House of Commons

Tuesday 14th December 2010 Commons Chamber

Tuesday 14 December 2010

The House met at half-past Two o’clock

Prayers

Tuesday 14th December 2010 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 14th December 2010 Commons Chamber

The Secretary of State was asked—

[Joseph Johnson (Orpington) (Con)]

2. If he will assess the compatibility of the provisions of the Vienna convention on consular relations with the effectiveness of the internet as a means of promoting democracy worldwide.

[The Minister of State, Foreign and Commonwealth Office (Mr Jeremy Browne)]

There is no incompatibility between the Vienna convention on consular relations, which is an international treaty ratified by 172 countries, and which defines a framework for consular relations between independent countries, and the development of the internet, which is indeed a vital tool in the development of democracy. However, we condemn the release of classified information through the internet. That can damage national security and may put lives at risk.

[Joseph Johnson]

Will the Minister give an assessment of the impact of the WikiLeaks affair on the conduct of diplomacy, and will he say what steps he plans to take, on the one hand, to tighten access to diplomatic cables that need protecting and, on the other hand, to free up access to the other information that can and should be in the public domain? The latter would also enhance the Government’s transparency agenda.

[Mr Browne]

We believe in freedom of information and open and transparent government, but there is a private realm and a legitimate area for confidentiality in diplomatic relations between nations. We need to get that balance right to ensure that we are secure when trying to safeguard confidential information. That is what we are working to do.

[Mr Denis MacShane (Rotherham) (Lab)]

We have learned that the US Secretary of Defence, Mr Gates, believed that

“Russian democracy has disappeared and the government was an oligarchy run by the security services”.

Who could possibly disagree? Instead of the wet willies whimpering over WikiLeaks from the Front Bench and wanting to lock up Mr Assange, would it not be better to congratulate American diplomats on being such excellent reporters and ask why our media are so lazy at foreign reporting? The only time we get foreign news on the front pages is when WikiLeaks gives the media a story.

[Mr Browne]

I do not wish to comment on the individual case that the right hon. Gentleman has brought to the House’s attention. We all understand that there are areas of the private realm—health and tax records, for instance —where it is perfectly possible to release information, but where we would not wish to see it released. We regard that as appropriate for diplomatic relations as well.

[Caroline Lucas (Brighton, Pavilion) (Green)]

What contacts have the Minister or his officials had with their Swedish counterparts or authorities about the extradition of WikiLeaks founder, Julian Assange, from the UK to Sweden, and what assurance has the Minister sought or received from Sweden about the widespread public concern that there might be a political dimension to these proceedings?

[Mr Speaker]

Order. The Minister will accept that his answer must relate specifically to the effectiveness of the internet as a means of promoting democracy worldwide.

[Mr Browne]

It is hard to answer the question within those confines. The matter to which the hon. Lady refers is for the courts rather than me as a Minister. However, it touches on a wider point. I agree with the observation that you inferred from the question, Mr Speaker, that the internet is a valuable tool for empowering people around the world, for opening up the world of politics and for giving people greater freedom of information. However, that should not be confused with safeguarding the legitimate private realm.

[Paul Uppal (Wolverhampton South West) (Con)]

3. What recent assessment he has made of the state of relations between the UK and the countries of the Gulf; and if he will make a statement.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

The Government are strongly committed to elevating our relations with all our partners across the Gulf. We are expanding co-operation with Gulf states across the board—in culture, education, defence and security, trade, investment, and foreign policy co-operation. Gulf states’ reactions to the increased engagement have been very positive, and we will maintain the commitment in the coming years.

[Paul Uppal]

Over the summer, I met the British ambassador to the United Arab Emirates, Dominic Jermey, who told me how impressed he was with the Prime Minister visiting the Emiratis in June. In view of those warm words, will the Foreign Secretary tell me what work his Department is undertaking to ensure that British businesses are supported in exporting to Gulf nations?

[Mr Hague]

I am very glad to know that the ambassador was pleased with the Prime Minister’s visit—it made a huge impact on the United Arab Emirates. My hon. Friend is right that my right hon. Friend the Prime Minister made his visit in his first few weeks in office, and since then Her Majesty the Queen has made a state visit to the UAE and many of us on the Government Front Bench have also visited, so there has been a serious elevation of relationships. It is also true that there are many commercial opportunities, to which my hon. Friend referred. We export about £15 billion-worth of goods and services to the Gulf, but we can do much more. British embassies in the region and UK Trade & Investment are now poised to put their efforts behind that.

