Today, I have been specifically asked about the prospect of protecting the site of HMS Prince of Wales and HMS Repulse, given the provisions of the Protection of Military Remains Act 1986. By implication, I have also been asked what legal and other actions the Government can and should take to discourage or prohibit intrusive diving on wrecked military vessels by a wayward or unscrupulous minority that does not heed the good sense of the diving associations' code of practice.
The 1986 Act empowers my right hon. Friend the Secretary of State to designate by statutory instrument that the Act apply to any vessel that has sunk or been stranded while in military service, irrespective of whether its location is known. A place containing the remains of such a vessel, provided it is in United Kingdom waters or international waters, becomes a
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protected place. He is further empowered to designate as a controlled site any area, whether in UK or international waters, that appears to him to contain the remains of a vessel that sunk or was stranded in military service.
In broad terms, the Act makes it an offence to interfere with the remains of vessels within a protected place or controlled site, unless a licence permitting the interference has been issued by the Secretary of State for Defence. Thus, most intrusive diving activity on a designated vessel or wreck site will be prohibited unless a licence allowing diving to take place has been issued.
To date, the Ministry of Defence has not designated any vessels or controlled sites. I readily acknowledge that the situation regarding wrecks is changing, and have already mentioned how advances in the technology available to salvage and sub-aqua divers, coupled with a sustained increase in the popularity of diving as a sport, have meant that previously undisturbed wrecks may become potential targets for trophy hunters. This, together with the increased public respect for wrecks that are war graves, provided the impetus for a review of policy on the subject. I recognise the growing importance of the matter. Previously, I have said that my Department is reviewing the protection of vessels and wreck sites, and that I will respond fully to inquiries that I have received.
In considering the designation of vessels or wreck sites, I have given due consideration to the views of those campaigning for the designation of war graves. I have noted the coastal industry that revolves around sports diving, in which a small but significant number of individuals rely on diving for their livelihood in areas where options for alternative employment are limited. I am also conscious of the efforts that are being made by the diving associations to increase sports divers' awareness of the need to respect all those who lost their lives at sea. My Department intends to increase its support for those initiatives, through further information and guidance of its own.
I am not persuaded that that should be the Department's sole approach, however. I view the issue as a conflict of interest between aspects of the diving community and the interests of survivors' associations. I believe that education is the most effective mechanism by which wreck sites can be offered the best protection, but it may not be sufficient. In the balance of conflicting interests, we must always err on the side of the survivors' associations.
Mr. Nicholls: What the Minister says is most encouraging. Does he agree that much of it relates to good practice and enforceability in the UK's immediate sphere of influence? I have also drawn his attention to the fact that out and out commercial pillaging is taking place overseas. Would he be prepared to make representations to foreign Governments on such matters to ask for their co-operation, once he was satisfied that the law enabled him to do so?
Dr. Moonie: That is certainly what I have in mind. I shall make some remarks about the international situation shortly.
Moral authority rests with the rights of survivors rather than divers' recreational pursuits. It is for that reason that I have asked my Department to consider

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further the specific implications that designation of sites—either as protected places or as controlled sites—will have for the diving community from both a legal and economic perspective.
Additionally, I want to reassure the hon. Gentleman that all wrecks of Her Majesty's ships, be they war graves or not, remain the property of the Crown. If we are able to gather evidence that individuals have been involved in pillaging of such vessels, it will be presented to the police for them to consider what action may be taken. I recognise that there is a need to take a tougher stance with the rogue element of the diving community. I ask all responsible elements of the diving community to pull together to stamp out the rogue elements and enable protection of Crown property to become a tangible reality. That area will always be difficult, and I believe that survivors' associations understand that, but platitudes are not sufficient when property is stolen or graves are desecrated.
HMS Prince of Wales and HMS Repulse lie in international waters off the coast of Malaysia. Representations have been made by my officials both in Kuala Lumpur and Singapore to officials within the respective Governments. The navies of both Malaysia and Singapore have been asked to keep my officials informed of reports of intrusive diving or salvage or any untoward activities in the area of the wrecks.
Diving on those wrecks is likely to attract sports divers of many nationalities as well as local divers from Malaysia and Singapore. The 1986 Act does not extend to foreign nationals on non-British controlled vessels, and enforcing it at such a distance from home waters would present significant practical difficulties for all concerned, as the hon. Gentleman recognised in his remarks. It is unlikely to provide the degree of protection for HMS Repulse and HMS Prince of Wales that the hon. Gentleman seeks. However, I believe that designation will provide evidence of the wrecks' status and the Government's commitment to honour its war dead. It is for that reason, therefore, that I have requested my officials to look again at detailing what
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designation will entail and what it will provide, and whether that can be linked effectively to ensure better protection.
My officials, together with those from the Foreign and Commonwealth Office are working with the international community on how wrecks may best be protected. Several countries support our position that historical wrecked vessels and military war graves should be left undisturbed. UNESCO is discussing a draft convention on the protection of under-water cultural heritage. The United Kingdom and other major maritime powers are fully engaged in this process, particularly as it relates to historic warships. However, the hon. Gentleman must be aware that the process of working through UNESCO can be time consuming.
