Westminster Hall Sitting of 14 January 2003

Preamble
[MR. JOHN MCWILLIAM in the Chair]

Equity Release Mortgages
Motion made, and Question proposed, That the sitting be now adjourned.—[Jim Fitzpatrick.]
9.30 am
Mrs. Angela Browning: It is a pleasure to serve under your chairmanship again, Mr. McWilliam. At a previous sitting, I recall our having some interesting literary exchanges, but I will spare you those today. I do not think that the work of D. H. Lawrence is appropriate to today's debate. Our discussions will be important, although they probably cover only a small group of elderly people who were missold home income plans in the 1980s. At the end of my remarks, I shall refer to the current situation.
I have been a Member of Parliament for 11 years and I took up such cases in 1991 before I was elected. The fact that I still have some of them on the books, so to speak, is of great concern. The problem has caused anxiety to other hon. Members, in particular my right hon. Friend the Member for West Dorset (Mr. Letwin), and my hon. Friends the hon. Members for Poole (Mr. Syms) and for East Devon (Mr. Swire). They would have liked to be present today, but they are in Committee this morning. What I am about to outline affects their constituents, too.
Back in the 1980s, many people who had retired on small pensions were attracted by sales people who sold them home income plans whereby they could not only increase their income but usually receive a cash sum to spend on something that they found attractive, such as a trip abroad to visit their children or a new car. Such transactions were not explained to them, however, and were clearly cases not just of mis-selling but of fraud. People were sold equity-linked, high-risk products on which they were told that they would receive a return that would not only provide them with an additional income but would pay off the interest on a mortgage if they remortgaged their property.
When I raised the matter in 1999, I received great assistance from the insurance ombudsman, who took up many individual cases in my constituency and restored several constituents to the position that they were in before they unfortunately took out the home income plans. However, five constituents have been unable to access such restoration and the interest on their properties is still mounting. The building societies that set up the mortgage have made helpful arrangements whereby they have promised not to foreclose so that people have the right of tenure in their property until they die, but many elderly people wish to sell for one reason or another—often to go into residential care. As the interest is compounding, when they die, the property is likely to be owned outright by the building society.
I draw attention to the cases in my constituency involving people who were sold policies by Sonia Thompson who worked for DBS Financial Management Ltd. The case has been before the court,
182WH
but I have clear evidence that I will share with hon. Members of that particular lady falsifying mortgage applications. Even when the building society concerned was informed about the falsified documents, it still agreed to go ahead and co-operate with Miss Thompson in arranging the home income plans. That is why the building societies that still hold the deeds for the properties should do the decent thing.
Mr. John McWilliam (in the Chair): Will the hon. Lady assure us that the case to which she is referring is not lying before the courts and that it has been decided?
Mrs. Browning: The case is not lying before the court, Mr McWilliam. It went before the court, but unfortunately it was thrown out because the witnesses were elderly and unable to do justice to it. I shall quote from a letter that I received from the Britannia building society, which is one of the building societies involved in such matters in my constituency. When I raised the matter on the Floor of the House in 1999, Britannia agreed to visit my constituent. The letter stated:
"we are more than happy to try to deal sympathetically with members who have problems relating to the DBS settlement and I am hopeful that we will be able to do something positive to help."
I am sorry to say that, despite that assurance, nothing has happened with Britannia building society. The people who were involved have moved on to other departments or have left the organisation. I raised the matter because I believed that Sonia Thompson, acting on behalf of DBS, acted illegally in the way in which she carried out her work. One of the policy holders and mortgagees, a Mr. Budgen from Devon, who gave me permission to put his details before the House today, wrote to Britannia building society and explained his experience. He said:
"The Mortgage application form was completed by us and signed as true. Since then a figure of over £22,000 has been added by Miss Thompson, a representative of D.B.S. Financial Management Ltd. as being our income…Immediately we received this copy…we spoke to your manager at Barnstaple",
but they still processed the mortgage.
Unfortunately the lady was allowed off the hook by the courts, but there is an onus of responsibility on the building societies that were involved in processing the mortgages. That is an extreme case due to the way in which Miss Thompson conducted her business, but there are examples of such activity throughout the country. A couple of my constituents have other building society mortgages and there are certain requirements for building societies to check the validity of what is offered in a mortgage and the person's ability to repay that mortgage.
People may be surprised to hear me say that such requirements are not bound up in sufficient regulation, and that there is therefore a free-for-all in the area of financial services. We must bear it in mind that the purchase of a home is the biggest financial investment that any individual or family makes. Given that the problem affects people who have already paid off a mortgage and are now in retirement, it compounds the vulnerability of the people taking out the schemes. Therefore, there is a real imperative for the schemes to be brought within the remit of financial services and dealt with by the ombudsmen who handle complaints and restoration. Some schemes have been subject to such guidelines, but not all.

183WH
The difficulty is that the people so affected are now elderly and frail. They are dying without having had the benefit that others have had of their cases being brought to justice. That is why I am bringing such cases before the House. Time is running out for that vulnerable, fragile group of elderly people. It is time for some action to be taken so that at least their final years can be spent without the anguish and anxiety of compounding interest and living in what was their family home but in many cases no longer belongs to them.
Looking at what needs to be done, I am looking for a minimum of a freeze on the interest that is rolling up. I cannot believe that that would cost the building societies an arm and a leg, because there are so few of those people. Talking of arms and legs, if one considers the amount of money that has passed from the mortgagees to the building societies, one can see that the building societies have made a fair old return from those people already. It would not hurt the building societies to do the decent thing now. They should freeze the interest, look at terms of restoration as others have done in identical cases and determine how those people initially came by the policies.
We should consider how the building societies came to be involved in allowing the policies to be sold to that particular group of clients under rules quite different to those that would have applied to younger people of working age. I am aware that some building societies have tried to help, for example, by saying that those people have security of tenure for the period of their lives, and I welcome that. I feel, however, that more needs to be done.
We should be looking to bring equity release mortgages within the regulatory framework and we should consider the situation of elderly people who are remortgaging their homes. I do not say that that is always a bad thing. I know that people are interested in such policies, particularly those who do not have families to which they wish to leave the family home, or who find that they are on a very low income in retirement. None the less, such people do not seem to have the protection afforded to others and the Government have an opportunity to do something about that.
I received a letter from the National Consumer Council that said,
"We welcome the prospect of Financial Services Authority regulatory protection for consumers of lifetime mortgages from 2004. We are concerned, however, by the exclusion of home reversion schemes from the FSA's regulatory remit."
I hope that the Minister will be able to say today that she will look again at this issue. There is time to consider whether to bring such policies within the scope of the regulations. Many organisations that deal with the elderly and with such products, including Britannic Retirement Solutions Ltd, Help the Aged, Which? and the Consumers Association, are anxious to see changes in this area. I hope that the Minister will be receptive to this request today. That would not, however, necessarily help the vulnerable group about which I speak and I want to flag it up that that group is in need of urgent action.
Such cases were brought to my attention before I was elected in 1991 and, 11 years on, I cannot think of any other open casework on which I am still trying to get a
184WH
resolution. We have had meetings in the House over the years with Back Benchers of all parties, lawyers and buildings societies and Ministers have talked to us to try to find a way through. I cannot believe that the will is not there to resolve the problem for this small group of people and that we cannot find a way forward today in order to do something for them.
In 1991 I wrote to the Council of Mortgage Lenders, which was at that time quite resistant to any increase in the regulation that affected it. I hope by now that it has had second thoughts, because we are 11 years down the track. Most of us recognise that there is always a need for the individual to assess risk and take some responsibility for that. However, the way in which the policies were sold, and in many cases sold fraudulently to pensioners, means that one could not realistically have expected people to realise what the full consequences would be.
There must be a greater input into the detail and the consultations that people are given, because they are jeopardising the very roof over their head. One feels that, particularly when speaking to people such as my constituent, whom I will call Mrs. X because she does not want to be named. She explained in a tearful conversation with me how she was suddenly in the frame of being able to visiting her close relatives in Australia, perhaps more than once, although she had not seen them for a long time. That was the result of a sales pitch that was put to her suggesting that not only would she have more income in retirement, but that something that she thought well beyond her reach—visiting her close relatives—was suddenly a realisable dream. One can understand that such people are severely vulnerable when small print is put before them by those who have no good intent and simply want to collect commission on a policy. On behalf of that group, I ask the Minister to bring to bear whatever influence she can on the building societies that still hold the mortgages to do the decent thing—restore people to their previous position and freeze the interest.
I ask the Minister to examine the cases because this is not the end of the story. Such practices and policies may well be put before a future generation of pensioners. It is incumbent on us to ensure that when we regulate, we regulate to protect the genuinely vulnerable. We need not overregulation but a measure so that the roofs over people's heads are not put in jeopardy as they retire.
9.46 am
Mr. Paul Tyler: I am delighted to contribute briefly, and I congratulate the hon. Member for Tiverton and Honiton (Mrs. Browning) on the way in which she comprehensively introduced this extraordinarily sad saga. As she mentioned, there is a long history of all-party concern about this matter on behalf of our constituents. Several of my constituents were also sold dud schemes in the late 1980s, which was a classic case of mis-selling. I shall return to that point in a moment.
I shall outline more history to add to what the hon. Lady said. She will recall that the schemes were explicitly endorsed by the then Government when they were first introduced in the late 1980s. Margaret Thatcher, the then Prime Minister, went on record to support the schemes as an easy and effective way for

185WH
those in the circumstances that the hon. Lady described to release equity, to take advantage of the increasing value of their property and to get additional income for old age. The then Government were involved at that early stage.
Like the hon. Lady, I was visited in the early 1990s by constituents who realised just what they had been sold. Most were not only very elderly but in ill health. One of the reasons why many had taken up the schemes was that they needed additional income or released capital to improve their property in order to cope with the difficulties of old age and infirmity.
When I was elected in 1992, I formed a little informal group. I am delighted to see the hon. Member for Birmingham, Selly Oak (Lynne Jones) here because she, I and Mr. William Powell, the then Conservative Member for Rugby—[Interruption.] For Corby—I am sorry, my memory has collapsed. The three of us tried to get some sense out of the various regulators and Treasury Ministers. Throughout the Parliament of 1992 to 1997, we fought a lonely battle on behalf of a lonely group of vulnerable and elderly people.
One of the great questions that hangs over the sad problem, as the hon. Member for Tiverton and Honiton effectively demonstrated, is why nobody was prepared to accept responsibility during those five years. The Council of Mortgage Lenders, the insurance industry, the insurance ombudsman, the Securities and Investment Board, which we visited, and Treasury Ministers were not prepared to say, "Yes, we recognise there is a problem here and we are going to take it up."
Mrs. Browning: I must put it on record that the then Insurance Ombudsman Bureau resolved several of my problem cases and restored people to the position that they had been in before they took out the policy. From my experience, if everyone had been treated by the insurance ombudsman in that way, there would be no need for me to speak in today's debate. I hope that the hon. Gentleman will endorse my opinion.
Mr. Tyler: I am grateful to the hon. Lady, but I think that the experience that she describes came later. From 1992 to 1997, it was difficult to pin down responsibility. I endorse what she says, but, in my experience, the ombudsman was prepared to come in only somewhat later.
Lynne Jones: To clarify the hon. Gentleman's point, my recollection is that there was a different regulator for products sold with insurance policies as opposed to financial services products, which were regulated by FIMBRA. Responsibility was then taken over by the Securities and Investment Board. One problem with which we all tried to grapple was the plethora of regulatory bodies. At the point at which FIMBRA had produced a report and was starting to use its teeth, it was taken over, and the report was hushed up and not acted upon.
Mr. Tyler: I am grateful to the hon. Lady for succinctly making the point that I was just about to make. I do not blame anyone, but, unfortunately, the time scale of changes in the regulatory systems did not help. The hon. Lady made that point vividly.
186WH
I pay tribute to some individuals who, at their own expense and with considerable personal commitment, have tried to support those affected, especially Mr. Phillip Cheal and Mr. Tony Craven of the two support groups, who have done a fantastic job. Perhaps their most important act was to alert Members of Parliament to the fact that the individual cases brought to Ministers and the regulatory authorities were examples of a large number of cases—the tip of the proverbial iceberg. They also managed to get the commitment and interest of the Consumer Association.
I am delighted that, even at this late stage in a long and sad story, the Consumers Association has taken such an active role. I intend to use the excellent brief that it has provided for this debate to exemplify exactly what has gone wrong with the investment schemes. I shall also quote details of individual examples obtained by the association, obviously with the consent of those concerned.
The major problem is that the way in which the schemes were introduced was almost invariably linked to expectation about the rise in value of the stock market and the inevitable and continuing rise in the value of property. Hon. Members may say that anybody in their right senses would know that anything that rises that fast is likely to fall. Unfortunately, that is not always the case with forecasts. Indeed, to a large extent, when one examines the small print, the mis-selling that undoubtedly took place was dependent on a continuing and considerable rise. Therefore, those who invested in schemes in the property boom of the late 1980s suddenly found themselves at a considerable disadvantage.
As the hon. Member for Tiverton and Honiton said, some of the more responsible lenders have done their best to mitigate the problem, and I pay tribute to them for that. However, many people, including some of my constituents, are considerably out of pocket. I must emphasise that those who were caught in the situation have almost invariably lost their legal right to redress. It has gone; they are out of time. Several thousand retired people have mounting debts and cannot pay them off by using interest payments or by remortgaging.
If the person in debt dies, the debt must be met through the sale of the home, which may well be repossessed and sold at a reduced price, and the family is then placed in an even more difficult situation. The most desperate part of that desperate situation is the length of time—more than 10 years, in most cases—for which uncertainty hangs over so many people. I know of people in my constituency whose lives have been ruined by the uncertainty, the constant threat to their future and their homes, and the worry about how their families will look after them if they become too ill and disabled to stay in their homes.
I shall give three examples that the Consumers Association told me about, having of course obtained the consent of those concerned. First, I give the example of Marion Grimshaw, from my county, Cornwall. The lender was the Chelsea building society. She borrowed £17,000 in 1990, ironically just before such schemes were removed from the market. She had the use of all £17,000 and has not been able to repay anything so far. The amount still owing is £60,773. Imagine such a debt hanging over an elderly woman living on her own.

187WH
Then there is the case of the scheme sold to Mabel de Morgan's mother, who is from Anglesey, in 1989, when she was 88 years old. The lender was the Staffordshire building society. The mother borrowed £15,000; she had use of £5,000 and invested the other £10,000. She has already repaid £27,900, and yet £18,800—a considerable sum—is still owing.
Mr. and Mrs. George Carrod were lent money by the West Bromwich building society. The hon. Member for Birmingham, Selly Oak will recall the various exchanges that we have had with that building society. Mr. and Mrs. Carrod borrowed £49,500 in 1989 and had use of £8,600. Some £5,000 was kept back from the loan, and £200 a month was taken from investments for 18 months. The amount so far repaid is £57,580 in compensation and investment value, and the amount still owing is £20,715. Those are huge sums of money.
Hon. Members will agree that such schemes are an extraordinary scandal that has affected some particularly vulnerable people. The hon. Member for Tiverton and Honiton is absolutely right to say that those lenders who have insisted on getting their pound of flesh should accept a freeze on any further interest. However, that is not enough. There should be compensation for the mis-selling of those schemes, just as there has been for the mis-selling of other financial products. Government responsibility has been acknowledged for the way in which the episode was so disastrously exploited because of the endorsement by the then Government.
My constituents and I are fed up to the teeth with the game of pass the parcel that has gone on for far too long. It has to stop at some time. As I have said, legal remedies are now effectively blocked to those affected; the cases are out of time. The Government have a responsibility, particularly to those who are not very articulate and who are not only elderly but ill and frail. Such people have been kept in an impossible situation for far too long. We are talking about classic cases of mis-selling, and the Government must act.
9.58 am
Lynne Jones: I, too, pay tribute to Phillip Cheal and Tony Craven of the home income plan scam support group, and to Vera Hawkins, who is sadly no longer with us. Perhaps her dogged work to support elderly people caught up in the home income plan scam led her to her premature death, which has come to many elderly people because of the worry resulting from such plans and from the growing debts that they have led to.
Unfortunately, I was not sufficiently well organised to bring my file on home income plans from my constituency office, so I will have to speak from memory. As far as I am aware, I no longer have any elderly constituents who continue to be dogged by increasing debts. Most reputable building societies have frozen those debts—although not before they had accumulated to unacceptable levels. Some, but by no means all, the growth in debt has been paid off by compensation. There is not a lot that the Government can do, but I ask the Minister to look in detail at the policies of different building societies and lenders and
188WH
perhaps name and shame those that are not following the practice of those that have done the best for their elderly customers.
The scandal with which I was most involved was that of the West Bromwich building society. Elderly people were encouraged to embark on financial investments by an organisation called Fisher Prew-Smith. People were signed up to schemes without being given any explanation of what was involved, and they were told to sign legal papers with a solicitor whom they had never met who was apparently acting on their behalf. That enabled the building societies subsequently to wash their hands of any responsibility—even though the suppressed FIMBRA report makes it clear that building societies such as the West Bromwich knew what they were getting into and embarked on loans to elderly people with the specific objective of increasing lending.
It took many debates and many meetings to expose what was happening. Belatedly, the West Bromwich building society accepted some responsibility when it agreed to freeze some loans. Many people have had appalling experiences. Elderly people, including at least one constituent of mine, have gone to their graves prematurely through worry over the debts with which they were burdened as a result of home income plans.
Today, elderly people own a great deal of equity in property. Elderly people come to my surgery who cannot afford to pay for essential maintenance work on their homes. Those people are on low incomes, and very little help is available to them to get work done. One way to help such people—or people who struggle on low incomes but have high capital assets—would be equity release schemes. However, adverse publicity and the worry associated with equity release and home income plans mean that many elderly people are reluctant to embark on such schemes. I am pleased that the Government have raised the issue in the Green Paper and are considering options to create a level playing field for the regulation of equity release and home reversion plans to protect consumers and make the market work better. I hope that the Minister will say a little more about that.
I am thankful that our regulatory system is now less of a maze than it was in 1996–97, when my constituents and I had to attempt to grapple with a complex system in which different regulatory bodies were allowed to play off against each other, each claiming that things were not their responsibility. I congratulate the Government on having made some sense of the maze, and I look forward to hearing what they will do to help elderly people who are still struggling with mounting debt and to ensure that the elderly will be able to make the most of their capital assets.
10.5 am
Dr. Vincent Cable (Twickenham): I thank the hon. Member for Tiverton and Honiton (Mrs. Browning) for introducing the debate. She recounted her constituents' experiences effectively, but I wish to add a different dimension to the discussion.
This is a current problem: last week I noticed a headline in the letter column of my local borough newspaper that said, "Caught in SAM Trap"—SAM stands for shared appreciation mortgages. Over the past few years hundreds of local people have bought into those schemes,