[David Cairns (Inverclyde) (Lab)]

It was the worst kept secret in foreign policy that the nation feared most by the Arab states of the Gulf is not Israel but Iran; we did not need WikiLeaks to tell us that. Given that that is now out in the open, is there an opportunity to forge a new consensus—one that would embrace the countries not just of the EU but of the Gulf region—to convince everyone of the absolute necessity of taking action against Iran before it develops a nuclear capacity, which would be a threat to us all?

[Mr Hague]

The hon. Gentleman raises an important point. I am not going to comment on the WikiLeaks allegations, but of course there is enormous concern about the dangers of nuclear proliferation in the middle east being sparked by Iran’s policies on its nuclear programme. The Gulf states vary in their relationships with Iran; we have to be clear about that. The United Arab Emirates have recently joined in applying financial sanctions against Iran, whereas Oman has a different and long historical relationship with Iran and a strong relationship with this country, and wants to use its good offices to improve relationships between the west and Iran. Each of the Gulf states is able to help in its own way, and the elevation of our relationships with them encourages them to do that. We must join them in that, consulting them and being open to their advice about how to deal with Iran and other regional issues.

[Sheryll Murray (South East Cornwall) (Con)]

4. What assessment he has made of the outcomes of the NATO summit in Lisbon; and if he will make a statement.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

As the Prime Minister made clear to the House on 22 November, the NATO summit was a significant success. By agreeing a new strategic concept, the alliance has shown its determination to face the security challenges of the 21st century together. The summit also took important steps to strengthen euro- Atlantic security, in Afghanistan and in relations with Russia. Our commitment to NATO is as strong as ever.

[Sheryll Murray]

What discussions, if any, did the Secretary of State have at the NATO summit to encourage the use of the excellent training facilities at HMS Raleigh and Flag Officer Sea Training in Devonport, which contribute significantly to the local economy in the south-west?

[Mr Hague]

Although we did not discuss that specifically at the NATO summit, it is clearly important that NATO nations work together on training. It is also part of our new defence treaty with France that the UK and France will work together to a much greater extent on sharing training facilities, so I will ensure that, between the Foreign Office and the Ministry of Defence, we look at further opportunities in the area that my hon. Friend has raised.

[Paul Flynn (Newport West) (Lab)]

The Lisbon conference showed the same irrational optimism about Afghanistan. Can the Minister explain why, if things are going so well, after spending $52 billion in aid Afghans are still dying in the streets of Kabul of starvation?

[Mr Hague]

I do not think that the NATO summit showed irrational optimism; I think that it showed realism about the situation in Afghanistan. Bringing together all 48 troop-contributing nations of the international security assistance force in one of the sessions at the NATO summit in Lisbon underlined the fact that there are now more countries engaged in what we are doing in Afghanistan than at any stage before. We in no way minimise the fact that there are enormous challenges ahead of us on Afghanistan. Today I have laid before the House a written ministerial statement that updates hon. Members on where we think we are in Afghanistan. Many of those challenges, including in development, remain.

[Sir Malcolm Rifkind (Kensington) (Con)]

The Lisbon statement said nothing on the future of tactical nuclear weapons in Europe. As the Foreign Secretary will be aware, the United Kingdom gave up its tactical nuclear weapons in the 1990s, as militarily useless and politically irrelevant. Will the British Government now support multilateral negotiations between NATO and Russia, so that tactical nuclear weapons can be removed from Europe as a whole?

[Mr Hague]

As my right hon. and learned Friend will be aware, we said at Lisbon that NATO would remain a nuclear alliance to meet current and future threats, which does not directly address his point. The statement at Lisbon recognised the role that the alliance can play in supporting wider disarmament and non-proliferation efforts. We agreed at the summit to reviewing how NATO implements those principles. It will discuss all the strategic threats facing the alliance, and the capabilities that we need to meet them, including nuclear deterrence and missile defence. The argument that my right hon. and learned Friend presents will be part of that review.