The Government share the desire, expressed today, that, where practicable, significant wrecks, whether civil or military, which are part of our heritage or are dangerous, should be properly protected. The issue goes beyond defence, and we need to take account of the rights and freedoms of the legitimate users of our territorial waters as well as peoples' aspirations for the protection of wrecks. I hope that the hon. Gentleman will be reassured by my words today that the Government take the matter seriously. To that end, I am grateful to the hon. Gentleman for initiating this worthwhile debate.
I repeat the hope that I expressed earlier that the diving associations' efforts at self-regulation and, in particular, the recent code of practice, will bring about the improved behaviour that we all desire. If self-regulation proves inadequate, I remain ready to take further action to ensure that proper respect is paid to those sites in perpetuity. Some may be disappointed that I have failed to announce any concrete proposals today. They should not be disappointed, however, as more consideration is required. All my experience tells me that it is best to move forward slowly and, where possible, with the agreement of all parties concerned in such delicate areas. Consequently, before I make an announcement of the best way ahead, I propose to consult the relevant parties and shall do so as quickly as possible. Nevertheless, I hope that the tenor of my approach is clear. My Department supports the aspirations of survivors' associations and of the hon. Gentleman. In my opinion, time is up for rogue divers.

Biwater Industries (Clay Cross) Ltd.
12.59pm
Mr. Harry Barnes: On 4 September, a bombshell exploded at Clay Cross in my constituency. Within minutes of the takeover of Biwater, a pipe-manufacturing plant, it was announced that the works would be closed down at the beginning of December—only a month from now. That would lead to the loss of 700 jobs, and, since 75 per cent. of those workers live within a 5-mile radius of the plant, that would cause devastation to the local community.
The response was immediate. Everyone combined to fight the threatened closure: the workers, the General, Municipal and Boilermakers' union, local councils, elected representatives and the whole of the local community, including a highly active women's support group. The reaction was so strong because everyone knew that this plant was not on its last legs. It was to be closed not because it was doing badly, but because it was doing rather well.
According to Biwater's annual report this year, the company's share of the home market grew by 9 per cent. Its major strength, however, is in the export trade, and the report stressed that there had been a 30 per cent. increase in sales in Italy, and significant contracts with the United Arab Emirates, Syria, Vietnam, Korea, China and South Africa. The company's market position was being maintained in France, Spain and Germany. A breakthrough had been made into the Egyptian market, and the dominant market position was being maintained in Lebanon.
The only problem had been initial low oil prices in the middle east. When the price of oil rose, so did Biwater's orders. Indeed, with the recent hike in oil prices, orders have been flooding in. I have supplied details of these to the Department of Trade and Industry. Between 1 September and 25 September, £3.4 million-worth of orders came in, mainly after the announcement of the closure. On 16 October, I faxed to the Secretary of State 25 pages of further evidence of continuing export orders. In fact, the workers at Clay Cross have been working overtime and extra shifts in order to meet growing demand. Orders stood at £7.5 million at the end of August and rose to £9.13 million by the end of September.
Another sign that demand has been high for the pipes is that the value of stocks of goods for resale fell from £5.5 million in 1999 to £4.7 million in 2000. Biwater was not, therefore, producing goods that could not be shifted. Operating profits also rose from £2 million to £2.3 million in the same period.
Why on earth, therefore, would anyone wish to close down a plant that is the jewel in the crown of the United Kingdom's pipe-manufacturing industry? Let us look at who is up to what. Saint-Gobain is the company that took over Biwater. It operates through a British subsidiary, Stanton plc. Saint-Gobain is a highly profitable, powerful multinational company. From its headquarters in Paris, it controls 600 subsidiaries in 42 nations, and 8 per cent. of its massive empire is in pipe production.
Saint-Gobain's interests in Biwater have been, first, to destroy the pipe-manufacturing capacity of a rival company that has strength in overseas markets;
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secondly, to take over Biwater's substantial order books, resulting in much of the work ending up with Saint-Gobain's other operations in Brazil, China, Spain, France and Germany; and, thirdly, to transfer some of the plant to Stanton's works at Ilkeston, but mainly to asset-strip the provisions.
That Saint-Gobain has such selfish interests is illustrated by the nature of its deal in taking over Biwater. It has purchased the machinery, the order books, the know-how and the work force. It will take what it needs and place the rest on the scrap heap. It has leased the land and buildings from Biwater on a short-term basis only. In commercial terms, it considers that it needs to get off the site as quickly as possible.
I have had no time to mention the role of Adrian White, BBC governor and the effective owner of Biwater, so it will need to be spotlighted in future. It should also be noted that, even though it has recently received state aid in France, Saint-Gobain is not short of a bob or two. With 600 subsidiaries in 42 nations, its stock market value has increased threefold since 1988. In 1999, its gross profits amounted to 34.1 per cent. of sales, and its dividends amounted to 8 per cent. of sales, so it has ample cash for wheeler-dealing. It will benefit from the Clay Cross closure, but no one in this country will benefit.