189WH
and they will be caught up in the problems that the hon. Member for Birmingham, Selly Oak (Lynne Jones) is so troubled about. She and my hon. Friend the Member for North Cornwall (Mr. Tyler) have brought a useful historical perspective to the debate.
I agree with what the hon. Member for Birmingham, Selly Oak has just said. If people's wealth is locked up in their homes, it makes sense to try to help them to liberate some of it rather than its being just paper value—and if that can be done in a safe way, we should encourage it. It is not only Mrs. Thatcher who agrees with that; it is basic common sense. The problem has been that many of the products that do that have been, and still are, unsafe.
I also wish to touch on a broader issue that the three hon. Members who have already spoken did not mention. It relates to the wider picture of heavy mortgage lending and the potential instability that that will create for the housing market.
There are two types of products. The straightforward mortgage lending type of equity release is unproblematic and uncontroversial; the mortgage is repaid on death and the products are regulated. The controversy revolves around reversion products, whereby the mortgage lenders acquire a share of the equity. The figures for the past 18 months suggest that we are dealing with a very big market: about one third of all equity release is in the form of reversion products. That amounts to £300 million over 18 months, which is very big business.
The history of reversion products is chequered, for the reasons that the three previous speakers have mentioned. Reversion products that achieve equity release were started in the 1970s, and even at that stage there were some unhappy experiences, particularly with products that had variable interest rates locked in. People were in effect giving up the equity in their home, but acquiring liabilities with very high interest rates when the economic cycle was in a phase of high rates.
The industry claims that some of those products were banned in 1990, and I would like the Minister to confirm that that is the case. Since then, the industry has been governed largely by self-regulation under the safe home income plans—or SHIP—scheme. I have just looked through the code of practice that governs safe home equity release plans, and it is fine—it has been approved by Age Concern, I think. Many of the elements in it are progressive; for example, there is a commitment to give an absolute guarantee that there will never be negative equity under these plans.
If the code of conduct were honoured and universally applied, the problems that we are debating would not be serious. However, a good deal of equity release reversion lending is operating outside the voluntary code. One of the most striking cases is that of the shared appreciation schemes that the Bank of Scotland and Barclays bank operate. Many of the people who are victims of the type of reversion scheme that I have mentioned are those who have bought into those banks' schemes.
I shall illustrate what the shared appreciation schemes do with reference to the experience of one of my constituents, a Mr. Brooking, who came to see me about the matter. His home in Twickenham was valued at £190,000 four years ago, but Twickenham, like many
190WH
other suburban areas, has witnessed an extraordinary boom in house prices. Mr. Brooking's property has now more than doubled in value to £400,000. On the back of his £190,000 home, Mr. Brooking took out a £30,000 mortgage. However, in addition, half the appreciation in value of his home—more than £100,000—also belongs to the Bank of Scotland. It has earned a return of about 250 per cent. over four years, assuming that the market stays up and that Mr. Brooking, who is an elderly gentleman, moves house or dies.
What is striking about that case is that my constituent is not naive; he is a highly sophisticated, well informed, clear-thinking man who read all the small print. However, the small print in no way prepared him for what happens in a world of rapidly rising house prices. The assumption that the Bank of Scotland used, and presented to all its clients, was that house price appreciation would continue at about 4 to 5 per cent. a year. All its modelling and examples were based on that assumption. Mr. Brooking was given no warning; he had no reason to expect such an extraordinary outcome. He has since referred the case to the ombudsman, who has been totally obtuse and completely failed to understand the issues. She had a very unsatisfactory correspondence with the ombudsman.
Thousands of people have got involved in the shared appreciation scheme and feel a serious sense of grievance as a consequence. Apart from the fact that schemes such as SAM operate outside the code of practice, the hon. Member for Birmingham, Selly Oak also underlined a broader point. Mortgage lending has been regulated since 2000, but reversion products are unregulated. The Government have given a commitment in the Green Paper to look into that, and perhaps the Minister will give us a few more indications today about where Government thinking is heading.
My final point relates to the broader issue of mortgage lending and what it does to the housing market. Equity release is part of a much bigger phenomenon—an enormous amount of money goes into the housing market, and that contributes to the enormous appreciation of prices that we have seen. The Government broadly take the view that we should not worry too much about that, although borrowing-to-income ratios are at record levels. The fact that interest rates are low historically means that there is no particular reason why people should have enormous difficulties in repaying those mortgages—provided that interest rates remain low.
The problem with that optimistic scenario is that should incomes fall and unemployment rise—bearing in mind the fact that there is no longer any fall-back ability to make mortgage payments through the social security system—prices could fall rapidly. That hypothesis is not mine alone. The Governor-designate of the Bank of England has already warned of the potential for a serious shock to the economy if house prices fall substantially.
Other members of the Monetary Policy Committee have said openly that they cannot do anything about the problem. They cannot deal with this bubble and the potential crash because to cut interest rates would add to inflation. Low interest rates might be good from the manufacturing sector's point of view, but they would aggravate the housing boom. On the other hand, to raise interest rates to deal with the housing boom would be

191WH
bad for the rest of the economy. The Monetary Policy Committee is trapped, because it cannot do anything through its conventional mechanisms.
Are the Government thinking at all about whether there is any way in which the asset bubble in the housing market, to which equity release has contributed substantially, can and should be managed? There are ideas out there. Some fairly conventional people have said that we should reconsider special deposits, which quarantine some of the cash in mortgage lending institutions, including that in equity release schemes. The money can then be released if the housing market crashes. However, that is an old mechanism, which may not work in our much more sophisticated times. Do the Government have any thoughts about the way in which the overall market should be managed, or should it simply be allowed to take its course?
To conclude, there are two sets of problems. First, there are the products themselves. How will the different treatment of reversion and other mortgage products be dealt with? Secondly, there is the overall housing and mortgage market, and I hope that the Minister will put the issues in that wider context. Are the Government content with the way in which the market is evolving, or have they undertaken provisional thinking on how it might be managed in future?
10.15 am
Mr. Stephen O'Brien (Eddisbury): I am grateful to my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) for securing this timely and important debate on equity release. The subject has gained considerable attention from the press and the general public, and it is appropriate that it should be the subject of full parliamentary consideration.
In discussing equity release mortgages, it is crucial to consider equity release in general. Such provision has become increasingly important as more elderly people use the resource of their home to provide additional income in retirement. During the debate, I want to determine whether the Government are prepared to demonstrate that they understand the importance to the elderly of such income by making a commitment to introduce swiftly appropriate regulation of the market.
As Her Majesty's official Opposition spokesman on the issue, I approach it in what I hope the Minister recognises is a constructive manner. I seek the Government's support in particular on issues on which Members of Parliament can have a real and current effect. Many of the issues raised by my hon. Friend relate very much to the past, and I shall address some of them, but it is important, given our responsibilities in the House, that we learn from what happened in the past so that we can prevent similar problems arising in the future.
There is great confusion about what equity release is, what risks underpin it, and when it is appropriate to purchase. Equity release can simply mean down-sizing the family home, or extending an existing mortgage. I shall focus on a specific financial service product, which uses the home of an elderly person to generate income or a cash lump sum. Such schemes can take the form of a loan or a reversion: a loan is a mortgage, while a reversion is the sale of all or part of the house.
192WH
It is inevitable that more people will turn to equity release. According to the Council of Mortgage Lenders, the average price of a house in 2001 was £115,700. By comparison, the average retirement fund in 2001 was only £24,000, according to the Association of British Insurers. That means that many so-called cash-poor pensioners are sitting on increasingly valuable assets.
For many people, equity release may be the only way in which to top up their retirement income, whether that is to fund a lifestyle need, care fees for a loved one, or policies for one's own future domiciliary care. That will be inevitable given falling annuity rates and stock markets, which are due, as much as anything, to the Chancellor's tax grab of £25 billion and £5 billion per annum on the pension schemes of those who have been doing the right thing by putting money aside during their earning lifetime to provide for their retirement. When that is coupled with low interest rates and increasing longevity, it is certain that more people will turn to their property to provide much-needed additional income in retirement.
That seems especially likely when one takes account of today's terrifying and growing retirement savings gap, which is at least £27 billion. The failure to take advantage of equity release where appropriate could increase that gap to as much as £40 billion. That is why the current, relatively small, equity release market in the United Kingdom, estimated by Datamonitor to be worth about £750 million, and by the Council of Mortgage Lenders to be worth about £1 billion, is deemed to have the potential to support sales growth of up to £4 billion or £5 billion a year for the next decade to achieve a market of £50 billion or, some would say, even £100 billion.
Two major factors have hindered the growth of that potentially critical market. The first relates to reputation. The home income plan saga of past years continues to have a serious and damaging effect, as my hon. Friend cogently described. That point that was reinforced by the examples cited by the hon. Members for North Cornwall (Mr. Tyler) and for Birmingham, Selly Oak (Lynne Jones). That can only undermine confidence generally in a potentially important market. I urge the Minister and the building societies involved to act urgently to freeze interest on those loans. I recognise that that is ultimately a decision for the building societies, but however much we in opposition prefer it were not so, the party in government unquestionably carries influence, so we urge the Minister to put her full weight behind that cause.
The second factor that hindered growth is confusion about the regulation of equity release products. In its consultation paper CP 146, the Financial Services Authority announced that it was prepared to regulate mortgage-based equity release—the regulation is due in 2004—but reversionary equity release would fall outside its remit. Therefore, the distinction described earlier, between mortgage-based and reversionary equity release, currently carries significant consequences. That would mean that cash reversions would be wholly unregulated in what we know will be an increasingly important market, but one with some identifiable risks of consumer detriment, especially for vulnerable older people.

193WH
Not surprisingly, that has caused considerable concern among several organisations, ranging from Britannic Retirement Solutions in the private sector, Help the Aged and Age Concern in the charitable sector, the Consumers Association and the National Consumer Council in the consumer sector, to trade bodies, such as the Association of Independent Financial Advisers. Given the attempts at populism that inform the Government's actions in their every waking hour, the Minister should be aware—if she is not, she can certainly take it from me, as a fellow north-west Member of Parliament—that this subject currently forms a major story line in "Coronation Street". Surely the Government will now do something!
Concerns were raised that the proposed action would both fail to provide the ageing consumer with an important safeguard, and maintain confusion in the market, thereby stifling its anticipated growth and ability to provide additional income for people in retirement. The Treasury's argument for partial regulation of the equity release market appears to have been as follows. The FSA is empowered under the Financial Services and Markets Act 2000 to regulate mortgages, but it is unable to regulate reversionary equity release as that is deemed to be a contract. In effect, caveat emptor applies under the legal doctrine of privity of contract, and reversionary equity release is not regarded as a financial services product. Consequently, equity release is not currently included in the regulated authorities order, hence the nonsense of partial regulation.
We were led to believe that the only way to bring reversionary equity release schemes under the proposed FSA equity-release regulatory umbrella was to enact primary legislation to change the Financial Services and Markets Act to include them. Imagine my surprise, therefore, when paragraph 72 of the Government's pensions Green Paper, entitled "Simplicity, security and choice: working and saving for retirement", published on 17 December 2002, announced:
"The Government needs to ensure that the market for equity release is effectively regulated and that individuals fully understand the implications and risks of the deal. One issue of potential concern is that while equity release mortgages will be regulated by the FSA from 2004, home reversion plans are outside the scope of regulation. The Government will be looking at options to create a level playing field for the regulation of equity release and home reversion plans to protect consumers and make the market work better."
I am relieved that the Government have recognised the anomaly and have decided to deal with it by creating, in that important phrase "a level playing field" for the regulation of equity release and home reversion plans, also known as reversionary the equity release, to protect consumers and to make the market work better. The Government have the opportunity today to tell us how and when they will do precisely that. Will the Government enact primary legislation to amend the Financial Services and Markets Act 2000 to enable the FSA to regulate equity release mortgages and home reversion plans? If so, are they prepared to tell us when and whether it will be in this year's Finance Bill?
194WH
The Minister should have some very clear information and I look forward to a clear answer. Bearing in mind the importance of this market to the cash-strapped pensioner, I hope that the Government agree that the issue needs swift and prompt attention; it cannot be left to drift. Consumer protection and the confusion surrounding it, which has been highlighted yet again in this debate, show that it is unacceptable to let the matter drift.
Alternatively, do the Government now wish to change their mind on whether reversionary equity release falls within the definition of a financial services product—that is, to say that reversionary equity release is more than a mere contract? A case can be made for that less painful approach to ensure consistent regulation, not least because most consumers and intermediaries recognise reversionary equity release as a differentiated financial product targeted at a differentiated class of people, primarily the vulnerable elderly, for what is likely to be a once-in-a-lifetime transaction using their main and almost always only dwelling house.
If the Government are to take that route, why were they not prepared to do so last year or earlier? The matter was raised, as I am sure the Minister is aware, during the passage of last year's Finance Bill. Failure to deal with the issue earlier has undoubtedly affected consumer confidence and the growth of an important market. However, the Government cannot and must not provide a system of regulation for reversionary equity release that is not policed in the same way and by the same body that polices mortgage-based equity release. By this I mean that if the FSA is to regulate mortgage-based equity release, and it is intended that it should do so from 2004, it must be the body that regulates reversionary equity release.
If the Government were to provide another body to carry out that task it would immediately cause additional complexity and perpetuate the consumer confusion that the regulation was intended to deal with. The hon. Member for Birmingham, Selly Oak pointed out that recent experience and increasing knowledge of how market regulations operate suggest that it would be better to bring the regulatory approach under one umbrella. I notice that the Liberal Democrat spokesman, the hon. Member for Twickenham (Dr. Cable), rightly did not attribute blame, but said that we must learn from experience.
The Green Paper refers explicitly to creating "a level playing field" for the regulation of these products, and that can only mean consistent regulation; therefore the FSA should be the regulatory body for reversionary equity release products. I hope that the Government can now reassure my colleague the hon. Member for Tiverton and Honiton, her constituents and me. Although it would be small comfort to people involved in the continuing saga, it would be at least some comfort to them to know that the pain that they have suffered will not be visited on future generations.
Mrs. Browning: I hope that the Minister can help us with the older cases as well. Since initiating today's debate, I have heard from Norwich Union and Nationwide that both support changes to introduce regulation in this area. Nationwide sent me a letter, which I received only this morning, saying
"consumers that are most likely to use these products are often elderly and vulnerable. Without much-needed clear regulation, there is a danger that current practice could lead to future accusations of mis-selling."
Across the piece, even before its introduction, there seems to be great support from the industry for more regulation. That is not something that one often sees.
Mr. O'Brien: I thank my hon. Friend for having made that important point, because it is critical that that area of the market is appropriately regulated, not least so that it operates on a level playing field. There is also a need to enhance consumer confidence in the light of the concern provoked by home income plans. The market will certainly be a major one, even allowing for the inevitable cycles that can be predicted for property values. The capital assets locked up in people's homes are massive compared with the amount of money that is being put aside for pensions—the disparity is far greater than was formerly the case. I endorse my hon. Friend's comments. She recognises the extraordinary amount of third-party and business support from all quarters, not only for market regulation, but for that to be coupled with proper recognition of and redress for those who have suffered. I hope that the message that she takes from the debate to her constituents who have suffered so grievously will be that something is going to happen. We look forward to hearing the Minister's response to all the issues that have been raised.
It is important to recognise that, while the Green Paper's wording is somewhat woolly, it is common knowledge that the FSA is working on the assumption that the Government's intention is that the product sector should come within the FSA's remit, after what will be described as tricky boundary issues have been ironed out and the details have been discussed. I imagine that the FSA's high street firms division will deal with it. That will tie in with the long-term care issues that are already under review by the FSA. It is therefore a wholly appropriate expectation for the FSA, and one that I would encourage, as it is consistent with its stated concern about the rapid growth market in products directed at asset-rich, cash-poor, often elderly, vulnerable people. By today's standards, it is odd that reversionary equity release is not already covered and that mortgage equity release is not expected to be covered until 2004.
The Government must be in no doubt that the vulnerable elderly consumer expects and deserves a high level of protection when purchasing such products. For him or her, regulation means the guarantee of effective monitoring of and punitive systems for product providers and advisers who are in breach of regulation. Consumers also demand the confidence given by a reliable compensation scheme and an effective ombudsman. The roles and powers of such regulation should be enshrined in legislation. I hope that the Minister will agree that voluntary regulation cannot work and should not be expected to do so, given the potential size of the market and the variations within products.
196WH
My concerns have been echoed by the private sector and, as my hon. Friend the Member for Tiverton and Honiton pointed out, by many consumer groups and charitable associations. It might seem counter-intuitive that it is a Conservative who is calling for more regulation, when it is normally our role to try—often vainly—to stop the Government from indulging their whim for excessive and stifling regulation. However, we have a responsibility to do so in this instance, because the Government have not introduced the safeguards that both the private sector and consumers have called for, in the light of experience and of the recent exponential growth of the market, to meet their needs and release for their lifetime use the equity value that is pent up in property, rather than, as often happens, leave that value to pass to others after their death.
Concerns about the regulation of equity release have been expressed in both Houses of Parliament. Baroness Greengross is today asking an oral question in the other place to find out how the Government plan to regulate and promote the development of equity release schemes. No doubt, the Minister's colleague in the other place will read with great care what she says here, in order to guarantee consistency. We would ask that that consistent message be expressed in the terms for which we have all called.
The Conservative party is pleased to note that the Government have at last recognised the importance of the market—the elderly—and of the need for effective regulation, but it is up to them to let us know what they intend to do and when. There can be no fudge. A paragraph in a Green Paper, which is what they have provided on so many occasions, is no substitute for action. To do otherwise would be no more than disingenuous spin about their intent in a critical market. I hope that the Minister's answer will, for once, absolve the Government of that charge.
10.35 am
The Financial Secretary to the Treasury (Ruth Kelly): How pleased I am serve under your chairmanship, Mr. McWilliam.
I am grateful to the hon. Member for Tiverton and Honiton (Mrs. Browning) for securing this debate. I pay tribute to her, the hon. Member for North Cornwall (Mr. Tyler) and my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones) for their campaigning. They have brought to the attention of the House and people outside the importance of these matters and the injustice that has been done to certain people by the mis-selling of certain financial products.
I am aware of the distress that has been caused by the mis-selling of these plans not only because of the representations made by hon. Members but through correspondence. However, in response to the hon. Member for Eddisbury (Mr. O'Brien), I must say that the Government recognise the role that assets in their broadest sense—non-pension assets and, in particular, housing and equity release—can play in the provision of retirement income. As the hon. Member for Twickenham (Dr. Cable) said, it is common sense that people ought to be able to secure an income from their assets in retirement if that is what they want to do. If that is done in an informed way, and if it can be done safely, such practice will grow, and rightly so, but we must ensure that those products are provided in as safe a way as possible.