[Penny Mordaunt (Portsmouth North) (Con)]

5. What recent discussions he has with his US counterpart on co-operation under the north Atlantic treaty; and if he will make a statement.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

Secretary Clinton and I worked together closely prior to and during the NATO summit in Lisbon in November. During the summit, we worked together to agree with other allies the new strategic concept as well as the way forward on Afghanistan. The United States remains a firm ally of the United Kingdom and we will continue to work closely with it in NATO.

[Penny Mordaunt]

Could the Secretary of State elaborate on what discussions he has had with the US on the gap in our defence capability, and the implications of that for international relations? I am thinking in particular of the gap in our carrier strike force.

[Mr Hague]

The United States has been very supportive of the conclusions of our strategic defence and security review—[Hon. Members: “What?”] It has been extremely supportive, and Secretary Clinton reflected that in her remarks. The US is pleased that we will continue to spend more than 2% of our national income on defence, and that we will continue to have the fourth largest military budget in the world. The fact that we are such a strong member of NATO, and that we have the strong alliance of which I have been speaking and work so closely with the United States and France, will help us to work through some of the difficulties in the coming years while we get to an orderly state in our defences, which we certainly did not inherit and we have now to bring about.

[Mrs Madeleine Moon (Bridgend) (Lab)]

Sea lanes of communication are a critical component of the global economy, especially those in the north Atlantic that facilitate trade between the US and the UK. What discussions has the Foreign Secretary had with his counterparts on maritime security co-operation within NATO, especially since the axing of the Nimrod MRA4?

[Mr Hague]

Maritime security is an important component in NATO. It is primarily the work of my colleagues in the Ministry of Defence to hold those discussions, but the hon. Lady can be assured that Defence Ministers have done so. In particular, my right hon. Friend the Secretary of State for Defence has been working with international colleagues on maritime security around the high north and the north Atlantic. That work is going on, primarily in the Ministry of Defence, but it is of course supported in the Foreign Office.

[Richard Ottaway (Croydon South) (Con)]

The Prime Minister said last week that we might start drawing down troops from Afghanistan next year. Has the Foreign Secretary had any discussions with the United States about what conditions would have to be met before such a draw-down could be put into effect?

[Mr Hague]

My hon. Friend will be aware that my right hon. Friend the Prime Minister first talked about that during his visit to Washington in July, as well as reiterating the point during his trip to Afghanistan last week. He said in Washington, around his discussions with the President, that such a draw-down

“should be based on the conditions on the ground. The faster we can transition districts and provinces to Afghan control, clearly the faster that some forces can be brought home.”

That is the position of the United States as well as of the United Kingdom, and the Prime Minister and the President have certainly discussed it together.

[Michael Dugher (Barnsley East) (Lab)]

6. What recent discussions he has had with the Secretary of State for International Development on economic development in the west bank; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)]

The Foreign Office and the Department for International Development work very closely on this issue. I last had a conversation with the Minister of State, Department for International Development, my right hon. Friend the Member for Rutland and Melton (Mr Duncan) just before his visit to the west bank in late October. We are encouraged by World Bank reports that the economy of the west bank grew by 7.2% in 2009, and we hope that it is benefiting from the stability under Prime Minister Fayyad and the easing of restrictions on movement and access by the Israeli Government.

[Michael Dugher]

I thank the Minister for that reply. Does he agree that Israel’s decision to allow exports from Gaza is welcome and positive? Should not that serve to encourage all sides to look for further progress, and the people of Gaza to reject Hamas?

[Alistair Burt]

I welcome the hon. Gentleman’s comments. The development of the economy of the west bank in recent years has been in sharp contrast to the development of the economy of Gaza—for a whole series of reasons. We would welcome the further expansion of the economy in Gaza, which has to come from an easing of the economic blockade. On that, we welcome the decision announced by Israel last week further to ease the opportunity for exports from Gaza. The hon. Gentleman is absolutely right in saying that it is economic prosperity in both the west bank and Gaza that will make decisions on the future of the whole area that much easier.

[Mr James Clappison (Hertsmere) (Con)]

Would the growing economic prosperity in the west bank not spread to Gaza and be even more impressive if there were full acceptance of the Quartet principles by Hamas and all parties in the middle east?