Before I ask the Department of Trade and Industry and the Secretary of State to take specific action, I shall mention what has happened so far. On 22 September, the Secretary of State met a deputation from Clay Cross, including my hon. Friend the Member for Bolsover (Mr. Skinner). The Secretary of State faxed Jean-Louis Beffa, the chairman and chief executive of Saint-Gobain, asking him to reconsider the decision to close on the basis of arguments from the deputation, which he conveyed to Mr. Beffa. In his letter, the Secretary of State added:
On behalf of the UK Government, I can assure you that we stand ready to provide assistance to keep the factory open.
When Mr. Beffa rejected those arguments, the Secretary of State rang him to try to persuade him to change his mind, but the arguments were again rejected. On 28 September, the Secretary of State made the following point at the Labour party conference:
When there is real pressure and difficulties in areas like textiles, coal and steel and in specific plants like Biwater in Clay Cross...we must not stand to one side. We won't walk away.
It should be added that the pressures in textiles, coal and steel are relevant to the area in which Clay Cross is situated.
The situation is desperate. We are within a month of closure, and the loss of 150 jobs is earmarked for 17 November. In the light of his past commitments, what can the Secretary of State do? Under the Fair Trading Act 1973, the Secretary of State may immediately refer the takeover to the Competition Commission. Pending completion of the commission's investigation, the Secretary of State can prevent closure and establish that the plant is running fully, as prior to the takeover. Before deciding whether to do so, the Secretary of State will take into account the points made in this debate and representations from the EU Competition Commissioner. Commissioner Monti is considering whether, under EU directives and regulations, Saint-Gobain has abused its dominant

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market position and whether abuse or misuse has occurred in respect of state aids agreed by the EU Commission and paid by the French Government.
Phillip Whitehead MEP and shop stewards met representatives from Commissioner Monti's office in order to pursue those points. He is trying to obtain relevant material from the European Union, and I believe that the DTI itself has made representations to try to clarify that point.
We should be on a winner with this argument: we should be able to save the plant. However, there is a big fly in the ointment—the Office of Fair Trading. In April, the OFT looked into the intended takeover. Its recommendation to the Secretary of State was that the deal could be accepted and did not need to go before the Competition Commission. On the basis of the OFT's report, which made no reference to the closure proposal and concentrated on competition policy matters only, the Secretary of State accepted the recommendation. The Secretary of State was, however, misled—the Director General of Fair Trading recently revealed that the OFT knew prior to the report that Saint-Gobain intended to close Biwater.
I assume that if information of that nature had been passed to the Secretary of State, he would have had second thoughts about accepting the OFT recommendation. When, on 3 October, I asked the Secretary of State to refer the matter to the Competition Commission, he decided first to return it to the OFT, on the basis of new information that he had to hand, much of which had been supplied by myself and Councillor David Nuttall, leader of North East Derbyshire district council. Unfortunately, John Vickers, the new Director General of Fair Trading, merely endorsed his predecessor's recommendations. However, the Secretary of State can still refer the matter to the Competition Commission over the head of the OFT. That has been done before by the Secretary of State and his predecessors.
The OFT's report, of which we now have an edited version, with various statistics removed, shows no signs of its having assessed certain matters that are of relevance to the Secretary of State's judgments. Under the Fair Trading Act 1973, he is entitled to consider the impact of the development on UK exports—I have stressed today and in the past the export work in which Biwater is involved—and the distribution of industry and employment in the UK. Neither of those matters is included in the advice that was sent to the Secretary of State by the OFT, and they do not appear to have been given serious consideration. Even given the OFT's concern for competition policy, the arguments that I have summarised today, which were presented in detail to the Secretary of State, override the position that it has taken.
As an alternative to turning to the Competition Commission, the Secretary of State could negotiate an immediate deal with Saint-Gobain to save the day, perhaps involving a new purchaser who will properly operate the plant as a competitor with Saint-Gobain. I see no reason why Biwater (Clay Cross) cannot concentrate on producing much needed pipes for the overseas market—including desperately needed pipes for the third world—while Stanton plc, which operates
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with a foundry involved in pipe production, from Ilkeston in Derbyshire and from Staveley, which is also in my constituency, could concentrate on the home market, which it mainly supplies.
I hope that the Minister can either tell us exactly what the Secretary of State will do or explain his thinking and confirm when a final decision is to be made. The matter cannot drag on for much longer. We need a response that will save 700 jobs. As early-day motion 1084—which was signed by 103 Labour Members—argued, the matter should go before the Competition Commission, the closure should be put on hold, and the report that would then be published by the commission should be geared towards saving the plant.
Mr. Dennis Skinner rose—
Mr. Deputy Speaker (Mr. John McWilliam): Does the hon. Member for Bolsover (Mr. Skinner) have the permission of the hon. Member for North-East Derbyshire (Mr. Barnes) to speak?
Mr. Barnes indicated assent.