197WH
Equity release schemes are financial products that allow home owners to release the value of their property over and above any amount owed on a mortgage. Those schemes involve providers giving home owners a lump sum or income, or both, based on the value of the home. The providers receive their return when the home is sold. There are two basic types of scheme. One is mortgage-based; the other is the reversion plan. In the mortgage-based scheme, the householder retains ownership of the property; but in reversion plans, the reversion provider becomes the owner of whatever proportion of the property is sold.
There are several variants of the mortgage-based scheme. The mortgage annuity scheme, usually called the home income plan, allows the home owner to take out a fixed-interest mortgage, which is used to buy an annuity for a fixed income for life. The rolled-up interest mortgage allows the interest on the mortgage to be rolled up and added to the amount owed, which is repaid on death or when the property is sold. The shared appreciation mortgage expresses the cost of the loan as a percentage of any growth in the property value, payable on death or the sale of the property. Finally, some interest-only loans are available. I am aware of the concern expressed about many of those categories.
Under the home reversion plan, home owners sell their house at a discounted rate in return for a lump sum and/or income, and they continue to live in the house rent-free or for a peppercorn rent for life. The amount paid to the house owner is based on a number of factors, including the value of the property, the proportion of the property being sold, the life expectancy of the home owner, long-term interest rates and expected house-price inflation.
As with other regulated mortgage contracts, mortgage-based equity release schemes will be covered by the Financial Services Authority's regulatory regime that is due to come into force in October 2004. The FSA considers that such mortgages, which it calls lifetime mortgages, are high risk, and it has accordingly devised a regulatory regime for them. The proposals are set out in consultation paper 146—the FSA's approach to regulating mortgage sales—which was published in August 2002.
Mr. Tyler: As the Minister has already made apparent, the schemes are extremely complicated. She has also made it clear that some are high risk. Does she accept that such schemes were sold, particularly in the late 1980s, to a large number of people who could not get independent advice and were not expert in such matters, and that the schemes were demonstrably high risk to the seller, not to the buyer? Does she accept that the worst feature of that mis-selling was the fact that salespersons were able to say that the then Government had endorsed—guaranteed, even—such schemes?
Ruth Kelly: I am not going to comment on individual cases with which building societies or others may now be dealing. I shall come on to the different types of scheme and the problems with each, but to continue on appreciation mortgages. I understand the interests of the hon. Member for Twickenham in such matters.
Concerns have been raised about the returns that lenders receive if borrowers sell their property, having received a shared appreciation mortgage. The return a
198WH
lender receives from a shared appreciation mortgage is dependent on the increase in property value. In most cases, no interest is payable. The borrower repays the amount borrowed, plus three times the agreed percentage of any increase in value. For many shared appreciation mortgages, the maximum percentage is 25 per cent., so at most the borrower will be charged three times the increase in value. With the value of some properties rising substantially, however, lenders could receive a large return—indeed, some have done so. The hon. Member for Twickenham drew attention to the example of one of his constituents. Few people could have foreseen the extent to which house prices would grow. However, if house prices had fallen or risen more slowly, borrowers would have received a lower interest or even an interest-free loan. The risks should be properly understood and explained, and people should exercise an informed choice.
I am pleased to say that, when the FSA's mortgage regulation comes into force, the proposed advice and disclosure regime will enable borrowers to become fully aware of the implications of all equity release loans before they take a decision on the right one for them. I believe that the new regime will cover the anxieties that the hon. Member for Twickenham expressed. In the meantime, if hon. Members' constituents believe that they have been badly advised, or that their mortgage was mis-sold, and, assuming that all internal complaints procedures have been completed, they may be able to seek redress from the financial ombudsman service.
Home reversion plans are not currently covered by the FSA regime. That is because they are considered to be pure sale and purchase agreements, and not financial services products, as the hon. Member for Eddisbury pointed out. Just because home reversion plans are not financial services products does not mean that there is no scope for abuse. Vulnerable consumers may still be at risk of mis-selling and a lack of redress if things go wrong. There is also the possibility of distortion of the equity release marketplace in favour of the unregulated plans if there is not a level playing field and regulation between reversion-based plans and mortgage-based plans.
I am delighted that my hon. Friend the Member for Birmingham, Selly Oak mentioned the pensions Green Paper, and acknowledged the paragraph in it in which the future of home reversion plans is considered. I also note the commitment of the hon. Member for Eddisbury. He too thinks that it is a good idea to consider the matter closely, and wants a commitment from the Government to regulate.
The Government recognise the concerns that have been expressed and are concerned—for the reasons that I have described—about creating a level playing field for the regulation of both equity release and home reversion plans, aiming to protect consumers better and to make the market work better. We have already begun to meet interested parties to find out how a system of regulation might work. We are still gathering evidence of possible and likely consumer detriment in order to decide the appropriate degree of regulation. We do not want to overregulate—I am sure that the Opposition would have us bang to rights if we pursued that route. We want to get things right and we want consumers to be properly protected. Were we to go ahead on the basis of consultation, the process would be to publish a

199WH
consultation paper—probably later this year—and then to decide after taking legal advice whether regulation could be implemented using secondary legislation or whether primary legislation should be pursued.
Mr. Stephen O'Brien: If it was felt that such regulation was appropriate to achieving the Green Paper's stated aim of creating a level playing field, will its introduction coincide with the introduction of regulation of mortgage equity release, which the FSA is due to introduce in 2004?
Ruth Kelly: We will keep such dates in mind when we carry out our consultation and consider the possible legislative routes. As I have suggested, we are not holding back. We have begun to meet interested parties and are in discussion with them. We are determined to find out what we can do in this area.
Dr. Cable: The Minister is clearly trying to reconcile avoiding overregulation and protecting vulnerable people who are dealing with complex products. Has she considered that the sale of such products should involve independent financial advice?
Ruth Kelly: We will consider all the options that are put to us, while bearing in mind the fact that creating as close to level a playing field as possible for different types of regulation will be desirable. After consultation, we will determine the best way of regulating. One possibility is that the FSA will carry out the function; and the FSA will have views on the best ways of conducting any such regulation.
It is not the case that consumers have no protection at present, or that they will have no protection in future. As has been pointed out, the main reversion scheme providers are members of SHIP—safe home income plans—which is supported by leading providers of equity release plans. Members of SHIP agree to comply with a code of practice and undertake to provide fair, simple and complete presentation of any plan that they offer. I understand that the charity Age Concern has welcomed that code of practice; it may well improve the code, as the hon. Member for Twickenham has suggested. A SHIP plan guarantees that consumers will not lose their home whatever happens to the stock market or interest rates. In addition, and importantly, consumers' solicitors act on consumers' behalf—they are independent of the providers—when advising on the sale.
For the future, the FSA proposes that those firms that sell both mortgage-based equity release schemes and reversion plans will be required to take account of both types of product when giving advice. The proposed training and competence requirements will also include knowledge of both lifetime mortgages and reversion schemes, whatever the Government's decision. That is because the FSA is able to make rules in respect of the unregulated activities of regulated firms.
I turn now to home income plans. There were indeed serious problems at the end of the 1980s with schemes based on investment bonds. Those schemes used the proceeds of a mortgage raised on a property to invest in
200WH
a bond designed to provide sufficient returns to repay interest on the mortgage and, in addition, to provide an income. Unfortunately, the investment bonds failed to provide the returns required and investors found themselves with rising levels of debt to their lenders. The problem is well recognised by us and a range of measures have been implemented to help.
The sale of investment bonds was regulated at the time under the Financial Services Act 1986. Effectively, the then regulators banned home income plan schemes involving such bonds in the early 1990s. Using complaints procedures that were established under the Financial Services Act, home income plan investors were able to claim against their advisers, who were required to return the capital invested. About £70 million has been paid in compensation to 4,500 home income plan investors either directly by advisers or, if they had gone out of business, by the investors compensation scheme, which was the predecessor of the financial services compensation scheme.
Mrs. Browning: On that point, may I quote from a letter that I received from a former Economic Secretary to the Treasury—a dear colleague—that was put out on 20 November 1992? On home income plans and the investors compensation scheme, it states:
"In cases where the financial adviser was not the only party responsible for investors' losses, the ICS will not delay making an offer of compensation but will attempt subsequently to recover an appropriate element of the costs of compensation. I understand that one building society has, whilst not accepting legal liability, agreed to make a contribution to the costs of compensating clients."
That is a written precedent showing that there was culpability on behalf of not only the independent financial advisers, which is clear, but building societies. We want the Minister to show those who are still caught by the policies and increasing debts that the Treasury will put its weight behind getting building societies to do something to restore people to their original position and, as a first point, to introduce a freeze on the interest that is rolling up.
Ruth Kelly: I shall come to the hon. Lady's point in a moment.
I recognise that the Financial Services Act was able only to deal with funds that had been put into an investment bond. There were other cases in which people used sums raised for other purposes that are not covered under the Act and, consequently, many were left with residual debt to their lenders even after the compensation that was allowed. Although the lenders themselves should respond to residual debt, we take a serious interest in victims.
Fortunately, most lenders have offered a package of measures to home income plan investors in respect of such residual debt. The terms of packages typically include cash payments, reductions in interest rates charged for mortgages, capping mortgage interest rates and allowing people to stay in their homes for the rest of their lives. Additionally, the then investors compensation scheme agreed additional financial benefits for former home income plan investors with several lenders.

201WH
There is still scope for negotiation with lenders on those issues and I know that the Financial Services Authority has taken an interest.
Mr. Tyler: The Minister has said that the Government are taking a serious interest in people who are still caught by the schemes to which the hon. Member for Tiverton and Honiton referred. What exactly does that mean? We accept that comparatively few people have not benefited from compensation in the terms to which the Minister referred. What are the Government going to do? It is 11 years since the severity of the problem was first recognised, and there are damaged, distressed and vulnerable people out there.
Ruth Kelly: The fact is that there is very little that the Government can do except bring moral pressure to bear. The lenders must resolve the situation with the people who took out the plans.
Lynne Jones: I agree that the issue comes down to moral pressure, but it would be helpful if investigations were carried out to determine which lenders have the best records. That could be benchmarked, so that pressure could be put on other lenders to be that helpful to borrowers.
Ruth Kelly: I thank my hon. Friend for that. Clearly, lenders have different records on that matter. The Government and the FSA are aware of the issue, and following this debate, I shall take a closer interest in it. The investors compensation scheme has been able to negotiate settlement terms with the West Bromwich, the Cheltenham and Gloucester, and the Stroud and Swindon building societies, but other lenders have not been so co-operative.
It is interesting to consider the case of one building society that went beyond the package of terms resulting from the ICS. In a court case, it was decided that responsibility lay not just with the independent financial adviser but with the building society, and that as the two were engaged in a joint enterprise or had a common design in marketing such products, they had a joint responsibility for compensation. That creates a precedent.
Mrs. Browning: I am very pleased to hear the Minister acknowledge that, because in all the outstanding cases that have come to my attention, homes were mortgaged with one branch of the Britannia building society some 60 miles away from where the people involved lived. It
202WH
was not the nearest branch, which one would think would be the obvious place to go. One has to conclude that there was a liaison between that one branch, for which Britannia's head office has responsibility, and those doing the selling.
Ruth Kelly: I acknowledge that I am not familiar with the particular branch that the hon. Lady mentions. I am more familiar with the general issues surrounding such plans.
There has been some success in persuading lenders to aid their victims and those who have been caused distress by the plans. That will continue, but we are determined to ensure, over time, that such distress will not be caused unnecessarily in future. That is why we are considering how such plans might be regulated in future. Of course, home income plans and mortgage-based plans will be brought under regulation. We hope that lenders will take account of the views that have been expressed today and in the past and will take as generous and as sympathetic an approach as possible to any residual debt.
These are involved, technical and emotive subjects that range over different types of financial products governed by different regimes and sold at different times. In the background, there is the emotive issue of home ownership and the horror that many people, particularly the elderly, feel at the thought of losing so much of what they have worked so hard to gain. We are right to be concerned about that, and I welcome this opportunity to set out the Government's position. I hope that I have said enough to assure hon. Members that the victims of mis-selling have appropriate mechanisms for redress, and that the FSA takes the matter seriously and provides adequate levels of investor protection, although of course we recognise that some cases are still outstanding.
Through the great pensions Green Paper, the Government are taking the steps necessary to enable people to save with confidence, and use not just the simpler financial products but equity release—if they are properly informed and fully aware of the risks involved—as a potential additional source of retirement income. I agree with the hon. Member for Eddisbury that we are talking about a growing market, and one in which consumers should have confidence if they are to make proper investment decisions. We are putting in place a framework that is right for the future.
10.59 am
Sitting suspended till Eleven o'clock.

Road Safety (Wiltshire)
11 am
Dr. Andrew Murrison (Westbury): BBC Wiltshire put it to me this morning that a senior Minister's being clocked doing 99 mph along a stretch of the M4 in Wiltshire might have been the inspiration behind today's debate. That is not so, but traffic speed will feature largely in what I have to say.
Shortly after I was elected, the Wiltshire policeman who took me around pockets of petty lawlessness in my constituency was called to a traffic accident on the A36 north of Warminster. As we approached the scene, it was clear that it was a major incident, and it subsequently became apparent that a family of four had been killed when a lorry crossed to the wrong side of the road. That truly harrowing introduction left me with enormous respect for the emergency services and what they do and focused my interest in road safety. I am grateful for the opportunity to indulge that interest today.
In 1997, the Government set up the post of Minister for Public Health, and I have questioned elsewhere whether that was helpful in reducing mortality and morbidity in transportation. It was spectacularly unsuccessful in the context of road traffic accidents. After dramatic falls in road mortality in the 1980s and 1990s, progress has stalled. The Times reported only last Friday that the number killed and injured fell by less than 1 per cent. last year, which is short of the Government's 10-year plan to cut the numbers by 40 per cent. by 2010. There is a faint whiff of complacency about that and, indeed, a Department for Transport spokesman has been quoted as saying:
"Ministers are content with the progress we are making."
I invite the Minister to correct that impression—I am sure that he will do that.
Most deaths of car occupants occur on rural roads and the downward trend in total deaths since the 1980s continues at a slower rate in the countryside. Traffic is expected to increase more rapidly on rural roads than in urban areas, so it will be difficult to close the gap. I am happy to say that Wiltshire appears to be bucking the trend and, despite its rural nature, the county enjoys an enviable safety record. Against the background of the target set by the Government for the years to 2002, which was itself set against the 1981 to 1985 baseline, Wiltshire achieved a reduction of 54 per cent. in those killed or seriously injured, compared with the national average of 47 per cent. That trend was mirrored in total accidents and we appear to be doing better than Somerset, our next door neighbour, which is in many respects a similar county. It is difficult to work out the secret of Wiltshire's relative success, but one factor may be the willingness of the county to impose speed limits. In Wiltshire, less evidence has been demanded than would be required under Government guidance. For example, an accident record is not necessarily required in order for a speed limit to be imposed.
Wiltshire has been trialling vehicle-activated road signs. The success of that study should surely warrant the inclusion of such signs in the Traffic Signs Regulations and General Directions 1994, which would allow local authorities to introduce them without prior reference to the Secretary of State. I would appreciate it
204WH
if the Minister would tell us when such an inclusion will be made, because my highways authority is keen to know.
Wiltshire has been anxious to ensure that its interventions are firmly rooted in available evidence. That is especially important in respect of road safety, because that subject is emotive and there is a tendency for politicians to want to be seen to be doing something, even if that may be neutral or worse. The use of 20 mph restrictions in the immediate vicinity of schools is one such example. Intuitively, one would think that such a measure is bound to help, but as the Government have pointed out, the evidence is less than clear cut. Children, especially young ones, are fairly well marshalled in the immediate vicinity of schools. They play close to their homes. The difficulty arises some distance away from schools, in the exact spots at which traffic speeds rise after leaving a 20 mph zone. We should not be tempted into tokenism and must look at wider areas.
Furthermore, evidence suggests that, to be respected, a 20 mph zone must be complemented by physical cues and attention to the general roadscape. Nowhere is that more true than in the linear villages of Wiltshire, where long, straight main streets encourage speed. A short while ago, the children of Dilton Marsh primary school wrote to me with their thoughts about how to improve road safety in their village, especially close to their school. The head teacher, Mrs. Judith Finney, invited me to visit and talk their thoughts through with the children.
I am sure that many hon. Members are humbled, as I am, by the sound good sense of young constituents. This occasion was no exception. The children pointed out that their main street was long and straight which encouraged people to drive fast. They said that the speed limit could be reduced, a pelican crossing could take them from school to the other side of the road where there was a post office and sweet shop and that general traffic-calming measures could be introduced. However, their most sophisticated observation was that it was difficult for children and their parents to walk to school because of the layout of the village and its pavements. The children said that it would be helpful if there were continuous pavement that did not end in a grass verge or hedge because they could then walk to school.
The children actually suggested what clever officials at the Department for Transport had come up with after months of careful consideration—so-called safe routes to school and school travel plans. In many areas, especially rural ones, there are no pavements and, where they do exist, they often end abruptly, forcing pedestrians into traffic. My young constituents rightly pointed to that as a hazard as well as an incentive for parents to take them to school by car.
In many areas, parents on the school run effectively use their cars as armoured vehicles to protect their children. We know that that sets in train bad habits that will probably stay with children for ever at great cost to public health and their health as individuals. By paying attention to how children get to school, we can demilitarise the school run.
Road safety is full of paradoxes. Until recently, I owned an elderly Nissan 1 litre car as well as an equally ancient Volvo estate. Apparently, I was more likely to injure and be injured while driving the latter than the