[Alistair Burt]

It is certainly true that the rejection by Hamas of the Quartet principles and its failure to denounce violence and to accept the state of Israel is holding back any possible negotiations. Also, the illegal holding of Gilad Shalit for a further length of time is contrary to all our interests, and he should be released as soon as possible. It all goes to show that further negotiation and talk is the best way to produce an overall settlement in the middle east, which is what we are all looking for.

[Mr Speaker]

I know we are focusing on economic development in this question.

[Richard Burden (Birmingham, Northfield) (Lab)]

Given what the Minister has said about economic development in the west bank, does he share my concern that it is not in the interests of the economic development of that region to see the tightening rather than easing of movement restrictions in the Jordan valley and Palestinians and Bedouins being dispossessed in the Jordan valley?

[Alistair Burt]

The hon. Gentleman’s long interest in the economic development of the west bank and all other areas is well noted; we spoke in the Westminster Hall debate the other day. The easing of all restrictions is in the interests of all. That is why we welcome it when we find it and are concerned if there is any greater restriction on access. The economic development of the whole of west bank area and of Gaza is a crucial part of the development of the Palestinian state. The establishment of that valid state, side by side with a secure and recognised Israel, is of interest to us all.

[Bob Blackman (Harrow East) (Con)]

The threat to the economic developments on the west bank and in the rest of the region is, of course, dependent on the military position. Is the Minister aware of the rockets, bombs and anti-aircraft capability that Hamas has built up and does that not further threaten the security of the region?

[Alistair Burt]

The Government have already expressed concern about the build-up of arms in the area by Hezbollah and Hamas, none of which is conducive to what we all want: a negotiated peaceful settlement of the middle east process that is a secure and sovereign Israel side by side a viable Palestine.

[Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)]

When the Minister visits the middle east in the new year, will he press Israel further to reduce its restrictions on freedom of movement both for Palestinian people and for Palestinian goods? Free movement is crucial; so, too, is providing global opportunities for the Palestinians to trade with the rest of the world. In the Foreign Office business plan, UK Trade & Investment is developing its strategy; will the Minister ensure that UK trade with the west bank is absolutely part of that UKTI strategy?

[Alistair Burt]

Yes, indeed; I welcome the hon. Gentleman’s comments. There was a successful investment conference in the west bank just a few months ago, and it is in the interests of all that economic prosperity is encouraged on all sides. It is in the interests of Israel to make sure that there is as much access as possible—providing, of course, that its essential security interests are safeguarded. Wherever they have been threatened, as in Gaza, it remains necessary for the Israelis to control any materials that might detract from that. When it comes to economic development and movement, however, the hon. Gentleman is absolutely correct.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

7. What recent reports he has received on the decision by the Sri Lankan authorities to end the operations of the International Committee of the Red Cross in the north of that country.

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)]

The Government are aware that the Sri Lankan Government have asked the International Committee of the Red Cross to close two centres in the north of the country. We are also aware that the ICRC has, after a review, already closed down its own operations in Mannar.

[Siobhain McDonagh]

The removal of the Red Cross from the predominantly Tamil area shows contempt for a renowned international non-governmental organisation and will seriously inhibit much needed aid and assistance. In light of the comments made by the new cardinal of Colombo—that there is a dangerous trend of ethnic Sinhalese moving into Tamil areas—does the Minister agree with me that the real reason for removing the Red Cross was to allow for Government-supported demographic change to go unchecked by independent monitors?

[Alistair Burt]

I am not sure whether I can speak for the Government of Sri Lanka in explaining how they made their decision, but it is certainly true that the international community listens extremely carefully to the voice of the ICRC as an independent monitoring body, and its unavailability will therefore have to be compensated for elsewhere. The Government have consistently pressed Sri Lanka to live up to its offer of post-conflict reconciliation, but moves such as restricting access to detainees and any restriction of the work of significant non-governmental organisations will make that process rather harder.

[Mr Lee Scott (Ilford North) (Con)]

One of the valuable tasks performed by the ICRC has been investigating the disappearance of young children throughout the Tamil community and trying to repatriate them with any relatives who are still alive. Will my hon. Friend look into the possibility of pressing for that valuable work to be allowed to continue?

[Alistair Burt]

I will ask our posts in Sri Lanka to consider it carefully. The fact that more people need to return to the areas from which they were removed is another measure of the steps that are necessary in the post-conflict resolution, and although we have seen a great deal of progress over the years, more needs to be done.