1.14 pm
Mr. Skinner: I have nothing but praise for the work done by my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) ever since the closure programme began. He has been involved during every single waking hour, for a simple reason. The case does not involve 700 jobs in the south-east, where unemployment has gone way below the national average. We are talking about an old coalfield and steel area. In some villages in my constituency, where some of the Biwater employees work, the level of hidden unemployment is not dissimilar to that in many other high-unemployment areas in old coalfield regions. You, Mr. McWilliam, know only too well about how much unemployment is hidden. The net result is a rate of some 15 to 20 per cent.
That is why 700 jobs in Clay Cross are as important as a Rover problem spread over 20 constituencies. My right hon. Friend the Secretary of State for Trade and Industry got stuck into the Rover problem. We are still concerned about the eventual outcome, but we managed to get the show back on the road. The case under discussion affects about three constituencies in the main, but it is just as bad—if not worse—in terms of consequences for the people there. All deep mine pits in north Derbyshire have closed and the textile industry has been ripped apart. In my constituency, 700 jobs have gone in the past few months. I think that a similar number of jobs have disappeared in my hon. Friend's constituency and in other parts of the area. We are saying to the Secretary of State for Trade and Industry, "You've got to do something special here."
We must bear in mind that there has been intrigue from the beginning in this matter. Those concerned went to the Office of Fair Trading and said, "Look here, there's a takeover. This monster conglomerate, Saint-Gobain, is eating things up all over the place and asset stripping. It is like the 1960s and 1970s all over again, like Slater Walker and all the rest, except that it is French." Everyone is hoodwinked, the business is taken

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over and they close it within half an hour. What happens then? Two directors of Biwater manage to obtain a directorship in the new firm, Saint-Gobain. It was a dirty intrigue from beginning to end.
Of course, the workers were not told. If it had happened on the mainland of the so-called Europe, common market or whatever it is, they would have been told. We made strong representations to the Department of Trade and Industry and we expected the Office of Fair Trading to do its job. It has not done so, so we have now come to a political crunch. If I were the Secretary of State for Trade and Industry, I would not want the OFT to pull the wool over my eyes. I would say, "Look here. I'm the gaffer. I'm the boss in this Department and I'll refer this to the Competition Commission. Never mind about those tinpot civil servants who took the decision." There is too much hiding behind civil servants. When somebody is given the job of Secretary of State for Trade and Industry, he has a duty to ensure that civil servants are considering the political implications of what has happened in this case, which have been outlined so precisely by my hon. Friend.
It is a race against time. There is only a month. The shop stewards and workers are fed up to the back teeth. If anybody is to be blamed, it should be Saint-Gobain and Biwater. The trouble is that we can say that it is their fault only if the Secretary of State does the decent thing and implements my hon. Friend's proposal. He should refer the matter to the Competition Commission, irrespective of what the OFT does. The OFT is employed by the state and paid by the taxpayer—by all of us here. Why should it decide what the issues should be? The Secretary of State should stand above its decision and re-negotiate it to ensure the survival of this viable plant—we are not talking about an uneconomic unit, here—so that those workers can keep their jobs and the dole queues will not rise in Clay Cross and Bolsover resulting in the taxpayer picking up a massive bill for dole and unemployment benefits.
1.20 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson): I congratulate my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) on securing this important debate. The Government recognise the devastating effect that the announcement of the closure of Clay Cross has had on workers at the plant and on the local community. That has been articulated by my hon. Friend and by my hon. Friend the Member for Bolsover (Mr. Skinner), who spoke with great passion. The closure of the plant, which plays a key role in the employment and wider economy of the area, has clearly come as a heavy blow. We fully understand the efforts that my hon. Friend the Member for North-East Derbyshire has made to bring this case to the attention of the House.
Part of the Government's competition policy relates to the regulation of mergers, and it might be helpful if I outline that process. The Secretary of State considers merger cases on the basis of advice provided by the Director General of Fair Trading. The officials of the DGFT in the Office of Fair Trading undertake an analysis of a merger that meets the qualifying criteria under the Fair Trading Act 1973. In particular, they will consider the effects of the merger on competition in the relevant markets.
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It is the policy of the Government to refer merger cases to the Competition Commission for further investigation primarily on competition grounds. It is open to the DGFT and to Ministers to consider other issues, which can be broadly categorised as public interest issues and could include, for example, the effect on employment, regional development, or national security. However, as the Office of Fair Trading's own published guidance states, only in very exceptional circumstances would such considerations be a decisive factor.
Mr. Skinner: Is that acceptable?
Mr. Johnson: It is the process that is always applied. I shall come on to talk about the specific case in a moment.
The primary purpose of merger control is to consider and, if necessary, block or amend those mergers that are identified as having adverse effects on competition in markets. Merger control is, therefore, part of a competition policy whose aim is to improve the dynamism, innovation and efficiency of the economy as a whole, which we believe is the best means of securing jobs.
Once the Director General of Fair Trading has advised, the Secretary of State may refer the case to the Competition Commission for further investigation. The commission may recommend clearing the merger, in which case that would be the end of the matter, or find that the merger is against the public interest because of adverse effects. If the latter happens, the Competition Commission may recommend seeking undertakings from the parties to remedy the adverse effects, or simply blocking the merger. The Secretary of State can accept or reject those recommendations, including clearing the merger.