205WH
former because, although Volvo has an enviable and well-publicised safety record, it encourages a tank mentality. Although my Nissan was a wonderful car, it did not encourage the same sense of immortality, which made for much better driving.
Many people were initially taken aback when Wiltshire county council decided to dispense with white central markings along some stretches of road. Research and experience from abroad suggests that doing that reduces the biggest killer on our roads—speed. It removes any sense of comfort that road users may have and engenders caution. Unfortunately, that well-meant and evidence-based intervention produced some of the most craven, ill-informed opportunism that I have ever seen from the Liberal Democrats. It was shameful and I am sure that the Minister and I will find common ground about that.
Frankly, I am sure that the Minister will agree that what the Liberal Democrats say and do in Parliament does not matter much, but it does matter locally where they are often in positions of responsibility. In the context of the problem that we are discussing, they seem to be offering only a simplistic diet of speed restrictions. The evidence tells us that lower speed is necessary but by no means sufficient. Indeed, research suggests that the environmental context is the most important influence on driver's behaviour. At this point, the problem becomes a lot more difficult to solve than is implied by the Liberal Democrats' easy solution of sticking up speed signs so that they can tick the box marked road safety and consider that the job is done.
Evidence from Europe suggests that we need to improve the ability of drivers to read the road; we need legible roads. That suggests—almost counterintuitively—that the intelligent use of speed restrictions must be supported not only with physical barriers but with the absence of comfort cues that separate road users. In effect, that extends the home zone concept and the quiet lanes initiative that has had some success in Kent and Norfolk.
We learned from the Government's response to the Select Committee on Transport's report on road safety in October that demonstration projects are planned to trial suggestions for good practice in rural areas. They will be in line with the highly successful Gloucester safer city project. I think that all of us could welcome that, and I want the Minister to say how much progress has been made.
In October 2001, the Department for Transport, Local Government and the Regions published a progress report that it had commissioned from the consultants Babtie Ross Silcock, which was entitled "Development of a Rural Road Hierarchy for Speed Management". The following month, it appeared on the Department's website. It recognised that the main killer was speed and that a blanket 60 mph limit on rural roads was inappropriate. The idea that it came up with was a reclassification of roads with easily understandable speed limits and corresponding traffic-calming measures where appropriate. It was quite far reaching and we understand from the Government's response to the Transport Committee's report of June 2002 that a working group was set up to carry the recommendations forward. Since then, we have not heard anything further, and I want the Minister to say where he has got to with this.
206WH
At the end of 2001, the Government put on ice a number of important road building and improvement projects that would undoubtedly have saved lives. Those included the A36 improvements to the road from Codford to Heytesbury; that is a notorious stretch of trunk road, which is known colloquially as "Death Valley." That project—like the Westbury bypass—was a stand-alone local project that should not have been dependent on the outcome of the south coast to Bristol and Bath superhighway consultation exercise, which, we understand, is due to report in the summer. Nevertheless, it was put on ice pending the outcome of that investigation. Such delaying tactics are transparent, and they do not help to improve our road safety record.
Public health policy is meant to focus on where the greatest potential benefit lies. Every year, about 3,500 people are killed on Britain's roads, 40,000 are seriously injured and there 300,000 casualties in total. Each year, about a fifth of all deaths of those aged between five and 19 are due to road traffic accidents. In public health terms, that is quite a lot—and things are particularly bad if the age distribution of casualties is taken into account, because that considerably magnifies the significance of road accidents in terms of quality-adjusted life years lost.
The toll from road traffic accidents vastly exceeds that from air, sea or rail travel. The tragedy at Potters Bar in May 2002 killed seven people, and all of us can recall the furore that appropriately and understandably surrounded that sad event. However, 10 people die on our roads every day, but in spite of the public health challenge that road accidents present, road safety appears to be the poor relation when one considers the effort that we put into safety elsewhere in our transport network. In The Guardian two years ago, Rob Gifford of the Parliamentary Advisory Council for Transport Safety was reported to have said:
"Someone needs to do some hard thinking and ask why we are prepared to invest so heavily in rail safety and so little in road safety which offers much better value for money per life saved."
As a result of the Potters Bar tragedy, we are likely to get a specialist rail investigation branch from the forthcoming Railways and Transport Safety Bill—which, I understand, we will hear more about this afternoon. That is good; it will add to similar outfits that exist for air and sea transport, and it is broadly to be welcomed. However, on road transport, policy makers are strangely silent. That is especially odd, given that there has been a Minister with responsibility for public health since 1997 and we might therefore expect a sense of proportion in policy making. If we are serious in our cross-cutting attempts to improve public health, the Government need to concentrate on where the toll is greatest. Of course, they must deal with the all-too frequent tragedies on rail, sea and air that fascinate the media, but in addressing death and serious injury from accidents, they must be less willing to be reactive. They must look first at where their capacity to do good is greatest and that is on our roads.
It is clear from the copious material that I have ploughed through over the past few days that the evidence base available to Ministers for policy making is finite. In observing the investigation held by the police following the accident that I attended on the A36, I was able better to understand the role of the police in such matters. It is clear that, appropriately, their first

207WH
consideration is law enforcement and not accident investigation. Indeed, they have neither the numbers nor the tools, given the skills that they are provided with to act as specialist accident investigators, to conduct investigations in the way that, for example, air, sea and rail investigators may.
Now is the time to set up a road casualty investigation branch to hold thematic inquiries into why certain types of accident happen. It could be located in the Department for Transport and funded through existing resources. It is worth noting that the total cost of road accidents in the United Kingdom in 1998—the latest year for which the figures are available—was £11.5 billion.
11.16 am
The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson): I congratulate the hon. Member for Westbury (Dr. Murrison) on securing the debate and on the exemplary manner in which he has presented his case today. Notwithstanding that, I am sure that he will not mind my chiding him gently on the matters on which I disagree. I share his distress at seeing major incidents such as the one that he described on the M4 in which people were killed and seriously injured. I assure him that every time such accidents happen—in my own constituency or anywhere else—they have an impact, not only on people like myself but on those in the Department. That is partly what drives us forward to do the things that we are doing.
I will chide the hon. Gentleman gently on the importance of such events to Government policy. I assure him that road safety is very prominent in the Department's thinking. It permeates our road transport policy. There is no complacency. We have a 10-year target to reduce the number of those killed and seriously injured. However, my reading of those figures is that we are now just ahead of the target. It is encouraging that we compare very well internationally—we are probably the best in terms of overall road safety—but our record on accidents involving children has not been as good as that of other countries in the European Union. It is encouraging to see that we are now making an impact on the number of accidents involving children.
I share the hon. Member's interest in the west Wiltshire "People's Voice", which sounds like the Liberal Democrat's version of "Focus". I have a saying, "In politics, there are lies, damned lies, statistics and Liberal Democrat focuses", in that order. I agree with him that there is "craven, ill-informed opportunism" in the document. It is nonsense to suggest that the whole road safety problem could be solved by spending £150,000 on 20 mph zones around schools—and that the policy was cruelly voted down by Tories and Labour councils. As the hon. Member for Westbury pointed out, our experience is that reducing speed limits and putting up signs in the road has little impact on the speed of vehicles. Such actions must be associated with other measures, such as engineering changes or speed cameras. There are many possible changes that could reduce speeds. As has rightly been pointed out, different measures can be combined. We should not detain ourselves for too long on the simplicity of the Liberal Democrats' so-called solutions.
208WH
Before I move on to some general points, I want to deal with a couple of questions that were raised. The hon. Gentleman spoke about talking to children at primary schools in his area. I have consulted widely with children in my area on what policies they think important. Interestingly, road safety features highly—children are the ones who experience the problems day by day when going to and from school and when playing. We should never ignore the sound good sense of children. We are considering ways of interacting with children in our consultations, so that we can hear some of that good sense and condense it into our thinking and our policies.
The hon. Gentleman asked about vehicle-activated signs. In some areas, they can certainly be very effective. Revised guidance will include approved legends for those signs, and the Highways Agency will soon provide guidance on approved types of equipment.
The hon. Gentleman also mentioned the Gloucester safer city project, which I had the pleasure of visiting just under two years ago. The project has been extremely successful in involving local people and finding out the issues that they consider must be dealt with. Finding local solutions to local problems is very important. The full report on the project will be published some time in the spring of this year. It has taken time to discover what we have learned, but I assure the hon. Gentleman that we will learn important lessons from the experience in Gloucester, where the measures taken have led to a huge improvement in road safety and general quality of life.
I understand the hon. Gentleman's impatience about the Codford to Heytesbury section of the A36. However, the roads programme that we are undertaking, and the amount of money that we are spending both through the Highways Agency and through local transport plans, is unprecedented in the past 50 years. Although it has made good sense to defer this particular project while the south coast to Bristol and Bath study was carried out, recommendations will be made again in the spring. It would not be sensible for me to comment further before then.
I am sure that hon. Members are aware that the Government produced in October last year a response to the report by the Select Committee on Transport on road traffic speed, which the hon. Gentleman mentioned. That response included mention of work that my Department is doing and will be doing to combat the effects of not only excessive but inappropriate speed. That work will help us to achieve our casualty reduction targets—a reduction of 40 per cent. in the overall figures for those killed or seriously injured, and a reduction of 50 per cent. in the figures for children, by 2010. We are aware of the problem of inappropriate and excessive speeds, especially in rural areas. We acknowledge that many of the measures that we have developed to improve safety in urban areas are not always appropriate for rural communities. We are working hard to address that imbalance.
It may be of interest to hon. Members that work is in progress or is planned for the near future. We have already begun to consider the merits and the practical implications of introducing a rural road hierarchy—which, of course, will be important in a largely rural county such as Wiltshire. We are also considering village entry signing and are simplifying the procedures for introducing 30 mph village speed limits. In addition, I

209WH
am sure that the hon. Member for Westbury will be interested to know that work has already started on the development of a framework for assessing which speeds are appropriate and comparing them with the speeds that are actually being driven on our rural roads. We expect the first results of that work to be available in the early part of this year. They will feed into our plans to revise the guidance on setting local speed limits more appropriately. We plan to publish the advice on village entry signing later this year, to assist authorities in introducing more 30 mph speed limits in rural villages.
The hon. Gentleman will be aware that responsibility for safety on local roads rests largely with the local highways authority. However, the system of local transport plans requires local authorities to include separate road safety strategies for achieving the new reduction targets in their bids for capital funding for local transport measures. Wiltshire's funding for integrated transport measures, which includes measures to promote road safety, has increased from just over £350,000 in 1998–99 to almost £4 million in the current financial year. The hon. Gentleman will agree that that is a substantial and welcome increase in local authority funding for transport purposes.
As the hon. Gentleman said, Wiltshire has made real improvements in road safety. They are largely consistent with the national trend and have generally exceeded the relevant targets. It is a tribute to local highways authorities and the police that they have promoted better road safety education, engineered solutions and introduced better enforcement where appropriate.
As the hon. Gentleman said, however, that is just the start, and we have no reason to be complacent. In 2002, Wiltshire county council signed a public service agreement with the Government, which included a more challenging casualty reduction target than that which applies nationally. We welcome that. The public service agreement sets a target of reducing the number of those killed or seriously injured on Wiltshire county and trunk roads to 288 by 2005. Without the public service agreement, the national target for Wiltshire would be 311. The county is half way towards achieving the national target for 2010, and I congratulate it.
The hon. Gentleman could not resist making some comparisons within Wiltshire and with the neighbouring county of Somerset. It is difficult to compare one county with another. Counties have their own problems and needs, and they must develop an appropriate road safety strategy. I have looked at Somerset's figures, however, and they show the same downward trend as those for Wiltshire. That is welcome.
210WH
We want to encourage the introduction of 20 mph speed limits outside schools, and we will do so where appropriate. As the hon. Gentleman said, however, such speed limits will often have to be associated with other measures, and I am sure that Wiltshire is considering that.
Speed limit enforcement will remain an important part of our road safety strategy. One of the most effective road safety tools that we have introduced to combat excessive speed is the netting-off scheme, which allows some fixed-penalty speeding fine revenue to be reinvested in safety cameras. The scheme has been enormously effective. Wiltshire joined in 2002 and mainly operates mobile camera units, which specifically target speed-related casualties on rural roads.
The safety camera scheme has been so successful that we expect nearly all police force areas to have joined by spring this year. Wiltshire is relatively new to the scheme, but the hon. Gentleman will be interested to know that there was, on average, a massive 47 per cent. reduction in the number of those killed or seriously injured at camera sites in the pilot schemes. In real terms, more than 100 people are alive and well who would have been killed or seriously injured this year. That is a considerable success on the part of the schemes, and we should flag it up.
As has been highlighted, cameras are an excellent tool in helping to reduce excessive speed, but they cannot effectively combat inappropriate speeds below the speed limit. In our recent television advertising, we sought to encourage people to travel at speeds appropriate to the road conditions and the time of day—it may be raining or children may be coming out of school. Even 30 mph in a 30 mph zone may be inappropriate at certain times of day, although it will be wholly appropriate at others.
As the hon. Gentleman will know, we announced SWARMMS—the south-west area multi-modal study—before Christmas. It will dual much of the A303, which passes through the hon. Gentleman's constituency. Indeed, I sometimes pass along it on the way to my constituency. The study will introduce many road safety improvements, including on the stretch at Stonehenge, where tunnelling is being carried out. It is, indeed, a black spot.
Again, I congratulate the hon. Gentleman on raising these issues. I may not have covered them all in the time at my disposal, and I will be delighted to correspond with him.
11.29 am
Sitting suspended till Two o'clock.

International Criminal Court
2 pm
Tony Worthington (Clydebank and Milngavie): My reason for requesting the debate is that like many Government supporters, I was extremely proud that after decades of effort, we passed legislation in 2001 to give full support to the establishment of the International Criminal Court. That was the culmination of a process that started at Nuremberg. After the second world war, a judicial system had to be created because the inadequacy of creating a new tribunal or independent process after each outrage had been brought home to people. We needed an established international court in which the perpetrators of the worst crimes against humanity could be prosecuted. The sickening thought of future Idi Amins sitting safely in Saudi Arabia need be no more. If Saddam Hussein can be arrested, he can be prosecuted for any offences that he might have committed since the International Criminal Court was formed. That is truly foreign policy with an ethical dimension, if I may sound out of date.
The former Foreign Secretary and the Prime Minister played an active and special role in achieving the Rome statute that we incorporated into our law. Hon. Members of all parties said on Second Reading of the International Criminal Court Bill that they were in favour of the ICC in principle. Furthermore, the European Union, with our influence prominent, acted in unison with a common policy that was a formidable force for good to bring about the Rome statute. Eighty-seven countries have ratified the Rome statute to form the ICC; that has happened much more quickly than many anticipated. That was a huge triumph to end a huge injustice where, in the words of Mary Robinson:
"It's less likely that somebody who has massacred 100,000 people or has been responsible for their death would be brought before any accountable court than somebody who commits a domestic murder."
It was a therefore a great shock when I found out from isolated newspaper articles and sources abroad that my Government were leading the way in Europe to allow bilateral deals with the United States to exclude US citizens from the provisions of the ICC. In other words, we were excluding the 4 per cent. of the world's population who live in the most powerful state in the world from the International Criminal Court. That was a powerful and wrong message. Entrenching inequality before the law is a denial of the wishes of this House.
I fully accept the right of the United States not to ratify the International Criminal Court. I believe that its fears are misguided and, indeed, in the negotiations in which the United States played a full part that led up to the Rome statute people bent over backwards to accommodate its fears. The principle of complementarity was established and a role for the United Nations Security Council, on which the United States has veto powers, was written in to delay the responsibility of the ICC. Safeguards on the appointment of prosecutors were established and there was a refusal to apply the law retrospectively. However, the United States is still not satisfied.
Angus Robertson (Moray): Does the hon. Gentleman agree that it is disappointing that the United States
212WH
maintains its position, especially when one considers that the provisions of the court would cover prosecution for the attacking or bombarding by whatever means of towns, villages, dwellings or buildings that are undefended and not military objectives, such as those in New York?
Tony Worthington: I shall come back to that point. However, the wretched events of 11 September certainly constitute war crimes, and I should have thought that the United States would welcome the establishment of an international criminal court. Unfortunately, not only is the United States not ratifying the ICC but it is seeking to undermine it. In the middle of last year, it blackmailed the United Nations by saying that it would withdraw all its peacekeeping forces from East Timor and Bosnia unless it obtained immediate agreement that none of its people would be subject to any action by the International Criminal Court and that they would have impunity. It obtained a year-long exemption from the provision of the ICC, which runs out this summer.
The United States is now aggressively seeking to negotiate bilateral impunity agreements for its citizens with every country that has signed up to the ICC. Up to now, 14 nations have signed such agreements, although none has ratified them. They tend to be weak countries that are dependent on American favours; they are heavily leaned on if they do not sign. For example, the Philippines was threatened with loss of cash for army retraining and Romania with lack of progress to NATO membership if they did not sign bilateral agreements.
In addition, the United States Congress has passed the American Servicemembers' Protection Act 2002. It has sought to prohibit any US co-operation with peacekeeping operations unless US forces have been exempted. It precludes American assistance to any country unless that country has concluded a bilateral treaty with the United States that stops the surrender of US personnel to the court. Extraordinarily, the Act authorises whatever action is necessary to release from captivity any American personnel detained in The Hague or elsewhere.
Given American attitudes, it was crucial that the European Union stood together to resist demands for bilateral agreement that would undermine the International Criminal Court and that we responded with one voice to demands that severely undermined the credibility of the International Criminal Court. I am told that powerful voices in the European Union wanted to reject American demands. We were not one of them. We led those who were seeking to accommodate the Americans. That led to a position at the meeting of the Council of the European Union on 30 September that established the principles under which bilateral treaties could be signed. The Government claim that they are seeking to allow bilateral treaties with America in a way that does not undermine the ICC. I think that most people find it very difficult to square that circle.
I know that the Government are embarrassed by their role. They are not a modest Government and, rightly so. They have a lot to be proud of. They are fond of pointing out their achievements in international affairs—how they have led the way on certain matters, shown that they are at the heart of Europe, are setting the agenda and so on. However, the Government have been utterly silent on this matter, which has major implications for a

213WH
piece of legislation of which we are proud. Apart from a couple of questions in the other place and my modest contribution, they have given no information voluntarily.
As a Government supporter, I think that there should have been a statement on the International Criminal Court. I am particularly indebted to the organisation Parliamentarians for Global Action, of which I am a member and which worked successfully to persuade countries to sign up to the ICC. I am grateful to Human Rights Watch and to Amnesty International because, without them, I would have had no information about what was happening.
The debate gives the Government an opportunity to explain a policy that they have not wanted to explain voluntarily. The situation in which we find ourselves has considerable implications. The likely war with Iraq will be the first one in which British military action will be subject to ICC scrutiny. British military action, however, will not be under British military control. What discussions are taking place with the Americans to ensure that British forces are not involved in activity that could be subject to ICC concern?
I return, by way of example, to the point that was made by the hon. Member for Moray (Angus Robertson). The ICC treaty contains a provision that outlaws attacks on military targets that clearly cause excessive harm to civilians. A court could find that the use of cluster bombs was, in some circumstances and some locations, a war crime. What action are the British Government taking to ensure that their troops are not involved in actions that could lead to charges being brought against them? What steps are the Government taking to ensure that their forces are not implicated in actions that are taken by American commanders, which may be in breach of their own statutes?
In a written answer to my questions in a debate on the action that was being taken to enact a bilateral treaty with the United States, the Minister for Europe told me that preliminary discussions had taken place with American officials on 17 October while they had been on a sweep of meetings in European capitals to negotiate bilateral deals. Other EU countries are rejecting such deals out of hand. What is the time scale on that matter? Does he intend that the bilateral deals should be completed before the summer, when the United States one-year exemption vis-à-vis peacekeeping forces will expire?
One important question is whether the Americans have accepted the terms on which the EU will negotiate bilateral deals. The Foreign Secretary and the EU have said that the bilateral deals proposed by the Americans in other cases, such as in East Timor, infringe the Rome statute. The guiding principles do not give the Americans all that they have demanded with regard to non-surrender agreements, for example, with regard to the categories of people who are granted impunity.
My information is that the Americans have not accepted the guidelines that the EU is laying down for bilateral deals. I would be grateful if the Minister would confirm that. Will the Minister give us a cast-iron assurance that those guidelines will not be departed from and that if the Americans do not accept them then, like the other EU countries, we will not have a bilateral treaty with the Americans?
214WH
What action will the British Government take to ensure that Parliament is kept in touch with what is being done in its name? The contrast with the European Parliament and the Council of Europe is pronounced. The European Parliament debated the issue thoroughly and heartily condemned the principle of bilateral agreements. We must be informed about what is happening. Why will the Government not he open and transparent on this issue? Will the Minister give us an assurance that the House will be informed of all future developments? The EU Council instructed states to keep it in touch after its meeting on 30 September. The Government should surely be obliged to keep us in touch.
How would we respond if any other country approached us, or the EU, seeking a bilateral impunity deal? America is not the only significant country that has not ratified the ICC. If other countries, such as India, which supply peacekeepers, also sought to withdraw from UN forces, would the exemption policy also extend to them—if not, why not? Surely, we should be stressing equality before the law.
I would welcome the Government's views on the assertions made by the legal advisors of Human Rights Watch about the illegality of the use in this context of article 98 agreements. That respected and well-informed organisation believes that parties to the ICC have a legal obligation that prevents them from entering into article 98 agreements with parties such as the United States, which is the only country to have repudiated the Rome statute. Article 98 was not intended to allow a state that had refused to co-operate with the court to negotiate a web of agreements to secure exemption for its citizens or otherwise undermine the effective functioning of the ICC. It is surely common sense that signing such an agreement with the United States, which is committed to undermining the court, contravenes the obligations that Governments undertook on signing or ratifying the Rome statute. There would have been outrage if, while the Bill was passing through Parliament, a Minister had stated that if challenged by the United States, the Government would cave in and grant it impunity.
Article 27 of the statute incorporates the fundamental principle that no one is immune for crimes under international law such as genocide, crimes against humanity and war crimes. It says absolutely explicitly that the Rome statute
"shall apply equally to all persons without any distinction based on official capacity",
yet we are sanctioning bilateral agreements with the United States that are in direct contradiction of that ethos. Does the Minister agree with the report in the Financial Times of 27 August, in which it was said that the European Union's legal experts advised that countries would be violating their obligations under the Rome statute if they entered into a US impunity agreement? To put it another way, our Government will be breaking a law passed in 2001 if they sign an impunity agreement with the United States.
Another question—my speech is bound to be all questions because we have been given no information—is whether the Minister agrees that, in the end, it will be for the international criminal court as an independent international judicial body and not states such as Britain or the United States to decide what legal effect should be given to any bilateral impunity agreement.