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

As the Minister will know, recent additional footage from Channel 4 has shown Sri Lankan forces executing civilians at the end of the conflict. He described the ICRC as an independent international monitor, but, as he will also know, there is serious concern about the continued lack of independent and transparent investigation of alleged war crimes in the country. Have Ministers urged the Sri Lankan Government to support a properly independent inquiry with international involvement, and did the Secretary of State for Defence also raise those points in his meeting with the Sri Lankan President earlier this month?

[Alistair Burt]

Our Government have made very clear to the Government of Sri Lanka that any process involving the examination of war crimes or other issues must be credible and must have an independent element. We suggested recently that those appointed to a United Nations panel should be the interlocutors with whom it would be wise for the Sri Lankans to be involved in an effort to influence the international community. They have the first responsibility in dealing with the inquiry, but if there is to be credibility in the international community it is essential for there to be an international element, and for the issues that have been raised recently to be looked into extremely carefully.

[Yvette Cooper]

I welcome and agree with what the Minister has said, but I urge him to go further in pressing the Sri Lankan Government to accept international involvement in order to increase the credibility of the report.

The Minister did not answer my question about whether the Defence Secretary had also raised the issue, and I must press him for clarity. The Sri Lankan Ministry of External Affairs has said that the President and the Defence Secretary had

“discussed areas of assistance to Sri Lanka”,

and that

“There was agreement that the friendship between Sri Lanka and the UK should be strengthened”.

Will the Minister tell the House what status that agreement has, and whether all Ministers are taking every opportunity to press for a credible investigation of war crimes?

[Alistair Burt]

The interest taken by my right hon. Friend the Secretary of State in Sri Lanka dates back to his time as a junior Foreign Office Minister in 1996, when he helped to broker a ceasefire in the conflict that was taking place then. He has retained that interest, and it is very helpful to the Government as a whole to have an interlocutor with such long-standing relationships.

The United Kingdom Government are united in respect of the issues that we raise with Sri Lanka. That process involves helping the Sri Lankan Government to understand what the international community requires, in monitoring what is currently happening, in access of NGOs to detainees, in further reconciliation following the conflict, and in providing opportunity for independent experts to be involved in the inquiry. The Defence Secretary fully understands and appreciates that united position.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

Given the strong all-party interest in the House in human rights in Sri Lanka, will the Minister reassure us that conversations are continuing with the Commonwealth and its secretary-general to ensure that they do not step back from their active interest in human rights issues generally and Sri Lanka in particular?

[Alistair Burt]

I am sure that is the case, and may I say in passing that we welcome the recent visit of a Commonwealth Parliamentary Association group to Sri Lanka? I have already met representatives who were on that trip. The visit shows the Commonwealth’s strong interest in Sri Lanka’s continuing development post-conflict. I was greatly appreciative of the efforts made by Members of this House in going on that trip and reporting back, and I am sure that they will report back to the House more fully at a later stage.

[Mr William Bain (Glasgow North East) (Lab)]

8. What recent assessment he has made of the prospects for a resolution of the dispute in the Korean peninsula.

[Stephen Pound (Ealing North) (Lab)]

9. What recent assessment he has made of the security situation in the Korean peninsula.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

Tensions are likely to remain high until North Korea abandons its provocative behaviour and violation of UN resolutions, and creates the conditions for the resumption of talks by making verifiable progress towards denuclearisation. Talks between relevant parties offer the best prospect for achieving a resolution of the dispute, but cannot succeed without trust.

[Mr Bain]

I thank the Foreign Secretary for that reply. Does he agree with the statement issued from last week’s trilateral summit of Japanese and South Korean Foreign Ministers with Secretary of State Clinton that North Korea’s actions have jeopardised peace in northern Asia and that North Korea’s provocative and belligerent behaviour will be met by solidarity from all three countries? What representations will the UK continue to make to demonstrate the dissatisfaction of the British people with North Korea’s continual flouting of UN resolutions?

[Mr Hague]

The hon. Gentleman is right to draw attention to the statement from the United Kingdom, the United States and the European Union, and also the associated statements from Japan. The Prime Minister spoke to the UN Secretary-General and President Lee of South Korea on 24 November, and expressed our strong support for South Korea. In addition, we have held meetings in the past week: senior FCO officials have met North Korean counterparts to relay our messages and our clear view on recent events that North Korea should resume co-operation with the International Atomic Energy Agency and ensure that all nuclear activity adheres to the requirements of that agency, and that it faces increasing isolation unless these matters are dealt with.