I would now like to turn to the specific case that we are debating today. The merger between Stanton and Biwater was notified to the OFT in April 2000. It received information from the parties and asked, publicly, for third-party comments on the merger. Although Stanton did tell the OFT of its plans to close Clay Cross, the OFT was unable to seek the views of third parties on the plans as the information was commercially confidential and its release without the provider's permission could have breached the Fair Trading Act 1973.
The OFT carefully considered the merger between Stanton and Biwater. The DGFT advised the Secretary of State on 21 June that the merger should be cleared. This advice was put on the OFT website, at the request of the Secretary of State, on 13 October. I do not intend to repeat it here. The essential points are that the DGFT found that the merger raised no competition concerns, on the basis of which advice the Secretary of State cleared the merger on 29 June. However, it is important that hon. Members are aware that the advice given to the Secretary of State did not refer to Stanton's plans to close Clay Cross.
I shall now explain the steps that the Government have taken since we became aware that the Clay Cross plant was to shut. My hon. Friend the Member for North-East Derbyshire mentioned that my right hon. Friend the Secretary of State for Trade and Industry has

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taken a personal interest in the case. The meeting that he described took place on 22 September. Immediately following that meeting, he asked the Director General of Fair Trading to publish the advice that he had given to Ministers on the case. We have also responded to requests from my hon. Friend and other interested parties to look again at the decision.
Under the Fair Trading Act 1973, a merger decision may be revisited if material facts in relation to a merger not in the public domain were not disclosed. However, the plans to close the plant, which were disclosed to the OFT, do not constitute such material facts. My hon. Friend wrote to my right hon. Friend the Secretary of State on 3 October asking him to refer the merger to the Competition Commission on the basis of other, new material facts that he said were contained in documents that he had sent to the Secretary of State.
On 9 October, my right hon. Friend asked the Director General of Fair Trading to look at the information provided by my hon. Friend and others. Some of the information related to the period since June and therefore cannot have been made available to the OFT when it undertook its analysis of the case. I understand that the director general and his staff have carefully examined all the information that was provided to them. Following that examination, the director general wrote on 23 October to my hon. Friend the Member for North-East Derbyshire
Mr. Barnes: How would the material that had to be made available to the Office of Fair Trading by June relate to the Biwater annual report from which I quoted? That report showed the viability of the plant, but it was not publicly available until October, and it would not have been submitted until the year ending 31 April. The report might have been examined by the OFT, but it was not examined very carefully.
Mr. Johnson: My hon. Friend makes an important point about information that may have become available after the merger but was based on facts that were known before then. I shall deal with that point when I come to the crux of the matter—where we go from here.
The Director General of Fair Trading concluded that the information was not material and that it would not have affected the then director general's analysis of the case in June. He said also that the new information did not rebut the evidence for a lack of significant competition concerns considered by the then director
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general, nor his conclusion that the case should be cleared. On those grounds the director general sees no grounds for re-opening the case. However, we are aware of the separate approaches being made to the European Commission, and we shall obviously consider the Commission's views to see whether they are relevant.
I shall now describe the steps that the Government have taken to deal with the impact of the closure. First, immediately after seeing my hon. Friend the Member for North-East Derbyshire and hon. Members for the neighbouring constituencies on 22 September, my right hon. Friend the Secretary of State wrote to the chief executive of Saint-Gobain. Mr. Beffa, asking him to consider the options for preventing the closure. Mr. Beffa made clear in his reply that the decision had been taken for strong commercial reasons which the company were not prepared to revisit. Saint-Gobain has stated publicly that its main motivation for the acquisition of Biwater was to protect the position of UK-manufactured ductile iron pipes and fittings in the UK market. I understand that the company's reasons for closing the Biwater plant at Clay Cross arise from a number of factors, including over-capacity in the UK market.
In the time left to me, I shall turn to the practical steps that we are taking to try to ameliorate the impact of the closure. A job shop has been set up on the site to provide advice on job vacancies, retraining and benefits. We have provided rapid response funds to provide enhanced retraining opportunities for the work force over and above existing provisions. A cross-authority working group has been set up by the county council to co-ordinate the response of all its departments and to offer a range of support. Derbyshire county council and North East Derbyshire district council are working on an impact study. That study will assess the overall impact of the closure on the Clay Cross area, including the knock-on effect on Biwater's local suppliers and other local businesses. That will be a valuable tool to inform the group's longer-term work. A wide range of long-term action is also in hand or planned, and some money from the single regeneration budget has been made available. I understand that those are not the concern of my hon. Friends; they are looking to save jobs.
This has been an important debate on an important topic. The Secretary of State has made it absolutely clear that he wants to take into account all the points made by my hon. Friends before he considers the matter further. He will do exactly that, with a view to our assisting in any way that we can to ensure that the matter described so eloquently by my hon. Friends is dealt with, and so that any jobs that can be saved will be saved.