215WH
Is the Minister aware that if Americans who are suspected of war crimes are returned to America, they return to a country that does not have laws to deal with many international crimes under the Rome statute? As the United States cannot prosecute such crimes, a suspect would enjoy de facto impunity. We could not assume that, on the principle of complementarity, a suspect would be dealt with by the United States courts. Not all war crimes defined in the Rome statute are expressly defined as crimes under federal law when committed abroad. Crimes against humanity, apart from torture, committed abroad are not included under federal law.
Does the Minister agree with Amnesty International that if we sign an impunity agreement with the United States, we shall have to renegotiate all or almost all extradition agreements with other states, as most bilateral extradition treaties have re-extradition clauses? Such clauses provide that the state extraditing a person to another state normally retains the right to agree to the re-extradition of that person to another state or international court. If a state agreed to the US impunity agreement, it would have to renegotiate all or almost all extradition agreements that have re-extradition clauses. A new clause would have to be inserted to provide that the second state retained the right to agree to extradition except when the person was a US national or fell within other categories of persons covered by the agreement. What work will have to be done as a result of a bilateral agreement?
Does the Minister agree with Amnesty International that the US impunity agreement is designed to prevent US nationals from appearing as witnesses—even as expert witnesses—before the International Criminal Court? Since such witnesses appear only if they themselves consent, under the US impunity agreement they could be prevented from attending even if they were willing to help the court in its search for truth. The right to testify would be taken away by their own Government. Does the Minister agree that that is the meaning of the proposed bilateral agreement with the US?
Is the Minister aware of those points? What undertakings have the Americans given that they will update their laws to ensure that any war criminal from their country will face justice? A statement from the Council of the European Union confirms that:
"the European Union and the United States fully share the objective of individual accountability for the most serious crimes of concern to the international community."
However, the annex to that statement points out that
"any solution should include appropriate operative provisions ensuring that persons who have committed crimes falling within the jurisdiction of the Court do not enjoy impunity."
Is the US willing to accept the stipulation that it should amend its laws to fit in with the ICC statute?
A further question needs an answer. Does the EU remain adamant that applicant countries must ratify the ICC statute as a condition of entry into the EU and that the conditions for a bilateral agreement for applicant countries will be the same as those for current members of the EU?
216WH
Like many others, I feel great sadness about the attitude of the Bush Administration. It sends a dangerous message that the most powerful nation on earth sees itself as above international law. Enormous safeguards were included in the Rome statute to prevent politicisation of the ICC. Ironically, our stance weakens the position of any British nomination for prosecutor to safeguard the court from politicisation, because, in the eyes of most ratifiers of the convention, we have taken actions that weaken the court.
The policy followed by the Bush Administration contradicts the good work done by Americans since Nuremberg, as well as their helpful attitude in establishing the tribunals in Yugoslav and Rwanda and in helping us to establish a tribunal in Sierra Leone. I am disappointed that my own Government have undermined legislation introduced by the House less than two years ago—because that is the effect of impunity agreements.
I would like the Minister's assurance that, at the very least, he will answer my questions in a letter. Much better would be to use the facility of a written statement to the House to explain the current state of play.
2.24 pm
Angus Robertson (Moray): I congratulate the hon. Member for Clydebank and Milngavie (Tony Worthington) on securing the debate. I am a relatively new Member of this House, so I had to go back through the Hansard records of its proceedings to find out quite how many questions he has tabled and debates he has taken part in. This morning, I read his contributions to the debate of 3 April 2001 on the International Criminal Court Bill, and I supplemented my reading by looking at the substantial debates in the Scottish Parliament on the International Criminal Court (Scotland) Bill, which my party supported.
My interest in the International Criminal Court stems from my previous existence as a journalist—especially in the early 1990s, when I reported from the former Yugoslavia and saw scenes that were the results of clearly criminal actions by human beings against one another. My interest in history has also shown me that that is not a new development. Those are a couple of the reasons why my party and I are such strong supporters of the ICC. That is consistent with being in favour of an ethical foreign policy.
My interest in this subject was rekindled a few months ago when a constituent of mine who is an American citizen and whose father worked at the criminal trials in Japan after the second world war came to my surgery. I read about the international military tribunal for the far east with great interest and that reinforced my belief that it is right and proper for every state to support the ICC. Indeed, I pay tribute to the work that the Government have done to try to expedite the signing by the United Kingdom—which of course includes Scotland and the other jurisdictions in the UK.
My other particular interest in the ICC relates to the European dimension. That has been alluded to by the hon. Member for Clydebank and Milngavie, and it is an extremely important dimension bearing in mind the United States of America's efforts to secure article 98 agreements, which are essentially moves to seek exemptions for US service personnel. That is a new

217WH
policy, which the George Bush Administration are pursuing; it was not pursued by the previous Democratic Administration of President Bill Clinton. Bush's Administration is clearly pressurising many international states to sign bilateral agreements that would prevent the surrender of any US citizen or anyone who has ever worked for the US military—including contractors—to the ICC, which we all hope will deal effectively with the worst crimes known to humanity.
However, after months of campaigning, the Bush Administration have concluded such agreements with only 17 countries. Only six of those countries have satisfied the Rome statute, and two of them—Romania and East Timor—are now emphasising that their Parliaments must ratify the agreement before it can take effect. Those 17 countries are Afghanistan, Dominican Republic, East Timor, El Salvador, The Gambia, Honduras, India, Israel, Marshall Islands, Mauritania, Micronesia, Nepal, Palau, Romania, Sri Lanka, Tajikistan and Uzbekistan. The hon. Member for Clydebank and Milngavie rightly said that those countries are particularly prone to diplomatic pressure to sign up to such agreements.
I welcome the moves of Germany—supposedly one of our close allies in the European Union—and Canada, which is a strong NATO partner. They expressly said that they will not sign such an agreement. On November 4, the Canadian Foreign Minister, Bill Graham, announced that Canada considers an existing agreement covering the conduct of United States personnel on Canadian soil sufficient to meet US concerns. After the Council of the European Union released its conclusions on 30 September, Germany's Foreign Minister, Joschka Fischer, announced that Germany was
"against the conclusion of special agreements and we will not conclude such an agreement."
If any right hon. or hon. Members have not yet had the chance to consider the full analysis by the German Foreign Ministry of the agreement reached at the Council, I would commend it to them. It makes it clear that pursuing the route of signing an article 98 agreement is inconsistent with the International Criminal Court as established.
The Council of the European Union discussed the matter at great length on 30 September and released guiding principles for member countries that are considering bilateral agreements with the United States. The principles state:
"Entering into US agreements—as presently drafted—would be inconsistent with ICC States Parties' obligations with regard to the ICC Statute."
For such an agreement to be legal for those parties, it would need to include at least:
"No impunity: A guarantee that an appropriate investigation and potential prosecution would be undertaken by national jurisdictions.
No reciprocity: The exclusion of nationals of ICC States Parties from coverage of such an agreement.
No universal scope: The limitation of coverage to those persons present in a territory"—
because they have been sent by a signing state—and
"Ratification: The agreement must be approved according to the constitutional procedures of each individual state."
218WH
In addition, the Council emphasised that the
"Rome Statute provides all necessary safeguards against the use of the Court for politically motivated purposes".
I share entirely the concerns raised by the hon. Member for Clydebank and Milngavie, especially on prosecutors. I wish any nominees from the United Kingdom every success in securing a position at the forthcoming selections. However, I would be very surprised if other signatory states did not view any candidate from one of the minority of states that have signed up to the special agreements as compromised in one way or another.
Will the Minister clarify whether he shares the opinion of Foreign Minister Joschka Fischer that the principles that the European Union has outlined represent a concrete move towards a clear rejection of article 98—or does he not see the EU's principles as hindering the UK from entering such an agreement with its US allies? It has to be one or the other; it cannot be both.
Of course, it is up to the United States Administration to form their own policy on the International Criminal Court. As a great fan of the United States and a great supporter of much of its policy, I am very disappointed by the position that it is taking towards the ICC. However, I take some comfort from recent polls on the question conducted by the Chicago Council on Foreign Relations and the German Marshall Fund of the United States. They recently released the full findings of Worldviews 2002—the most comprehensive survey ever, apparently, of US and European foreign policy attitudes. The second and final phase of the release of the survey findings shows that 71 per cent. of American respondents support the United States' participation in the International Criminal Court.
I also note with interest the findings of Monroe Leigh of the American Bar Association, which quite clearly show the United States constitution's compatibility with the Rome statute of the International Criminal Court. Those are matters for the United States, but I hope that it listens to the views of people around the world, and pays attention to the increasing scepticism about its diplomatic initiative.
There is another dimension to the issue that goes hand in hand with developments in and around Iraq. Clearly, if the United Kingdom, with or without a United Nations mandate, finds itself involved in armed military action in Iraq, there could be consequences, given that the ICC will shortly be up and running. We should consider the situation as outlined by the ICC:
"if nationals of States Parties to the Statute are victims of suspected crimes within the jurisdiction of the Court in the territory of a State which is not a Party to the Statute committed by persons who are not nationals of a State Party, the Court wouldn't be in a position to investigate except if either the State of territoriality or the State of nationality of the suspected person accepts the jurisdiction of the Court, or if the situation is referred to the Court by the Security Council."
If the UK and the US were to pursue a military campaign in Iraq—and I hope that that would occur only if there were a new mandate from the UN Security Council—and the regime of Saddam Hussein were toppled, it would raise some big questions. If during a future campaign against Iraq, war crimes were committed against UK troops, would the post-war military administration enter Iraq into the ICC? Bearing

219WH
in mind that one surmises that the UK would play a role in establishing the new Government in Iraq, would the UK try to pursue a policy whereby that new Government would sign up to the ICC, or would the UK request that the UN Security Council referred the matter to the prosecutor of the ICC for investigation? That point is germane when one considers that military conflict may be only a few weeks away.
I should like to touch on a point relating to the timetabling of developments at the ICC. At the February meeting, judges will be elected, and in March 2003, there will be the formal inauguration of the ICC. My question is about nominations for judges and prosecutors. The Minister will be aware that the UK nominee for the position of judge is Adrian Fulford, an English judge. I wish him success. I am interested in how future nominations for positions on the ICC, the European Court of Justice or other bodies will be pursued, particularly as the Government have said that they would like a more open system of appointment for judges, and bearing in mind that there are three criminal jurisdictions in the UK.
Of course, if Scotland were a normal independent country, a Scottish Government would—as would any other normal Government, such as that of Ireland—ensure that a nominee from the Scottish legal system were put forward at every point. That is not always so in the UK, although it sometimes happens, as with the example of Judge Edward who serves on the European Court of Justice. However, there is no guarantee, and I view that as a less than ideal circumstance. Nevertheless, I would still like to hear from the Minister what system the Government have in mind for future nominations.
I shall finish with a quotation that I think is germane to ICC developments, and which comes from the time of the Nuremberg trials. It is of the chief US prosecutor, Justice Robert Jackson, who said:
"The ultimate step in avoiding periodic wars, which are inevitable in a system of international lawlessness, is to make statesmen responsible to law. And let me make clear that while this law is first applied against German aggressors, the law includes, and if it is to serve a useful purpose it must condemn, aggression by any other nations, including those which sit here now in judgment."
That was right then, and it is right now. If we are to reach agreements, it should be without exemptions. I look forward to the Minister's reply to my questions, and to those of the lion. Member for Clydebank and Milngavie.
2.40 pm
Ross Cranston(Dudley, North): I congratulate my hon. Friend the Member for Clydebank and Milngavie (Tony Worthington) on securing the debate. He has a passionate commitment to the International Criminal Court—that is well known—and his reputation generally on matters to do with international development is widely acknowledged in the House. When I was Solicitor-General, I was privileged to play a small part in the passage of the legislation, and I support the ICC unreservedly. However. I hope that my hon. Friend will forgive me if I put to one side his concerns for a moment, though I hope to return to them at the conclusion of my remarks. I declare my membership of the Bar.
220WH
The Government are to be congratulated on their promotion of the International Criminal Court. As my hon. Friend the Member for Clydebank and Milngavie said, the Government adopted a positive role both at the diplomatic conference at Rome and in the preparatory meetings leading up to that. After a long struggle—over decades—the Rome statute on the International Criminal Court was finally agreed in July 1998. We took that positive position despite the misgivings of our close ally, the United States. We have continued to support the court. Next month, as the hon. Member for Moray (Angus Robertson) said, there will be the assembly of state parties in New York, and the judges of the court will be elected. We have nominated Mr. Justice Fulford. Before his elevation to the High Court, Sir Adrian Fulford was an eminent criminal practitioner.
The success or failure of the ICC, as with other new institutions, does not turn simply on whether Governments agree or pass the necessary legislation. An institution depends vitally on the resources—the human resources in particular—associated with it. In the case of the court, that means the quality of its judges, of both the prosecutors and defence lawyers who appear before it, and of the support staff, such as those in the registry. That quality cannot always be guaranteed. In many developing countries, the best lawyers do not want to become judges, and the judiciary must be recruited from the public sector. Practising lawyers migrate to commercial law, which is more lucrative, and abandon advocacy before the criminal courts.
As for financial resources, there are problems with the existing international criminal tribunals—or, at least, with the international criminal tribunal in Rwanda. There have been operational problems. Verdicts have been handed down in relation to only five defendants, although over 50 detainees are still on trial, or awaiting trial. At the current rate at which cases are proceeding, that court will still be trying cases in 150 years' time.
There are also problems with the UN-sponsored trials in East Timor. The court there is not an international criminal tribunal but is sponsored by the UN as a hybrid court. Again, under-funding and neglect have meant that key appointments have not been made, and cases are proceeding in a desultory fashion.
When we turn to the former Yugoslavia, we can take some comfort from the quality of the tribunal; the efforts of Governments, especially ours, have resulted in a good record. I mention particularly the contribution of the English Bar. No better illustration can be found of the contribution that the UK has made than the trial of Milosevic. The presiding judge is Judge May, whose control over an extremely difficult trial has won universal admiration—although possibly not from the defendant. The prosecutor is Geoffrey Nice QC, and the amicus—he was appointed by the court because Milosevic is defending himself—is Stephen Kay QC. This country is making a superb effort, and its high standards are acknowledged by other countries.
It would be invidious to mention other lawyers from this country, although the senior lawyers whom I have mentioned are not the only ones to have made a contribution to the ICC; many junior lawyers are involved. For example, The Times last week contained an article on the International Criminal Court by Sylvia de Bertodano, a London barrister who has practised in these various courts and is now contributing to the

221WH
hybrid court in East Timor. The international criminal tribunal on the former Yugoslavia augurs well for the International Criminal Court. It can work.
I wish to make one subsidiary point. Too often in the House, I have to listen to negative comments about the greed of lawyers and about their obstructionism. As with any profession, there are unattractive aspects to some lawyers' practices. As MPs, we sometimes attract opprobrium—and in some cases it is justified.
Mr. Malcolm Savidge (Aberdeen, North): You get it for both.
Mr. John McWilliam (in the Chair): Order. I do not work in the international court.
Ross Cranston: English judges and lawyers have done the country proud and, as I said, that has been acknowledged well beyond our shores. Leading practitioners have been to The Hague, to Arusha, and to Indonesia to appear before and work for international criminal tribunals. Although they are paid, they earn much less than they would receive if they were still practising in London; and their practices suffer when they are absent. The English Bar has also done a considerable amount of pro-bono work; for example it has voluntarily engaged in advocacy training for lawyers from other countries who are to appear before the existing international criminal tribunals. I am sure that that will continue for the ICC. The efforts to establish an international criminal Bar for the purposes of the ICC will come to fruition in June 2003. Again, our lawyers have played an important part in that.
To conclude, I make three points. First, I hope that the successful operation of the international criminal tribunal for the former Yugoslavia, and the future success of the ICC, will convince the United States of the value of acceding to the Rome treaty. Secondly, the Government deserve credit for all that they have done within the confines of realpolitik. Finally, as well as taking credit on behalf of the Government, my hon. Friend the Minister for Europe would not be remiss if he paid tribute to our legal profession for what it has done in demonstrating that an international criminal tribunal can be made to work.
2.49 pm
Dr. Julian Lewis: The hon. Member for Moray (Angus Robertson) referred to the debate on 3 April 2001 on the International Criminal Court Bill. I was privileged to take part in that debate and I outlined then six good reasons for supporting the establishment of the International Criminal Court. The first was to punish past killers, the second to deter future killers, the third to embarrass those who shelter killers, the fourth to force countries to put killers in their midst on trial—preferably domestically—and the fifth to prove beyond doubt that the killings took place. The sixth was to bring out aspects of the truth that might otherwise remain hidden.
Like the hon. Member for Moray, I had read a great deal about former international military tribunals dealing with atrocities. I had personal reasons for doing that because my family was caught up in such events before I was born. I read of the way in which some of the
222WH
worst war criminals were sheltered after the war by countries that ought to have known better, were helped to get there by various organisations—including even some branches of the Roman Catholic Church—that ought to have known better, and were massaged by certain intelligence services that ought to have known better. There were cases that were not properly investigated, such as that of Mengele in Brazil. His family remained in regular contact with him from West Germany until his death—a contact that could easily have been found out if the West German Government had wanted to make the effort.
Like the hon. Member for Moray, I believe that there is a need for an international machine to cope with what he rightly called the worst crimes known to humanity. So far so good; however, this is the third debate on the subject in which I have participated, and it is the one that has made me most gloomy. In the first debate, I was extremely enthusiastic and in the second I was very enthusiastic, but was beginning to have doubts about the ways in which some people might regard the ICC as liable to interpret its work. In today's debate, I am becoming very concerned. If we are considering the worst crimes known to humanity, we should make sure that the ICC confines itself to those.
There are two ways of dealing with atrocities. There is the method that we have now: when the atrocities are sufficiently appalling, a special ad hoc international court is set up to deal with them—whether they be those perpetrated by the Nazis or the Japanese, or those that occurred in the Balkans or Rwanda—and only them. The disadvantage of doing it that way is that it takes a great deal of effort to set up such a court. There must be many borderline cases in which justice is not done because the countries concerned will not make the effort to set up a special court. That is the argument for having a standing court.
Unfortunately, it is beginning to dawn on me that there is a way in which the standing court could go badly wrong. Those doubts have been reinforced by some of the contributions that I have heard this afternoon. We know the saying, "The Devil makes work for idle hands." My concern is that a standing court, once set up, will look for things to investigate that might not come into the category that the hon. Member for Moray rightly defined as the worst crimes known to humanity. If a standing court is not to lose credibility, it should not be playing with definitions, as sometimes happens in domestic courts and even in quasi-legal inquiries. I heard talk of it possibly being appropriate for such a court to investigate the use of cluster bombs, but that would stretch the definition of what the court is designed to do.
I can foresee circumstances—I raised this during the debate that took place in 2001—in which there might be a danger of people trying to take a case to the international court about the fact that certain countries practise a policy of nuclear deterrence, on the basis that the threat of the use of nuclear weapons could be construed, in some bizarre way, as a war crime or a crime against humanity. We must recognise reality; we interfere with countries' sovereignty only in the most extreme and important cases in which the crimes committed are most dire. As someone who has proved myself, on two previous occasions, to be a friend of the idea of an International Criminal Court, I appeal to