[Stephen Pound]

The people of Ealing North keep a very close eye on rising tension in the Yellow sea, partly because the embassy of the Democratic People’s Republic of Korea is in Ealing—oddly enough, in the house that was formerly occupied by my hero, Sid James. Has the Foreign Secretary had any recent conversations with his colleague the Secretary of State for Defence about any British maritime presence in the area?

[Mr Hague]

We are interested to know of the history of buildings in Ealing in this respect. I imagine the building in question saw much more amusing times when occupied by Sid James than when occupied by the North Koreans. Nevertheless, our relations with that country are important, because we have to be able to pass clearly to them the messages I have just described. Yes, of course I discuss this issue, and not only with my right hon. Friend the Secretary of State for Defence, but across Government through the framework of our National Security Council. The maritime presence in the area is more a concern of South Korea, Japan and the United States than of the United Kingdom, but we always keep that under review.

[Sir Menzies Campbell (North East Fife) (LD)]

In view of the fact that China shares a border with North Korea, it might reasonably be thought that the Government of the People’s Republic of China would have an interest in stability on the Korean peninsula. What efforts has the Foreign Secretary made to engage with his counterpart in the PRC Government to encourage that country to take an active role in reducing tension in the area?

[Mr Hague]

I have had many such discussions. Indeed, some of my earliest discussions on becoming Foreign Secretary some months ago were with my Chinese counterpart on the subject of Korea and encouraging stability there. It was part of the strategic dialogue I conducted with the Chinese leaders in July in Beijing. My right hon. and learned Friend is right that China has that interest in stability there, although that also means that China is often very cautious about supporting the kind of language and the kind of condemnation that we think is appropriate for North Korea’s recent actions. That makes it much more difficult to pass strong Security Council resolutions about North Korean violations of the type that we have recently seen. China interprets the need for stability quite differently from the way we interpret it, but there is a strong and continuing dialogue about it between us and China.

[Caroline Dinenage (Gosport) (Con)]

Given that North Korea has so far evaded two UN Security Council resolutions and is, despite international condemnation, continuing attempts to enrich uranium, is there any hope at all that it will not become a nuclear power?

[Mr Hague]

North Korea makes many claims about its nuclear capabilities including, recently, about enrichment facilities. We are deeply concerned by reports that it is building a new nuclear facility, in violation, as my hon. Friend says, of two Security Council resolutions. We urge it to resume co-operation with the International Atomic Energy Agency to ensure that all its nuclear activity adheres to IAEA safeguards agreements. Until North Korea makes verifiable progress on that, we urge the international community robustly to implement the existing United Nations sanctions.

[Emma Reynolds (Wolverhampton North East) (Lab)]

The Opposition welcome the Foreign Secretary’s condemnation of North Korea’s recent unprovoked attacks on South Korea and I should like to associate myself with the comments he made a moment ago. I want to press him further on his response to China’s offer to host the emergency six-party talks. Does he regard that as the best way forward?

[Mr Hague]

I am grateful for the Opposition’s support. It always makes a difference in these diplomatic matters if the House of Commons stands united. It will be noticed in the world that the House of Commons is absolutely united in condemning the recent actions of North Korea. I do not think that an immediate return to the six-party talks is the way forward as that would be, in a sense, a reward for North Korea’s behaviour. Other discussions and other ways forward will have to be found.

[John Mann (Bassetlaw) (Lab)]

10. What recent assessment he has made of the state of UK relations with the countries of central Asia.

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)]

Central Asia is an important region for UK strategic interests. We value our constructive relationships with countries in this fast-developing region and want to strengthen these further. We have much to gain from closer engagement on a range of issues, including those relating to Afghanistan and democratic and other reform. We are also seeking to deepen our commercial links.

[John Mann]

Instead of the Government’s supine silence on Liu Xiaobo and their continued kowtowing to the Communist party of China, is it not time they gave a much higher priority to building the newly emerged democracies across central Asia with practical support and assistance?