Insurance Industry
1.30 pm
Dr. Vincent Cable: Thank you, Mr. Deputy Speaker, for the opportunity to speak to this Adjournment debate. This issue narrowly affects at least 600,000 with-profit policyholders of the Axa insurance companies, but given the precedent that may be created by the case to which I shall refer, almost every family in the country with a life insurance policy could be affected.
I have spent some time ploughing through relevant documents, and they contain pretty esoteric stuff in many respects. To understand some of them seems to require the actuarial equivalent of a PhD. Despite their complexity, however, there are some fairly basic issues of principle, such as who owns the very large—approximately £20 billion—orphan assets or inherited estates that lie in the major life insurance companies. Should policyholders own 90 per cent. of such assets, as tradition and ministerial and official guidance suggests, or should the assets be apportioned differently?
The press, including the Daily Mail, have taken up this issue with a vengeance. Many people strongly believe that allowing the Axa case to set a precedent would fit firmly into the Government's rip-off Britain policy. I am aware that the case is subject to legal action, and it is clear that the political dimension must be dealt with in that context. However, the case is rather unusual in political and legal terms, in that it is a public interest case brought by the Consumer Association with strong public backing.
A minute or two ago, a note was handed to me stating that the first round of the legal action was determined this morning. The Consumer Association has been awarded preventive costs of £100,000 to pursue its case against the insurance company, so it appears to have won the first round. According to that note—I have not established this yet—the judge has confirmed what the Consumer Association has argued all along: that this is not merely a narrow and technical legal issue, and that major public policy issues are involved that concern the Treasury and the Financial Services Authority, among others.
I shall return to those public policy issues in more detail, but let me summarise them now. Essentially, there are four issues. One is the status of Government guidance—originally provided by a Minister, but reaffirmed by the Treasury—on the so-called 90:10 rule. What is the current status of that guidance? The second issue concerns the FSA's performance, which seems a clear case of regulatory capture, as it is termed in the industry. Thirdly, there are issues relating to the Inland Revenue. I am in no sense a tax lawyer—
Mr. Deputy Speaker (Mr. John McWilliam): Order. We are having some problems here, and it would help if the hon. Gentleman were to establish the exact position of this case. Has it been put down for trial?
Dr. Cable: I am not enough of a lawyer to give a proper legal assessment. As I understand it, a case is being heard before the High Court, in which the Consumer Association is involved on the policyholders'
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behalf, and a preliminary round of hearings was held this morning. The matter has been the subject of a great deal of press comment—
Mr. Deputy Speaker: Order. The hon. Gentleman has made it clear that the case is sub judice, so I am afraid that specific discussion of it is out of order. However, he is open to argue the general principle.
Dr. Cable: Thank you, Mr. Deputy Speaker. You have pointed the way, and I shall try to be careful not to refer too much to matters under discussion in court. My point was was that there are substantial issues of public policy principle, to which I wish to return in detail later.
Mr. Deputy Speaker: Order. May I make it clear to the hon. Gentleman that he must not refer to the specifics of that case at all?
Dr. Cable: May I then define the problem in general terms? Insurance companies in general have orphan assets—assets set aside for long-term prudential purposes—which probably derive from the fact that bonuses that were insufficiently generous in the past have resulted in the accumulation of very substantial sums of money. The question is how those orphan assets should be allocated. The traditional assumption has been that 90 per cent. of them should be allocated to policyholders. That principle has been established in two ways: it features in the articles of association of all life insurance companies, and it was the subject of a Government guideline set out in 1995 by a Minister called Jonathan Evans—of whom I had not previously heardߞwhich has subsequently been reiterated by the Treasury. I hope that I have understood correctly that that is the current position.
I have a little difficulty in proceeding, as I am unsure how far I can illustrate the general points that I want to make with reference to a particular case. You have ruled that the case in question is sub judice, Mr. Deputy Speaker, so I cannot pursue my line of argument. However, the case has been in the public domain, and many of the issues that we have to discuss relate to its public presentation. May I seek clarification, Mr. Deputy Speaker? Does your ruling imply that coverage of the matter in the press, including today's press, technically represents a breach of the law by the newspapers concerned?
Mr. Deputy Speaker: Order. It may or may not represent a breach of the law, but it does breach the Standing Orders of the House. I am dealing here with the sub judice rule in those Standing Orders. Any other question is a matter for the courts and not for us.
Dr. Cable: Your ruling, Mr. Deputy Speaker, makes it very difficult for me to deal with the two essential elements in the case, which relate to the principle of apportionment and to the conduct of the ballot, which is highly contentious. I shall move quickly to my conclusion, Mr. Deputy Speaker, because you have cut the heart out of my subject, although, obviously, I respect your judgment. I shall proceed to the issues that affect the Government.
I have read the Minister's spirited article in the Daily Mail, in which she takes the view that this matter is not her direct responsibility. She correctly says that she did

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not approve the decision made by a particular insurance company, and that it is, therefore, not her direct ministerial responsibility. She took the view that examination of the matter by the Financial Services Authority and the courts provided adequate protection to policyholders.