223WH
Members present and to those who read the debate who want the ICC to work, as I want do, not to regard it as a tool for the creeping generalisation of some sort of world order of government. It should not be that. Its purpose should be to deal with the worst crimes known to humanity. If it confines itself to those cases, it will continue to receive cross-party support in this House.
2.56 pm
Mr. Michael Moore (Tweeddale, Ettrick and Lauderdale): The hon. Member for New Forest, East (Dr. Lewis) has made a perfectly valid case. I suggest that if the court were not properly set up and did not receive the right backing from across the world, none of his worries would come to pass. We shall, indeed, be in difficult circumstances if we get ahead of ourselves, as he may, perhaps, have been suggesting.
I add my congratulations to the hon. Member for Clydebank and Milngavie (Tony Worthington) on securing the debate. He has raised his concerns in various ways in the past—most recently in a debate on Europe in the Chamber—and it has been useful for us to have those concerns set out in more detail today. I look forward to the Minister's response to the points that have been raised, with which I have considerable sympathy.
Genocide, war crimes and crimes against humanity are all horrors of the present day in just about every continent on earth, but they have been a feature of our history for many centuries. The international community has set out the principles of law that should apply to us all, from the Geneva conventions to the United Nations charter. Those principles are complex, but the principle that civilised values should be shared, imposed and supported across the world is something with which few right-thinking people would disagree.
Since the second world war, there has been widespread recognition of the need to develop a justice system that is recognised around the globe and can give effect to those international conventions and laws. The purpose of such a system is not only to bring to justice those who commit offences but to act as a deterrent to those who might be tempted to follow suit and, importantly, to ensure that the victims of crime, their relatives and countrymen do not take the law into their own hands to get retribution. The failure to tackle the Nazis after the war—alluded to by the hon. Member for New Forest, East—the troubles of investigating the Rwandan genocide and, most recently, the creation of The Hague tribunal to deal with the former Yugoslavia have taught us different lessons about how we have coped, or not, as the case may be, with the problems that international law throws up. The hon. and learned Member for Dudley, North (Ross Cranston) rightly pointed out several of the shortcomings in the tribunals that exist.
Liberal Democrats were eager to support the International Criminal Court when it was created—while recognising such shortcomings and a desire to get rid of them—and we supported the passage of the legislation through the House. As we gather just before the judges are selected and the court begins its work, we should be celebrating. It is a fantastic achievement of
224WH
which the Government should be rightly proud. Instead, we find ourselves in considerable uncertainty as a result of the position of the US Administration.
We have always understood the American reservations. President Clinton signed the Rome statute but made sure that we were all aware that it would never be ratified. There is a world of difference between not ratifying the statute and actively trying to undermine it; unfortunately that is the US Government's present position. There are several reasons why the United States might be motivated to do that. One might be the profound issue of sovereignty, meaning that it does not accept that any body other than its sovereign courts can have jurisdiction over its citizens. That point might carry more weight if the United States showed slightly more respect for the citizens of other countries whom it alleges have committed international crimes. The people who are caught up in Guantanamo bay at the moment might like to pause and consider the irony of that.
Dr. Julian Lewis: For the sake of clarity, is the hon. Gentleman suggesting that what might or might not be happening in terms of prison conditions on Guantanamo bay could be the sort of circumstance that he imagines being examined by the International Criminal Court?
Mr. Moore: I was making a separate point. We do not want to be sidetracked into a debate on Guantanamo bay, but the rights and jurisdiction of those who are there is not best practice as we would enjoy it. The Americans should not be so worried about other jurisdictions when that is the case.
Mr. Savidge: Does the hon. Gentleman think perhaps that the ICC could be the ideal court to deal with people who are accused of terrorist and other offences?
Mr. Moore: It could be. There is a genuine debate to be had, but the core issue at this time is surely that we need to understand the motivation for the American action. I hope that the Minister will give us an insight into that. Attempts to sidestep the whole ICC by article 90 waivers and bilateral agreements are very worrying.
Surely at a time when we are, rightly, trying to exploit our special relationship with the United States, we should be persuading it to change its approach on this matter. Indeed, if we go back to the debate on Second Reading of the International Criminal Court Bill, the then Foreign Secretary, who is now the Leader of the House, said:
"I regret that the United States does not yet feel able to ratify a statute which it has signed…We will continue, as a friend and ally, to encourage the United States to join the International Criminal Court…the best way to do so is to show our own confidence in the court by taking part in it." —[Official Report, 3 April 2001; Vol. 366, c. 223.]
Surely that is not the same as being party to the bilateral agreements that will undermine the court.
Perhaps the Minister will make the European Union position clear when he responds because it appears that the Government are in something of a bind. They are committed to exploring and finding a bilateral agreement with the United States, but they are committed also to a set of guiding principles agreed on

225WH
30 September at the Council of Ministers that suggests that the draft agreements promulgated by the United States are incompatible with the ICC itself.
Given that there is the prospect of our signing a bilateral agreement with the United States, if the Government agree to give the Americans certain rights, the Government must accept some rights themselves. I ask the Minister whether the Government have now had serious second thoughts about the criminal court. If other countries approached us, would we consider bilateral agreements with them, too? Is our position that we shall actively seek to get exemptions of bilateral agreements with other countries?
The deferral of last year's application of the International Criminal Court was a compromise designed to avoid the ICC being stillborn. What is the Minister's assessment of the prospects of that process being resolved peaceably and effectively, leaving us, at the end of the deferral period in a few months' time, with an International Criminal Court that can credibly start to do its work? If the deferral period ends, and few countries have signed up to the bilateral deals that have been mentioned already, what is the Minister's assessment of what will happen next? It is an alarming prospect that we may find ourselves without an institution that has found cross-party support, as well as worldwide support.
At a time when the United States is making a serious case that those who commit horrendous crimes should be fully accountable in the international arena, its action is deeply damaging. Our Government's connivance with that is worrying. I hope that the Minister can resolve that issue for us this afternoon.
3.6 pm
Mr. Richard Spring (West Suffolk): I open by congratulating the hon. Member for Clydebank and Milngavie (Tony Worthington) on securing this debate on a subject of considerable interest that, although it was debated some months ago, perhaps must be looked at again. We are all interested to hear the replies to the questions put by the hon. Gentleman and by the hon. Member for Moray (Angus Robertson). I also take this opportunity to congratulate my hon. Friend the Member for New Forest, East (Dr. Lewis) on a clear and incisive contribution to the debate.
Hon. Members might recall that we opposed the passage of the International Criminal Court Bill at Third Reading because of its shortcomings, which we felt would cause considerable problems in its practical operation. Support was expressed for the principles behind the establishment of such a court. It is absolutely right in theory and in practice that the international community makes judgments about crimes against humanity.
The 20th century witnessed many bloody wars and saw genocide and crimes against humanity on a scale previously unimaginable. People internationally have a right to react to that. Many of today's conflicts, upon which I shall touch later, revolve around ethnic strife and tensions. Those tensions increase the potential for genocidal acts.
I shall recount a little of the history behind the establishment of the court, and the motivation underlying it. The international community, rightly
226WH
horrified by terrible crimes against humanity and the genocide perpetrated during the second world war, determined that the guilty should be brought to justice. The principle holds good today, as it did then; that those who commit such crimes should not—cannot—be permitted to escape justice.
Ad hoc tribunals that we have seen in the past may prove necessary again in the future. They can focus on a specific incident or issue and have the flexibility to address the actual circumstances of individual situations and crimes. However, the purpose of such trials must also be one of deterrence. It is open to question how effective such tribunals that are set up for particular cases will prove to be in that respect. They do not seem to have deterred Mr. Mugabe, for example, who, by anyone's standards, is certainly on the way to conducting himself with grotesque inhumanity.
However, while no one can dispute the value of bringing war criminals to justice, we continue to worry about the blueprint for the ICC and how it will work in practice. Concern is centred on a lack of protection for our troops, who are engaged in international operations and peacekeeping. To echo the comments of my hon. Friend the Member for New Forest, East, as it is currently conceived, the court runs the serious risk of becoming a political court. Despite expressing our concerns during the passage of the International Criminal Court Bill and tabling amendments to deal with them, the Government appeared unwilling to listen. The build-up to a possible war in Iraq puts the spotlight firmly on such matters.
It will come as no surprise to hon. Members that we are not alone in our concerns about the ICC and how it will operate in practice. Reference has been made to that this afternoon. The statute of Rome, which established the ICC in 1998, was signed by 120 countries. However, far fewer than that number have so far ratified it; I believe that 87 is the latest figure. The court entered into force in April 2002 as the 60th country ratified the statute on that date, but it is worth noting how many have not. We should question why that is so.
As we have heard at length this afternoon, the most notable country to have grave reservations is the United States. It has lead to President Bush's decision to "unsign" the statute. I can understand that country's worries, but it is not alone. Russia, China, India and Israel also have grave reservations and have not ratified the statute. That means that more than half the world's population is not technically covered and the serious concerns of many other countries have led to their securing opt-outs, such as France's seven-year opt-out. The worries at the root of those countries' reservations resonate the concerns of Opposition Members.
In today's world, peacemaking and peacekeeping play an increasingly important role, as they should do. Many countries torn apart by civil war and conflict are reliant on external peacekeepers to give them the stability that they need to rebuild their countries. Peacekeepers are provided by countries as an act of good will. As we pointed out during the Bill's passage through Parliament, at the heart of our concerns is the way in which the court could become a political court; a weapon that could be used by potential enemies to target British, American, French or other troops and officials who are behaving properly. The filing of charges in the court could leave them open to indictments for

227WH
legitimate actions in the course of their duties. The Government have failed repeatedly to secure protection for our troops in that regard.
Angus Robertson: Does the hon. Gentleman not agree that the use of political and diplomatic pressure to seek exemptions by one country runs the serious risk of politicising the ICC?
Mr. Spring: Countries have to make a judgment. For example, given its huge predominance of military and economic capability and its vulnerability, especially now, the United States is sensitive to actions against its troops. We can see that at every level. We must accept that reality and try to work with it. We are particularly concerned that the Government refused repeatedly to accept our amendment that was aimed at protecting our armed forces. Their broad stance—placing human rights law above the protection of armed forces—means that British armed forces will be less able in the future to fight effectively without fear of arrest. Most ironically, it damages the cause of human rights, as countries will not risk using their troops for potential peacekeeping and humanitarian work, as witnessed by America's threatened withdrawal last summer. The provision of troops is an expression of international good will by countries; good will that may well disappear if the troops become vulnerable. At all costs, we must avoid creating a situation in which it is difficult for law-abiding nations to pursue just action because their officials or soldiers—not those from countries that scorn all law—have to answer to such a political body.
The Minister is aware that if it proves necessary for military action to take place in Iraq, and if it is carried out without the backing of a specific UN resolution, British soldiers who are simply doing their jobs could face prosecution under the terms of the court. We supported from the outset the principle of bringing to justice war criminals and those who commit crimes against humanity. We still do. However, the issue is being distorted. My party's support in Parliament was conditional on the introduction of measures to protect our troops; a seven-year opt-out from jurisdiction over war crimes, greater protection for the armed forces and discretion for the Secretary of State with regard to requests for arrest and surrender.
I ask the Minister to clarify the Government's position on a number of key points. Does he accept that if the Government had adopted those measures, British troops would be better protected? Will he tell us once and for all what protection, if any, our troops will have from malicious prosecutions in the ICC? Now is an extremely important time to clarify the situation. Will he explain why the Government opted not to secure a seven-year veto from prosecution for our troops? He might argue now that a veto was not necessary. If that is the case, it was not the view taken by the French. Does he think that the French Government took an unnecessary step, or is it just another area in which our Government and that of France disagree?
What assessment has the Minister made of comments by Admiral Sir Michael Boyce that, in such circumstances, the rules of engagement might be changed to the point of giving those who do not adhere
228WH
to international laws first strike? Finally, how does the establishment of the court sit with the doctrine of preemption in foreign policy espoused by President Bush and supported by the Prime Minister?
This House, and our troops who are sent abroad on peacekeeping missions to defend our national interest, deserve answers to those questions, particularly at this most anxious time.
3.16 pm
The Minister for Europe (Mr. Denis MacShane): I congratulate my hon. Friend the Member for Clydebank and Milngavie (Tony Worthington) on having obtained this debate. He is right to insist that the House should debate the issue. There were debates in our Parliament leading up to the passage of the law establishing the International Criminal Court and its ratification, and we have heard some points reiterated today. I am happy to try, through normal parliamentary means, to discuss this sensitive issue with colleagues from all parties. It is not my direct responsibility, but I know, from many intense conversations that Ministers have had in the Foreign Office and from questions that have been asked in the House and in the other place, that the matter is important.
On the other hand, there has been a great deal of hypothetical questioning, which it is difficult to answer. I cannot guarantee what will happen; I am not a soothsayer. I know that the provisions of the ICC—this is an important point of debate with the United States of America—make it clear that countries have to undertake their own prosecutions against people accused of any of the serious crimes mentioned in the court's statutes. It is inconceivable that a British or American service person would not face the most relentless investigation and prosecution under British and American laws were he or she to be accused, in the course of a conflict, of any of the crimes mentioned, and I think that the same applies in the case of the other democracies. Let us be honest in admitting—I think of American servicemen, such as Lieutenant Calley after the Mai Lai massacre, who faced the severest sanctions because of such accusations—that the United States has a very good record in that respect. When it comes to motes and beams, I wonder whether every aspect of the post-1945 wars of decolonialisation in which the European powers were severally involved did not contain instances that were not perhaps investigated as fully as the misdeeds of which American servicemen were accused in Vietnam and in other conflicts.
Mr. David Drew (Stroud): Does my hon. Friend agree that one of the main reasons for the Americans' unwillingness to sign up to the ICC is that their mentality is to protect their service people at all costs? We all know that American service people committed criminal acts in this country, only to be whipped home before they could be subject to our criminal justice system.
Mr. MacShane: My hon. Friend is perhaps taking us a little far from the International Criminal Court. We are talking, as the hon. Member for New Forest, East (Dr. Lewis) forcefully reminded us, of the worst crimes against humanity, not infractions, serious though they may be, that can be dealt with by military or other

229WH
discipline. The fundamental problem, if my hon. Friend will allow, is of course that although criticisms are made of the current Administration, under the American constitution it is the US Senate that is required to ratify treaties. In over 200 years of existence, it has shown a great reluctance to do so.
Presidents may sign or unsign but there was never, in anybody's judgment, a majority on the Hill for the ratification of that treaty. That is why I say now, as I have said in other debates and publicly, that we need to engage with American elected representatives. We need to engage with American public opinion before the President acts to unsign, rather than protest when the Administration, reflecting what they suspect is the view of their own legislature, cannot accede to what we would like to see happen. I had very good conversations with the executive director of Human Rights Watch, Mr. Ken Roth, who protested, much as some hon. Members have, about aspects of our Government's discussions with the United States and with our other partners on this issue.
I must say pretty bluntly to Mr. Roth that, as an American citizen, he should persuade his fellow citizens, as we have had to persuade our fellow citizens, to support the ICC. He should persuade his elected representatives, as we have persuaded ours, to support, legislate for and ratify the ICC. I found it frankly a bit much to be lectured in the Foreign Office by Mr. Roth—and I have enormous respect for Human Rights Watch—when he should be in New York or in Milwaukee or Peoria persuading his fellow Americans that this is a good and great institution.
If I may, I shall quote from an article in the excellent magazine "Renewal". It was written by the noted American political scientist and philosopher, Mr. Michael Walzer, who is on the progressive left of American politics. He says:
"Consider the issue of criminal justice: the American refusal to join the International Criminal Court…I think that the Bush administration's policy is wrong. But it is not crazy or incomprehensible"
if understood roughly along these lines: when war is just and necessary as in the Gulf in 1991 or in Kosovo in 1999, it is the United States that bears the brunt of the fighting. According to the same article, our European allies oppose American unilateralism only this far:
"they want a role in deciding when war is just and necessary, but they are content once a decision is made to leave most of the fighting to American soldiers. Americans are supposed to accept the risks of war, and now they are supposed to accept the legal liabilities. It is American soldiers, and hardly anyone else, who will be accused of war crimes—and they will be accused both when there are legal reasons to think that crimes have been committed and when there are political reasons to pretend that crimes have been committed".
That is a long quotation to read into Hansard, but that was a member of the American liberal community rightly stressing the concerns that must be felt. The famous Kipling poem about Jolly this and Jolly that reminds us that when we wants him to do the fighting, we can call on him.
Mr. Moore: I think that I can speak on behalf of the Chamber and say that we always leave debates in which the Minister is involved much better informed, and we
230WH
shall do so again today. However, will he tell us the Government's position on bilateral deals and how it fits with the EU guiding principles?
Mr. MacShane: I am happy to do so, but it needs to be set in context. It was pointed out earlier that India, the world's largest democracy, has not only refused to ratify the ICC but has now signed a bilateral deal with the United States. France, one of the leading democratic partners in Europe, is insisting on article 124, which allows a seven-year opt-out. When I discussed that with members of the Administration in Washington, France's action was thrown back in my face.
It is precisely because we need to make the court work that simply to say that we are right, that we are the only ones in step and that everyone else is wrong and should conform with us, is not sensible international policy. We understand the US objections to the court: given that country's role on the world stage, it is particularly open to the threat of frivolous or politically motivated prosecution. We do not share its fear of the court, however, because the Rome statute contains sufficient safeguards to prevent it, not least the principle of complementarity.
Mr. Savidge: Will the Minister give way?
Mr. MacShane: No, I cannot. I must get these points on the record.
That is why we worked hard last July to achieve UN Security Council resolution 1422, which allowed the US to continue to contribute to peacekeeping in Bosnia without flouting the ICC.
In reply to the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore), I can say that the resolution allows another 12-month deferral when it comes up for reconsideration. The US is seeking more permanent solutions. It is seeking bilateral agreements under article 98.2 of the Rome statute; and it is seeking to work under the statute to protect what it sees as its own service personnel.
Tony Worthington: Will the Minister give way?
Mr. MacShane: No, I cannot. I am happy to write to my hon. Friend. He asked a long list of questions; if I had done nothing but answer them, I could not have set matters in context.
The original proposal from the US for an agreement to exempt all its citizens from the jurisdiction of the court would be inconsistent with article 98.2 and consequently the statute. With our EU partners, we have drawn up guiding principles, providing that a solution to the problem should not confer immunity for US citizens; that there should be no exemptions for nationals of a state party, such as the UK; and that there should be exemptions only for citizens "sent" or mandated by their Government. We believe that those principles, which are consistent with article 98.2, provide the basis for entering into bilateral agreements. It will be up to each EU member state to decide what to do.
The British Government held a round of discussions with the US on 17 October 2002. They were of a purely preliminary nature, and the US Government have not

231WH
come back to us; they have said that they would reflect on them, but they have not yet reverted to us. The US held similar discussions with other EU partners, particularly Austria, Italy and Spain.
I cannot answer my hon. Friend the Member for Clydebank and Milngavie on whether there will be a bilateral agreement; but I can say that the House will be fully informed. I do not know whether the US is willing to amend its laws to fit in with the ICC statute. I am not an American legislator. I can say, however, that witnesses can appear before the ICC, but that will be the decision of the witnesses. If a Government choose to impose a court order preventing a citizen from participating in an ICC hearing, it will be a matter for that Government.
I agree with my hon. and learned Friend the Member for Dudley, North (Ross Cranston) on the contribution of lawyers. We are creating an international legal system and we are getting there with some difficulty.
This debate reflects real difficulties and we should cease name-calling and try to work our way through the problems. The British Government want to see the ICC established and working. However, we must bring the rest of the world with us. It is no use standing alone with some of the democracies of the world, saying that everyone else must bend in with our laws when some countries have not ratified. The most important contributor to safeguarding the peace and security of the world has concerns that need to be addressed.