[Mr Bellingham]

I am grateful to the hon. Gentleman, who is secretary of the all-party group on central Asia. We are working carefully and closely on supporting the EU-central Asia strategy. Furthermore, the other day, the Deputy Prime Minister attended a very important meeting of the Organisation for Security and Co-operation in Europe, at which he met its president. I think that progress is being made all round.

[Rehman Chishti (Gillingham and Rainham) (Con)]

Will the Minister join me in paying tribute to the excellent work of Richard Holbrooke, the US envoy to Afghanistan and Pakistan, who did an excellent job in the Balkans with the Dayton accords?

[Mr Bellingham]

I am grateful to my hon. Friend for those comments and I join him in paying tribute to Mr Holbrooke, who was a remarkable statesman. He made extraordinary progress that can be built on in the future.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

11. What his most recent assessment is of the political and security situation in Afghanistan; and if he will make a statement.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

Earlier today I laid a written report on recent progress in Afghanistan before the House as part of the Government’s commitment to keep the House regularly updated on the situation there. The report covers the security and political situation including the results of the recent elections, outcomes of the NATO conference in Lisbon, governance and regional engagement.

[Tom Greatrex]

I thank the Foreign Secretary for that answer, but does he share my concern about the very high rate of attrition in the Afghan police force? Some reports put the figure at 7,000 out of 35,000 over a very recent period. What action can be taken to ensure that there is a stable and established police force in Afghanistan so that people there can have confidence in their civil policing arrangements?

[Mr Hague]

This is a vital matter and the hon. Gentleman is right to draw attention to it. The written report I set before the House today shows that by mid-November Afghan national police strength had reached 116,000 and is on track to meet the target of 134,000 by next November. One of the crucial matters is an increase in the rate of training the Afghan national police, as well as reducing attrition. For most categories of police officer, attrition rates have fallen in recent times, and the NTM-A—the NATO training mission for Afghanistan—reports an increase of around a third in the number of trained officers and a twofold increase in the number of trained non-commissioned officers. Clearly, the Afghan national police are being built up, despite the difficulties to which the hon. Gentleman refers.

[Dr Julian Lewis (New Forest East) (Con)]

Our strategy in Afghanistan oscillates between infantry-intensive counter-insurgency campaigning, at high cost, and advance notice that we are going to withdraw, which puts pressure on one side to compromise, but not on the other. Will my right hon. Friend at least keep his mind open to the possibility of alternative strategies, such as the strategic base and bridgehead area solution, which would allow us to secure our strategic interests at lower cost, and thus square the circle?

[Mr Hague]

There will always be a strategic debate about Afghanistan. There is no oscillation about those infantry-intensive campaigns. Our troops continue to do an extraordinary job, and as the Prime Minister has said in the House and elsewhere, they are able to do it more effectively now that we have the right concentration—the right density—of forces in Helmand, where our troops are mainly deployed. The whole of NATO has the strategy of building up the Afghan national security forces to the point where they can lead and sustain their own operations throughout Afghanistan by 2014. It is consistent with that for us to say that we will not be engaged in combat operations by 2015. We are joined with 47 nations in pursuing our strategy, and therefore we should not try to change it on a daily or weekly basis.

[Mr Bob Ainsworth (Coventry North East) (Lab)]

May I bring the right hon. Gentleman back to the answer he gave to the Chairman of the Foreign Affairs Committee? We can all recall the Prime Minister saying in the summer that the combat mission would come to an end in 2015, but no one can recall the Prime Minister saying at that stage that British troops would start leaving Afghanistan next year. When was that first said and why?

[Mr Hague]

The people who did not hear it were not listening to the BBC on 21 July, when

“Mr Cameron was asked whether people could expect British forces to follow the Americans in starting to pull out of Afghanistan from next year. The prime minister said: ‘Yes we can, but it should be based on the conditions on the ground. The faster we can transition districts and provinces to Afghan control, clearly the faster that some forces can be brought home’.”

That is still on the BBC website. What my right hon. Friend said last week—also in answer to a question—was simply repeating what he had said in Washington last July.

[Patrick Mercer (Newark) (Con)]

Further to the question put by the right hon. Member for Coventry North East (Mr Ainsworth), the Foreign Secretary will be aware of a Pentagon report that says that the time line given by President Obama for the withdrawal of American forces has given aid, succour and assistance to the Taliban. Have we been wise to follow that example?