However, there are issues involving public policy to which I hope the Minister will be able to respond within the constraints that we have had placed on us. The first relates to the guidance that the Government have given regarding the 90:10 rule, which has been changed by this case. Does the 90:10 rule still apply? It has clearly generated confusion, and there are now several different interpretations of it. The company involved obviously made a different interpretation from that of the policyholders. Does the Minister plan to re-state that guidance? Would that require legislation, whether primary or secondary? Everyone concerned with the problemߞin general terms, and not necessarily in relation to that court action—would like clarification on the Government's stance on the 90:10 apportionment principle.
The second matter of public policy relates to the Financial Services Authority, which reviewed the case in its capacity as regulator. The problem is whether the FSA has acted as one would expect of an effective and independent regulator. When it was set up—as the Minister must remember with pain because she guided the legislation through the House—interminable presentations were made and amendments suggested, almost all of them on behalf of practitioners. Many of those points were perfectly valid, but some of us, particularly those who argued from the consumer viewpoint, always feared that practitioner interests would come to dominate the FSA. We have seen that happen with other regulators—for instance, it was said at one stage that Oftel had been captured by BT. The danger is that a regulator, because of a lack of knowledge of the industry, will tend to err on the side of practitioners rather than consumers.
I am referring to the work of the FSA rather than the matter now being considered in court when I ask how, as a matter of general principle, the interests of a large number of life insurance policyholders can be represented at the FSA. The policyholders appear not to have had a voice. I also question the FSA's expertise. Different judgments have been given on complex matters by independent actuaries, which the FSA seems either not to have considered or not to have understood. Another matter is the conduct of the ballot in the case under consideration by the court, and whether the FSA properly considered the detail involved—but I am not allowed to refer to that. However, the main point is that the FSA has refused to divulge details of its findings on the ground of commercial confidentiality. I should have hoped that, acting as an independent regulator in the public interest, it would do so.
The third point of public policy—I am trying to stay as close as I can to my subject without contravening Mr. Deputy Speaker's ruling—relates to the Inland Revenue. If companies depart from the 90:10 rule and seek to use part of their orphan assets for tax planning purposes, shareholders will pay less tax. It is possible to use orphan assets for tax planning—or, more
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provocatively, tax avoidance—purposes. The Inland Revenue clearly has an interest in the matter, and I sincerely hope that the Treasury has spotted the scope for large-scale tax avoidance by the insurance industry once the 90:10 rule is breached.
My final point is a broad one about the insurance industry. The industry is undergoing a massive process of consultation, takeovers are imminent and demutualisation is possible for some of the large insurers. The future of Equitable Life is highly uncertain, which raises the question of how its orphan assets should be utilised. In many ways, that question will be determined by the precedent that we are not allowed to discuss today. None the less, a broad public policy issue is involved. Within the constraints that we have been set, I hope that the Minister can give us some broad idea of how orphan assets can be utilised in the future.
1.43 pm
The Economic Secretary to the Treasury (Miss Melanie Johnson): I, too, Mr. Deputy Speaker, will do my best to stick to your injunctions on the specific case involved. I therefore apologise in case some of the questions asked by the hon. Member for Twickenham (Dr. Cable) cannot be answered as fully as he would like.
I congratulate the hon. Gentleman on securing the debate. It will help if I run through the general background of inherited estates and the role of the Government and the regulator in these matters, without commenting on the specifics in which the hon. Gentleman and I are interested.
Issues related to inherited estates, commonly known as orphan assets, arise because a number of with-profits offices have accumulated surplus assets in their long-term business funds. That is to say, they have built up amounts over and above those strictly required to meet their liabilities and the statutory margin of solvency. Those sums can be used to smooth investment returns for policyholders from year to year.
The law requires all insurance companies to keep the assets of their long-term business in segregated funds known as long-term business funds, which can be used only for the purposes of long-term business. The surplus in the long-term business fund is termed an estate. The surplus is also used to meet policyholders' reasonable expectations in respect of the financial security of the fund and, as the hon. Gentleman said, the company's future investment and bonus policies. However, to the extent that prudent management of the estate permits, part of the surplus can be distributed to policyholders and shareholders. The terms on which distributions are made are often governed by each life office's constitutional documents. However, as the hon. Gentleman observed, it is common practice in shareholder-owned life offices for distributions to be made in the ratio of 90:10 between policyholders and shareholders respectively.
In some cases, the surplus estate has been allowed to grow up over a long time and has been passed from one generation of policyholders to the next. It is this class of surplus that is often called an inherited or orphan estate. The estate may reach a point at which it exceeds what is considered necessary for the efficient management of the business. In such circumstances, the company may wish to manage down the level of the estate by making a distribution in a manner agreed with the regulator.

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Although inherited estates have been built up over many years, in most cases the status of the funds and the appropriate basis of their attribution are clear. However, it does not apply to all insurance matters and all companies; in a small number of shareholder-owned life offices, that is not so. Over the years, policies and practices in those offices may have changed, and there may be doubts about the overall entitlements of shareholders and policyholders in relation to the attribution of surplus.