Landfill Tax
3.30pm
Mr. Barry Sheerman (Huddersfield): It gives me great pleasure to introduce a short debate on the landfill tax credit scheme and environmental taxation, and even greater pleasure to know that my questions will be answered by the Economic Secretary to the Treasury. He and I are old friends. Although it is enjoyable chairing Select Committees—I am Chairman of the Education and Skills Committee—some of us are quite glad to escape that role to speak about something else that we believe in.
I must declare an interest. Some six years ago, before the landfill tax credit scheme was introduced, I started an environmental organisation with a professor and a lawyer, which is a strange combination. We started a not-for-profit environmental group—Urban Mines Ltd.—that is now one of the largest in the country. Instead of viewing the waste flowing from our towns and cities as rubbish, we see it as a new raw material to be mined and used again—rather than digging holes in the earth's crust to take virgin material.
Over the past six years, our company has grown to employ 30 people. We have a portfolio of innovative projects and have developed a totally new methodology for identifying brownfield land and giving it new use. We have introduced a range of new businesses that use waste as a raw material—successful private sector ventures that make a profit and employ people on good wages right across the board. Our most ambitious task is to build sustainable growth parks, which are rather like themed industrial parks on which clusters of small, medium and large industries use waste as their raw material. That is the background of my special interest and explains why I am concerned about landfill tax credits.
Mr. Bill O'Brien (Normanton): Will my hon. Friend give way?
Mr. John McWilliam (In the Chair): Order. May I check that the hon. Gentleman has the permission of the Minister and the hon. Member for Huddersfield (Mr. Sheerman) to intervene?
Mr. O'Brien indicated assent.
Mr. Sheerman: I give way.
Mr. O'Brien: Does my hon. Friend include in his remarks about his own programme all the other agencies that have grown out of the landfill tax credit? They are doing great work and offer tremendous value to communities. They will be hit hard if the programme described by the Chancellor goes ahead.
Mr. Sheerman: I would be happy to include those agencies. I know that my hon. Friend, who is one of the chairmen of the all-party group on sustainable waste, is concerned about the matter.
As you know, Mr. McWilliam, anyone who holds on to the job of Select Committee Chairman for even a short period becomes one of the most knowledgeable people on the subject. I have been Chairman for only

233WH
two and a half years, but all the relevant Ministers have changed in that time, apart from one whose ministerial responsibility has changed from early years to higher education. All the others have disappeared, including the present Economic Secretary. I have stayed in the field of education. The great benefit is that one learns and remembers a lot about the subject, including where the bodies are buried.
I have been involved in the sector of the environment relating to waste for a long time. I have had the role—which I have always been positive about—of trying to educate Ministers from the Treasury and elsewhere about an industry about which they know very little. Treasury Ministers usually stay in their posts for only a year or 18 months, but I have to hand it to my hon. Friend the Minister for being the fastest learner of any Treasury Minister with whom I have dealt. He actually understands the subject. He has been a very good and fast learner, so some of the remarks that I will make today are about the Government rather than him. The Government could do better. If they had listened to the people who know the industry and sector well, the proposals that the pre-Budget information suggests might be made in April's Budget would be better.
It is unsurprising that some people are not interested in waste. The Minister's constituency borders Rotherham, which has achieved the magnificent target of 5 per cent. for recycling—although that has now slipped back to 4 per cent. The Prime Minister's constituency is Sedgefield; that has achieved 5 per cent. The area that the Chancellor represents has achieved an appalling 1.7 per cent., which is probably the worst percentage in the country. One might say that it is no wonder that some of the significant actors in this House do not really know how much demand there is for changes in this practical side of environmentalism.
I like this area of environmentalism because it makes a difference at the practical level: I will leave the blue-sky and long-term thinking to people such as Jonathan Porritt. I have always concentrated on this area; if we crack what we do with waste by making a real difference in recycling and the use and the hierarchy of change, which is recommended by all the enlightened people in the environmental sector, we will make a practical difference that ordinary people can participate in. Schoolchildren, their parents and people in communities will be able to improve their locality and the global environment in a practical way—rather than in a highly theoretical way that sometimes puts them off. Sometimes, when someone on the news says that the problem is all about global warming, the people who are listening think, "What can I, as an individual, do about that?" Ever since I became involved in this area, I have responded by saying, "Here is a practical way to do something that will change the planet." That is where I am coming from.
I have also tried to educate the Government. An express train from Europe is hammering down the tracks and it is bringing regulation that is to be welcomed, but that has a dramatic effect on our lives and industries. There are the statutory targets; local authorities must meet very rigid and demanding targets for recycling over the coming years as a result of the European Union landfill directive. That is an important directive, but it means that local authorities have to make superhuman efforts to do something to their waste
234WH
other than merely dump it in a hole in the ground. Most of them will not meet their targets, and the European Commission will impose enormous financial penalties on them, which will be a great burden on the British taxpayer and council tax payer. That will have a significant impact on our national life. As is suggested by the figures that I have quoted for Rotherham and for the constituencies of the Prime Minister and the Chancellor, the targets will be very difficult to meet.
The end of life vehicles directive will be introduced in September 2003. That is another very important regulation that will make a great difference to people's lives. It will be very expensive to achieve what it demands—£75 million is a conservative estimate of the cost. Following that, there is the waste electrical and electronic equipment directive: every piece of electrical and electronic equipment will have to be taken back by the retailer or the manufacturer. Then there is the hazardous waste directive, which people in the commercial waste management sector—who should know about this—say will result in billions of pounds of expenditure by the public or private sector. Both of those sectors will probably pay for some of that.
I have tried to alert the Treasury to all of this. I saw the Chancellor's chief economic advisor, Ed Balls. I have met a succession of Ministers in the Treasury to try to inform them about the scale of the problem and about how much it would cost the country if we do not act now. I have put two proposals to Ministers.
A strategic waste authority should be set up to bring together all proposals and to give us direction on the different organisations that are spread all over the place, which do nothing to help joined-up government. I see no action on that so far. The responsibility is being left with local authorities, most of which have a poor record in meeting any targets. In addition, the Department for Environment, Food and Rural Affairs does not have a good reputation in this area, either in leadership or management. The waste sector is the Cinderella of the Environment Agency, mainly because it does not have the resources to tackle the problem in a significant way.
The country is running into real problems with waste and in meeting the European regulations that will come towards us. A key element in tackling the waste issue was introduced by the Conservative Government in 1996–97. Overnight, the landfill tax increased the cost from zero to £7 per tonne. Historically, 20 per cent. of that tax has flowed into a fund called the landfill tax credit scheme, which goes to a range of environmental initiatives, all of which are worth while.
I know about those initiatives and schemes and about how they have worked since they started. They take time to develop, to mature and to become effective. I have seen them operate from the early days, when most of the money was spent on community and environmental improvements close to landfill and other areas where waste blights the lives of citizens. Having done much work in such areas, the schemes moved on to other purposes, including the remediation of brownfield land and educational priorities in terms of the environment, and to many other things. When the Government suggested that there should be another category and that more money should be spent on recycling programmes and sustainability, the organisations that

235WH
disburse the money moved quickly to ensure that 65 per cent. of the landfill tax money flowed in that direction. At the moment, that sum is about £150 million.
The pre-Budget proposals are that £50 million should be retained in local environmental projects, but no one is clear about what those will be. Will those be the environmental projects that have already been going on and which are the most criticised part of the scheme? Why is the £100 million—two thirds of the money from the landfill tax credit scheme—going to be sucked into the public sector, into DEFRA, or to DEFRA's child, the waste and resources action programme? That will do two, very damaging, things.
First, that will withdraw the money from a large range of community, national and regional organisations that have effectively and magnificently tackled recycling and issues regarding the practical sustainability agenda. The Government underrate the effectiveness of such groups.
Secondly, that would kill the ability to use the £100 million for a multiplier effect. It has been assessed that the best schemes can, through match funding, European funding and many other routes, multiply by four or five times the original investment from the landfill tax credit scheme, which is certainly true of my group, Urban Mines Ltd. Such schemes can do that because the money is presently deemed to be private—not public—sector money, so it can be used for match funding, as a multiplier and for leverage. That will go and all that will be left for the Treasury is £100 million. What a strange way to go about things. That must be the worst investment since Jack got the beans and threw them out of the window. The Government are throwing the beans out of the window, but nothing will grow. The £100 million will now be thrown at local authorities, which will enable them to do nothing. All of the really innovative groups throughout the country will cease to get those funds and will gradually go out of business.
It is unclear whether there will be any transitional arrangements or any of the 3,000 to 5,000 jobs will survive. Not only jobs but innovation and partnerships will be lost. Things have worked best when there have been creative and innovative partnerships between universities, green groups, non-governmental organisations and the private sector. I wish that we had the American system that would allow me to read into the record. We have seen a number of magnificent proposals, such as Recycle IT in Norfolk, Cheshire's schools waste action club, Waste Watch's landfill tax case studies, the national industrial symbiosis programme, and the Furniture Recycling Network. There have been dozens and dozens of schemes, some worth £8 million. There has been tremendous innovation and that has had a great effect on our environment.
Unless the Government change their mind, we will lose that environmental innovation and the people who have been brought on—the young staff and the undergraduates and post-graduates, people who have been attracted into that part of the public sector. John Smith said that there are some jobs that are better than simply going into the City of London and making a lot of money. The sort of people who work in the
236WH
environment are the very people who want to make our country a better and more sustainable place in which to live.
I am worried about what the proposals say about the Labour Government. I have been a Labour politician for a long time; I still believe profoundly in the things that brought me into politics. One of those things is that a Labour Government will be more in touch with ordinary people, with schoolchildren and their parents, and with local communities and grass-roots organisations. However, when I talk to Treasury Ministers, I see that they have a fear of understanding community groups. They say, "Oh dear. They're not a bureaucracy. I can't get the Audit Commission to look into them. Who are they accountable to? How do I assess them? They're not local government. They're not a quango."
There was a disgraceful exhibition from the Dispatch Box during environment questions before Christmas, when the Minister for the Environment told me that the reason for some schemes disappearing was that there had been an element of "dodginess". However, over many years, only eight appeals have been made to the appeals tribunal to do with any wrongdoing. I have picked up on only two cases of any kind of fraud.
This may be unkind, and I am not suggesting any responsibility, but the Minister, who is a good friend of mine, will know that individual learning accounts are an example of a Government scheme that went wrong. My Committee looked into that in some depth. Millions of pounds disappeared and nobody has yet been successfully prosecuted. If one wanted to look for dodginess in a scheme, one would look there, or at a number of other schemes that the Department for Environment, Food and Rural Affairs has promoted. There has been dodginess around a number of Government programmes. I urge the Minister to be honest and not to discard schemes for any reason such as that. If he is going to say that sort of thing, will he please stand up, be honest, and appraise any schemes in an independent fashion—or get an independent body to do so?
My sadness is that, if we are not careful, we will lose an amazing resource in the country and an amazing number of people who do a good job for the environment. If that happened, the message would go out that the Labour Government did not know how to connect with ordinary people in innovative community groups because they are small, because they are NGOs, or because they are green groups. Such groups are difficult to understand and to put into a tidy category. It is difficult for people at the Treasury to get their heads around them. However, I urge the Minister to try to do so.
3.48 pm
The Economic Secretary to the Treasury (John Healey): I congratulate my hon. Friend the Member for Huddersfield (Mr. Sheerman) on securing this debate, which I welcome. Parliament is sometimes short of experts but my hon. Friend's expertise in this area is widely acknowledged, as is that of my hon. Friend the Member for Normanton (Mr. O'Brien). We have with us the current chairman and secretary of the all-party group on sustainable waste.

237WH
The Government, to reflect the interests of the group to which my hon. Friend the Member for Huddersfield belongs, are committed to a sustained approach to waste management as an essential component of an environmentally sustainable economy. We currently place too much reliance on landfill, which adversely affects the environment through greenhouse gas emissions, water pollutions, the effect on transport and visual intrusion. We give too little priority to recycling and re-use, and arguably put too little emphasis on other methods of waste disposal.
The reforms outlined in the pre-Budget report, which is the subject of this debate, are only the first of the necessary actions that the Government are taking to try to change waste management performance. Between now and the Budget, an interdepartmental ministerial group that I shall chair will co-ordinate plans on waste policy delivery across Government. Despite what was said by my hon. Friend the Member for Huddersfield, we are acting decisively in view of the challenges we face with waste in the UK. Some, like my hon. Friend, think that they detect a lack of priority and urgency in the attention given to the issue. I hope that the work of DEFRA and the waste and resources action programme—WRAP—and the decisions and long-term signals on landfill tax in the pre-Budget report, as well as the work of the ministerial group and the reform of the landfill tax credit scheme are strong evidence to counter that criticism.
In the pre-Budget report, the Government announced that the standard rate of landfill tax would increase to £35 a tonne in the medium to long term. The current annual escalator of £1 a tonne will increase to £3 a tonne from 2005–06, and the tax will continue to increase by at least that rate thereafter. A clear signal that the tax will ultimately reach £35 a tonne will provide the necessary stimulus for the sort of investment that my hon. Friend is talking about, although we must take account of the often long time taken to develop waste management capacity. The pre-Budget report also made it clear that the measure is to he revenue neutral to business. The Government are considering a range of options for recycling revenue, and are working through some of the issues with stakeholder groups. We will announce our conclusions around the time of the Budget.
Change is always uncomfortable; it creates uncertainty. However, no one can claim that change is unexpected, particularly not in regard to the landfill tax credit scheme. In March 2001, the Select Committee on Environment, Food and Rural Affairs, of which my hon. Friend the Member for Normanton is a distinguished member, reported on delivering sustainable waste management. That Select Committee described the LTCS as providing
"a convoluted and, to date, ineffective method of funding sustainable waste management."
It described the scheme as a "charade" and recommended that it be abandoned altogether.
My hon. Friend will also know that the National Audit Office examined the scheme and pointed out that the operation of the scheme
"makes external examination of the value-for-money achieved by the scheme difficult for anyone to assess."
238WH
My hon. Friend stressed several times the effectiveness of the scheme, but when the Public Accounts Committee reported in July last year, it said that there were
"complex administrative and oversight arrangements, a lack of overall accountability for the Scheme and a lack of transparency"
and that the scheme contained
"no arrangements for evaluating the success of individual projects or of the Scheme overall."
Although strictly speaking the funds flowing through the scheme are classed as private, rather than public, spending, the money is essentially tax revenue forgone. Consequently, it is the Government's responsibility and is in the public interest to ensure that the money is spent in the best possible way. It would have been wrong to take such weighty criticisms lightly.
Between April and June last year, the Government consulted on the future of the landfill tax credit scheme. Rather than abandoning the scheme altogether as the Select Committee urged, the Government recognised that, as my hon. Friend points out, the scheme has supported many worthwhile community and environmental projects that are not connected with waste. Those account for around one third of current landfill tax credit scheme spend. Consequently, the Government will continue to make available approximately one third of the funding that currently goes through the scheme—around £47 million a year—for spending on local community environmental projects. The figure of £47 million will be kept broadly constant in real terms, which will ensure that the current level of support for such projects is maintained.
The Government recognise the strength of the criticisms of the Public Accounts Committee and of the Committee on Environment, Transport and Regional Affairs. Although the scheme supports a range of worthwhile waste projects—my hon. Friend's company Urban Mines is a good example of this—the current funding arrangements do not deliver the strategic and coherent approach to waste management that is needed.
I am sometimes asked what I mean by "sustainable waste management". I have some bottom line concerns. One is waste minimisation to tackle municipal waste growth. That is currently at 3 or 4 per cent. above gross domestic product and costs an additional £70 million a year to the taxpayer. Another concern is about diversion from landfill, and, in particular, to boost the current pitiful rate of 11 per cent. We want to use the additional spending to affect the levels of such activities.
The change that my right hon. Friend the Chancellor of the Exchequer announced in the pre-Budget report in November will take place in April, reflecting the imperative to improve rapidly the management of waste. However, taking note of my hon. Friend's arguments, I recognise the need for those currently involved in the scheme to be able to plan ahead.
In the representations that I have so far had, a range of concerns were raised, some of which are entirely understandable, whereas others are entirely unnecessary. There is no need for landfill operators to stop allocating funding now. Customs' advice to the landfill operators and environmental bodies before Christmas made it clear that funding from tax credits under the current scheme can still be allocated to waste projects until the end of March. Beyond the end of the March, that funding can continue to be spent until either