The Government's general policy on the attribution of inherited estates of insurance companies remains as set out in the reply of 24 July 1998 given by the then Economic Secretary, my right hon. Friend the Member for Airdrie and Shotts (Mrs. Liddell), to a question asked by my hon. Friend for Halton (Mr. Twigg). That statement confirmed the principle that the interests of policyholders and shareholders in with-profits life funds should generally stand in the ratio 90:10. As the hon. Member for Twickenham said, that policy was identical to the one taken by the previous Administration in 1995. The 90:10 principle reflected common practice in the industry, and the present and previous Administrations felt that that ratio would be a starting point for policyholders' reasonable expectations in any attribution of inherited states. The general principle on distributions and attributions is subject to interpretation depending on circumstances—for example, the constitution of the life office, contractual commitments, company statements of practice or any other relevant factors. The Government have no wish to move away from that principle. The 1998 statement has applied to all mergers and acquisitions involving life business since then.
The hon. Gentleman asked what is the Government's role. We do not seek to interfere in the individual investment and management decisions of individual life offices, nor in the contractual relationship between life offices and policyholders. In the normal course of events, it is for companies, in consultation with their policyholders. to decide how to run their life businesses. Our intention in making the 1998 statement on the distribution of inherited estates was to reaffirm the view taken by the previous Administration. Our announcement on the 90:10 rule sought to draw together general industry practice and influence how such distributions might be made in future. As I have sketched it out, application of the principle will depend on the constitutions and business requirements of individual firms.
Treasury Ministers are responsible for general policy direction and for making proposals for legislation. The Financial Services Authority is carrying out day-to-day regulation of insurance companies on behalf of the Treasury. We are behaving now as we will when the Financial Services and Markets Act 2000 comes fully into force. Any insurance company is free to seek to undertake corporate reorganisation of its business. Insurance companies are, however, obliged to take their proposals for such reorganisation to the High Court, which, having been advised by an independent actuary, will decide whether to sanction the reorganisation. As the regulator, the FSA has the right to make representations to the court and will exercise that right in any case. However, it has an on-going supervisory
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role for the purpose of protecting policyholders against the risk that the company will be unable to fulfil its liabilities.
Furthermore, in the case of long-term business, the regulator should seek to ensure that proposed changes to the management of life funds are consistent with the company's requirements to fulfil the reasonable expectations of policyholders. The concept of the reasonable expectations of policyholders derives from legislation, but is not defined in it. The FSA carries out the day-to-day supervision of insurance companies on behalf of the Treasury. It is for the FSA to ensure that those companies are meeting the reasonable expectations of policyholders.
The hon. Gentleman made a specific point about operation of the FSA and asked how independently it is acting and how much it is taking account of consumers' interests. It is, of course, acting entirely independently in circumstances such as those under discussion. In cases of proposed change, it has to take its own independent legal and actuarial advice as necessary. It is also required by legislation to balance consumer protection, competition and other issues in the course of arriving at any decisions or representations. The accumulation of significant surplus assets or inherited estates is not necessarily a matter for concern. Different companies have different approaches, depending on their liabilities and their preferred methods of business management. There are arguments for and against retention or distribution of surplus assets. From the regulator's point of view, corporate strategies must ensure that liabilities are met and that the margins of solvency are maintained.
Under your ruling, Mr. Deputy Speaker, I cannot comment on a specific case. It is not the place of the FSA or of the Government to approve or disapprove any particular scheme. Any company has the right to go to court. The regulator's sole role is to assess the likely reasonableness of the scheme in respect of policyholders' expectations. It is for individual policyholders to decide in the light of their personal circumstances whether they want to accept any particular offer.
Eligible policyholders can be asked to decide whether they would agree to the allocation of their policies to a new arrangement. They will have to accept that any agreement reached could cause them to forgo their interests in possible future distributions from the assets of an inherited estate. The present interest in orphan assets has arisen on the basis of a particular case, on which we cannot comment. It is worthwhile to point out that, were any provision to be made, the funds of policyholders who did not accept the agreement would have to be kept in a separate fund to which the general 90:10 principle would still apply.
I hope that my comments on the background to the issue and on the Government's role have been useful to the hon. Gentleman and to other hon. Members who are interested in the topic. I have described a number of important checks and balances that have been built into the legislative and regulatory frameworks in order to safeguard the reasonable expectations of policyholders in an open and transparent way.
It is important for the hon. Gentleman to appreciate that the FSA is carrying out its regulatory functions effectively and efficiently and is taking account of the

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relevant policy issues in discharging its responsibilities, and that the Government are continuing to act in line with the policy framework that has operated for some time in relation to these matters. I hope that he now appreciates the status of the 90:10 rule and the ability of Ministers or the Treasury to intervene, or, as in this or
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any case, not to intervene, in the decision of companies to place particular cases before the courts. It is up to the company concerned, and is not, therefore, a matter in which I, as a Treasury Minister, can successfully intervene.
Question put and agreed to.
Adjourned accordingly at four minutes to Two o'clock.