239WH
the projects are complete or the funding allocated is spent. The LTCS successor scheme will continue to provide funds for worthwhile community environment projects that do not fall into waste management categories. For waste projects currently funded by the scheme, there are challenges during such change. I have no wish to see good projects go to the wall. I am therefore analysing the transitional challenges that my hon. Friend talked about, to see what support may be appropriate from the public spending stream post April.
I am also committed to taking the decisions necessary to give the greatest and earliest certainty possible, as those involved with the changes plan for the period ahead. That will mean confirming the new ceiling to which landfill operators can claim tax credits as a percentage of their landfill tax liability, and outlining plans for continuity of contributions to support waste projects that are up and running. It will also mean setting out the basis on which prospective waste projects that contribute significantly to our sustainable waste management strategy will be able to draw on the funding reallocated from April to public spending.
We have more work to do. I pay tribute to the co-operative approach that Entrust and the distributive environmental bodies are taking in their work with my officials. I hope to make the decisions and announcements soon. Beyond that, we shall consult the many interest groups on the ways to meet the more serious criticisms that have been made of the landfill tax credit scheme in the operation of the LTCS successor scheme. I aim to set out any plans for reform on a budget timetable.
It is the Government's responsibility to ensure that the substantial level of funding currently going through the landfill tax credit scheme is used as effectively as possible, particularly in waste management. We believe that the reforms will help us to do so. Having heard my explanation of the changes, of the issues that we are currently considering, of the decisions that need to be taken in short order and of the decisions that we shall take at the time of the budget, my hon. Friends the Members for Huddersfield and for Normanton will, I hope, be persuaded that, rather than losing the innovation and badly needed impetus that my hon. Friend the Member for Huddersfield talked about, the reforms—the rise in the landfill tax rates, the successor landfill tax credit scheme, and the other work, some of which we detailed in the pre-Budget report—will improve the desired objectives.
Mr. McWilliam: Order. Time is up.
Before I call the debate on education and prisons, I inform the Members concerned that at least one, and possibly two, Divisions are likely. When the Division bell goes, I shall suspend for 15 minutes. If during that 15 minutes a second Division is called, that suspension will be for half an hour.
4 pm
Sitting suspended for a Division in the House.
4.19 pm
On resuming—

Education (Prisons)
Mr. Mark Oaten (Winchester): I am delighted to be able to start the Adjournment debate. When the Division was called the Minister and I thought that we might be saved by the bell. However, we are here and I shall be as brief as I can.
The debate is important and provides an opportunity to discuss an issue that is rarely discussed: what takes place in prison, and especially education in prison. The debate comes at a time when there has been much talk about being tough on criminals and about whether we should send burglars who are first offenders to jail. It also comes at a time when the Government are looking into reforming and changing the criminal justice system and when figures show that we have the biggest ever prison population—more than 70,000—and all projections suggest that that will increase.
Debate often takes place in the tabloid press about who would be tougher on criminals and why we should lock people up in prison. However, the question of what we should do with folk after they have gone to prison is often lost from the debate. We have to question why people go to prison, and punishment is an important aspect of that. However, we need to focus much more on other aspects and on the role that prison can play. Education is a vital part of that process, but it does not make good tabloid headlines. I accept that victims of crime who have just had their house burgled—or worse—do not want to hear politicians talking about providing more education for prisoners. They want to hear tough language about locking people up and throwing away the key. I argue that the tough thing to do is to improve the quality of education in prisons, because that is likely to have a greater impact on reducing crime in the first place.
I hope that the debate is topical, because I understand that the Government are considering a major report commissioned by PricewaterhouseCoopers, which examined education and the reforms that they want to make. I hope that the Minister will comment on the Government's early thinking about how they plan to respond to the report and the time scale in which they will do that.
May I refresh the Minister's memory with several harsh facts and realities about the Prison Service? Home Office statistics show that 60 per cent. of prisoners need help with basic skills. That can be further broken down: 50 per cent. of prisoners lack level 1 numeracy, which is the equivalent of an 11-year-old's achievements; 66 per cent. lack level 1 reading and 81 per cent. lack level 1 writing. There can be no greater indictment than that. We have failed prisoners and the prison system. Those figures suggest to me that only 20 per cent. of prisoners would be able to fill in an application form on release. The rest would be incapable of filling in basic job application forms after leaving prison. Moreover, 49 per cent. of male prisoners and 71 per cent. of female prisoners have no qualifications at all. To put it bluntly, there is little else for prisoners to do in prison. We have a captive audience, but we are missing an enormous opportunity to tackle the problems that those figures highlight.
Why does that matter? It matters because prison is clearly not working. Fifty-eight per cent. of prisoners released from custody in 1997 reoffended within two

241WH
years. We know that education can help to tackle that problem. The Correctional Services of Canada conducted research that suggested that vocational and basic skills training could cut reoffending by 12 per cent. That would have an enormous impact on reducing the number of crimes in this country.
What do we need to do and how can we improve the present situation? It is not all doom and gloom, because positive things are happening. I am especially taken with the work of the Prisoners' Education Trust—I met representatives of that charity a couple of months ago—and that is why I secured the debate. The trust does wonderful work in the prison system. An investment of over £200,000 a year has helped to make 852 educational awards this year. Its schemes operate in 75 prisons throughout the country. Of course, that is just one small charity, but several other charities are working in the field. However, I am sure that the Minister will agree that none of that work can replace direct Government action.
We need the Government to do several things. I would like them to produce more figures and data on the impact that education can have on preventing reoffending. I have mentioned statistics from Canada, but I wonder whether the Minister would consider commissioning work in this country so that we can make the case that more education can help to reduce reoffending. We also need a major programme of reform and investment. The PricewaterhouseCoopers study is a good start, and I hope that the Minister will tell us when the Government intend to respond to some of its ideas. I also welcome the 50 per cent. increase in funding—to £87 million—for education in prisons. A large proportion of that—420 million—comes from the capital modernisation fund and is earmarked for better facilities. I welcome that. However, it is all very well having a spanking new building and computers, but unless the resources are available to enable staff to bring them to life, the money will have been used ineffectively.
The Government have recognised that they need to tackle the problem of the 60 per cent. of prisoners who have no skills, but they must also focus on the other 40 per cent. They need to ensure that the focus is not only on basic skills, but on trying to get much more out of people. The Government could learn a lot from the current work being undertaken by charities. I should be grateful if the Minister would give us his thoughts on how the Government could work with the charitable sector to make a difference, because the charitable sector gets to parts that the Government find it hard to reach. It has introduced considerable innovation, from which the Government could learn. For example, charities have considered ways of focusing education on the individual needs of each prisoner rather than trying to serve the system as a whole.
We need to examine how education is provided, physically, and the day-to-day problems in prisons. For example, there are difficulties in escorting prisoners to lessons. Sometimes, education is available but there are no prison staff to take prisoners to classrooms. Prison officers are currently under pressure, so they understandably have other priorities. Unless we make education a core function of the Prison Service, it will always be knocked down the list in a busy, pressured prison.
242WH
Education in prisons is not joined up. There is an artificial divide between some of the vocational services and training provided by prisons, which is very effective as skills are often taught in a workshop environment, and the basic skills and academic education. It makes no sense to have the two run by separate organisations, at different times. Other incentives work against education. The prison pay system allows prisoners to earn money by working, for example, in prison kitchens, but there is no financial incentive for prisoners to take an education course if that course clashes with the opportunity to earn money. That is wrong.
There should be a system of national entitlement to education for prisoners. Such a system has been laid down for young offenders by the Youth Justice Board, but with only one in five prisoners currently involved in education and about 60 per cent. not having access to any form of education, it is clear that the system is failing adult prisoners. Will the Minister tell us whether the Government are prepared to make a similar commitment to give adult prisoners full access to education?
Another difficulty is that the curriculum is inflexible. We need to examine the range of courses that are available and to be more creative about the courses on offer. We also need a system that allows a prisoner who has already started a course at one prison to continue with that course if he is moved to another prison or leaves prison. At the moment, if someone is moved to a prison nearer to their home or to an open prison all their coursework is lost and wasted and they must start again. Worse still, an individual will clearly not want to remain in prison in order to complete a qualification, but the downside of being released is that that person will be unable to continue their education.
We need to reconsider how education in prisons is funded, so that money follows not, in this case, the patient but the prisoner, and so that we can track a prisoner, wherever they are and however long their sentence. At the moment, there is an enormous disparity in the range of money that prisoners receive to help with education. From a parliamentary answer to a question that I tabled a couple of months ago, I learned that the amount of money spent in Wandsworth is £257 per prisoner, whereas in my constituency of Winchester it is £576 per prisoner, and in Wetherby the figure is £2,416 per prisoner. I do not know what they are doing in Wetherby. Clearly, we need to tackle some of those disparities, but not by dragging down the money spent in Wetherby to give more to Wandsworth, because some of Wetherby's educational facilities would be lost.
The report by PricewaterhouseCooper examined different banding according to sentences. A certain amount of money could be allocated to somebody with a sentence of less than a year, an equivalent amount for sentences between one and four years, and a greater amount for those with sentences of more than four years. There is some merit in such a system, and I should welcome some early thoughts from the Minister on that.
All such issues require a change in the way that the process operates at the moment. I understand that February 2004 is when all the tenders for providing education in prisons are due. I am concerned that the Government may pick up on recommendations from PricewaterhouseCooper and try to rush them through, which would cause confusion in the re-tendering process

243WH
for contracts in February 2004. How does the Minister plan to introduce those changes? It may make sense to change the re-tender date to allow a longer period for some of the changes to be implemented to avoid chaos in the system. If not, when the new contracts come through, a new system of work for education in prisons should be clearly put into practice at the same time.
In the limited time available, I have raised a number of issues and put a number of questions to the Minister to tease out from him what priority the Government give to such matters, and particularly to find out whether they intend to pick up on the recommendations of PricewaterhouseCooper. It is a Cinderella service. It does not attract tabloid headlines, and it is difficult to communicate with the public about it. If the Government want to be tough on crime and tough on the causes of crime, I hope that they recognise that education is not a soft option. It is a seriously tough option to improve the quality of education in prisons. If that were done, it would tackle the reoffending rate and make prisons work more effectively, which has to be in everyone's interests.
4.32 pm
The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): I congratulate the hon. Member for Winchester (Mr. Oaten) on securing the debate, and I am delighted to hear him adopt the new Labour mantra of investment and reform. Given his contribution to the debate, we agree on a tremendous amount. I will take into account some of the positive suggestions that he made as part of our consideration of the PricewaterhouseCoopers report. I share his view that a more coherent approach to the education and training of offenders, supported by increased investment, is absolutely essential. That should be seen as an integral part of the fight against crime, and provides us with a unique opportunity—I think the hon. Member made this point—to break the cycle of offending behaviour that is so prevalent among those for whom the criminal justice system is, in effect, a revolving door.
There is considerable evidence that prison education makes a significant contribution towards reducing reoffending, and that it could do more. The hon. Gentleman referred to the skills level of more than half the population; let us not exclude them from not only the labour market and further learning, but from integration into the wider community. Half of men and two thirds of women entering prison have no qualifications. The estimated cost of reconviction to the criminal justice system is an average of £13,000. For many offenders—I think the hon. Member will have seen this for himself, as I have recently—prison is their first experience of having the chance to gain a skill, which could be rebuilding a car engine or developing better communication skills. For many, it is the first opportunity to develop any kind of skill or qualification whatsoever.
I was certainly impressed by my conversations with the staff at Preston prison, which I visited recently; in circumstances that are not always easy, they are doing a tremendous job. They are being innovative, imaginative and as supportive as possible in their education and
244WH
training programmes. I also had some interesting conversations with some of the prisoners. One told me how eagerly he had learned to read and write in prison. Another said that he was looking forward to taking up a college place on release, having gained a number of credits in prison; it meant that when he left prison, the college course would form part of his resettlement programme.
As I told the Education and Skills Committee recently, it would be wrong to say that Preston was a typical prison. A lot of tremendous work is going on there. However, although there are examples of excellence across the prison estate, we have a long way to go before we can turn good practice into standard practice; a point made by the hon. Gentleman. My colleagues across Government—particularly in the Home Office—and I are fully committed to ensuring that we take a joined-up approach to prison education; that is equally important. That commitment has to be supported by investment.
The hon. Gentleman will be reassured to hear that a record level of investment is going into prison education. Core funding will increase from £65 million this year to £125 million by 2005–06. With that funding and the capital investment that we have already begun to put into the system, I aim to equip prisons with the capacity to deliver a tailored programme of learning—another point made by the hon. Gentleman—from induction and assessment on arrival in prison to resettlement in the community on release. There is no point in achieving success with people in prison if it is not consistently followed through on release.
The hon. Gentleman knows that I am also considering the PricewaterhouseCoopers report, which provides a number of options for achieving that aim. It is accepted that we have to move from the present inequality of funding between prisons of the same type; there is no logic to that, other than historical spending patterns. We also seek to create delivery arrangements that support high-quality educational provision. However, as well as quality, we must have the capacity to develop provisions that are relevant to individual needs and match individual starting points. We are completing consultation on that report, and we will consider the hon. Gentleman's comments.
Mr. Oaten: Will the Minister give me a rough time scale for when that consultation will finish and in what form? When does he expect the Government to respond formally to the PricewaterhouseCoopers report?
Mr. Lewis: We have to respond by the end of February to certain issues because of their influence on contactors.
I am in a dilemma; the hon. Gentleman spoke about the balance between getting decisions right and ensuring synergy between contractual arrangements, and wanting to see swift and radical reform. I am committed within the next month not only to being clear about my specific responses relevant to the end of the February, but to laying out a clear and transparent time scale for how to tackle all the relevant issues. I shall ensure that hon. Members have sight of that within the next month or six weeks.

245WH
The hon. Gentleman made a valid point on the use of evidence and data in terms of the impact of prison education on reoffending. We have some of that evidence now, but we could do a lot better. I take the hon. Gentleman's comments on board.
The voluntary sector is often imaginative and innovative in a way that the statutory sector never can be. We have to become better at spreading the good practice that already occurs in pockets—it is not mainstream practice—and ensuring that Prison Service officials in all parts of the country give thought to how they can engage with local voluntary organisations that may have something to bring to the table. I believe that the voluntary sector has flexibility and imagination. The community sector has an important role to play in the resettlement of offenders; there can be significant follow-through and support for people once they have been released from prison.
We shall make our position on entitlement clear later. The hon. Gentleman made a valid point; "once in a generation" might be an over-used term, but we do have a unique level of resource available and a commitment across Government—and, in many ways, across the political spectrum—which represents a unique opportunity to make a difference. If it takes an extra couple of months to get decisions right, I would rather take that time than rush the decisions, get them wrong and fail to achieve the step-change. We all accept that tinkering at the edges is not what the system needs, nor what we want.
The hon. Gentleman was honourable enough to acknowledge that there has been significant progress in recent years. It is important to say that, because I want to support the efforts of both governors and frontline staff who make the system work daily. They have not always had the central and external support that they deserve, but many of them, starting at the grass roots, have been incredibly innovative and imaginative. We should pay tribute to that, and highlight some of their achievements.
With regard to basic skills, last year prisoners gained 61,000 qualifications, some 24,000 of them in literacy and numeracy. In the first eight months of this financial year, prisoners had already achieved more than 25,000 basic skills qualifications. We are well on the way to meeting, and even exceeding, our national target of 28,800.
Not only are we meeting targets, we are ensuring that mainstream developments in literacy and numeracy practice reach prisons. It is important that we do not offer a second-rate, out of date service to prisoners; they have access to the most modern and up to date strategies.
We are also supporting prisons proactively, with a quality improvement programme. A body of professionally qualified advisers is working in every prison, advising them how to build on their strengths and how to deal with areas of deficiency. We are told by the Prison Service that the advisers are making a real impact across the country, and are supporting prisons that are preparing for inspection against the new standards of the common inspection framework. They also help prisons with their action planning in cases in which the inspections have identified weaknesses.
246WH
We have also required all prisons to set up their own quality improvement groups, bringing together staff across the establishment to improve existing learning opportunities and to introduce new ones. That is already happening across much of the estate and there is no reason why it cannot happen in every institution. We have created a standards fund to encourage prisons to support staff development and training, to share best practice and to develop local quality assurance systems.
It is important to establish a culture of learning in the Prison Service. That is important not only for the prisoners but for the staff. I am delighted that two schemes are up and running, supported by the union learning fund, at Belmarsh and Haverigg prisons, to develop basic skills. That is engaging staff in learning. I recently had a meeting with Brian Caton, the head of the Prison Officers Association, and told him that I would actively welcome further applications from prisons for the next round of union learning fund bids. That area is underdeveloped and we would want to see a considerable growth in the number of prison officers who are involved in learning. I believe that that has a knock-on beneficial effect, in that it creates a learning culture in the prison environment.
The hon. Gentleman referred to vocational training and employment. He is right to make the point about the separation. In response to the PricewaterhouseCoopers report, we need to look at how we can create a more cohesive, integrated approach. In recent times, we have shifted the emphasis towards basic skills. We believe that to be right, given the low level of basic skills of more than half the prison population and the fact that there is a direct correlation between a lack of basic skills and a risk of reoffending. We must not lose sight of the need to help prisoners to improve their employability. The hon. Gentleman rightly spoke about reducing the risk of reoffending. One of the great ways in which to do that is not only to support and encourage people to learn and develop within their education programme, but to ensure that they are employable in a modern labour market. That is why vocational training is so important. Those in work are half as likely to reoffend as those without a job. That is very significant.
It is interesting to note that prisoners have gained 57,000 work skills qualifications so far this year. We have met our target already, which suggests that vocational education and training is working. However, I would like to know more about what those work skills actually mean and how they will feed through. Perhaps I will obtain more information for the hon. Gentleman on that issue.
We can do a lot more. We must ensure a much closer synergy between vocational training in prisons and the labour market. That is complex, because prisoners do not always end up living in the same area as their institution. Increasingly, we are trying to close the gap between what happens in the world of education and training and what is required in the labour market. When people are moving around, there can be different regional and sub-regional economic profiles. That makes the situation complex, but we should seek to close the gap further than we have done in the past.
The hon. Gentleman said that capital investment would be important to enable prisoners to modernise and upgrade their training provisions. Investment will also be required to fund the building of classrooms on

247WH
prison wings and next to workshops, to help create a more cohesive and integrated approach between learning and more vocationally based courses. With the assistance of the CBI, Jobcentre Plus and others, we are strengthening our links with employers to improve the work opportunities that are available to prisoners during and after their time in custody. We are also using funds from the invest to save budget to develop an innovative project led by Cisco to give prisoners the opportunity to gain valuable information technology skills and either to continue learning or to gain work on release.
I do not need to say to the hon. Gentleman how important information and communications technology skills are in the modern world. They are being used increasingly in the classroom, in the workplace and at home. It is important that we bring prison learning into the 21st century with regard to e-learning. We have done some work on that relatively recently and have had learndirect pilots in five prisons during the past year. All the evidence is that the learners
248WH
are often less threatened by a computer than by traditional classroom learning, which makes them no different to others who undertake basic skills courses in the community. In the prison population, we are dealing with high numbers of learners who have had a negative experience of school. That makes it even more important to find imaginative and innovative ways of turning them on to learning and removing some of the fear that inevitably accompanies people who have had a negative experience, not only in learning but throughout their lives.
I believe that we have answered a number of the hon. Gentleman's concerns, but we have a lot more work to do. I will consider carefully the lessons to be learned from our work so far and will also consider the recommendations in the report. This is a unique opportunity to get a credible reform and investment system in prison education and training. I look forward to working with the hon. Gentleman and with others in making things happen. Education and training is one of the most powerful ways of reducing crime in our society.
Question put and agreed to.
Adjourned accordingly at twelve minutes to Five o'clock.