[Mr Hague]

There are many conflicting reports, as my hon. Friend will be more aware than most. It is argued by some that the references by the President to a draw-down beginning in July 2011 gave some in Afghanistan the impression that there would be a complete withdrawal of forces in 2011. Anybody who is expecting that is in for a shock, because the combination of the surge of NATO forces we have seen recently and the now fairly rapid build-up of the Afghan national security forces means that more forces are deployed against the Taliban than ever before. Clearly, that build-up will continue, with the huge increases projected for the Afghan forces up to 2014. What we say about 2015 is in no way in conflict with that.

[Mr John Spellar (Warley) (Lab)]

May I associate the Opposition with the tributes to Richard Holbrooke, a tireless worker for peaceful solutions to conflicts around the world, most recently in Afghanistan? There, in a couple of weeks, our troops will be celebrating Christmas far from their families, and we send them our thanks and best wishes, and look forward to welcoming them home.

Can the Foreign Secretary fully reassure the House, in the light of previous questions, that any draw-down will be determined by conditions on the ground and not by the calendar? What conditions will be needed for combat troops to be pulled back from Afghanistan, especially when we approach 2014-15?

[Mr Hague]

I want to pay tribute to Ambassador Holbrooke in a moment, at the beginning of topical questions. I join the right hon. Gentleman in his comments about our forces in Afghanistan. Throughout the Christmas period they will, I hope, be in the minds of all of us in the House. The conditions on the ground that are necessary for any draw-down or any change in the deployment of forces to begin over the next few years are successful transition of districts and provinces. We made it clear at the NATO summit that we want that to begin early in 2011, but that does not always mean that forces that then become available are withdrawn. Many of them can be redirected into training. In recent months we have moved 300 additional forces into training. Although Canada is withdrawing its combat forces, it announced at the NATO summit that almost 1,000 trainers would be made available for Afghanistan. It is in this form that transition takes place and, as a result, there will be adjustments from time to time in the deployment of the forces of the 48 nations involved.

[Fiona Mactaggart (Slough) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

The whole House will join me, and several Members have already done so, in paying tribute to Ambassador Richard Holbrooke, President Obama’s special representative for Afghanistan and Pakistan, who died last night. He was not only a remarkable diplomat and public servant who served his country with great distinction, but someone who, through his efforts, brought an end to Europe’s worst bloodshed since the end of the second world war in Bosnia-Herzegovina in the 1990s. Today, as it happens, is the 15th anniversary of the signing of the Dayton peace accords, which Ambassador Holbrooke forged and which brought that appalling conflict to an end. In serving his country, he also saved countless lives and helped pull an entire country back from the brink. His death is a sore loss to international diplomacy.

The December European Council takes place later this week. The Prime Minister will attend. The agenda includes economic policy, including limited treaty change, the EU budget and the EU relationship with strategic partners. A stable eurozone is in our economic interest, but any treaty change must not transfer competence or power from the United Kingdom to the EU.

[Fiona Mactaggart]

This morning in Strasbourg the European Parliament debated and passed, with support from British MEPs in every political party represented in this House, a resolution on the EU trafficking directive. Has the Foreign Secretary discussed international action and collaboration against human trafficking with any of his European counterparts in the past six months, and does he expect to have such discussions in future?

[Mr Hague]

Yes, of course, the Government expect to have many such discussions. My right hon. Friend the Home Secretary is in the lead on these matters. Discussions take place between Governments all the time. I have argued for many years that Governments can do more together to deal with the issue. Our predecessors did so 200 years ago, and we should be able to do so today. That does not mean that we opt in to every EU directive on the matter if we are already taking necessary actions anyway and can retain the freedom to take actions as we wish to determine them in the House, but the responsibility of all nations to take action against trafficking is very clear.

[Mr Dominic Raab (Esher and Walton) (Con)]

T2. Last week the Nobel peace prize was awarded to Liu Xiaobo as he languishes in a Chinese jail. This comes as some EU states want to lift the arms embargo on China. Does my right hon. Friend join me in deploring China’s record of state torture and crushing peaceful dissent? Will he stiffen spines in Brussels so that the EU sends a clear message to China that it cannot behave like a thug and expect normal commercial relations?

[Mr Hague]

We have no plans to lift the arms embargo on China. I have made that clear in EU discussions, which I think is what my hon. Friend was asking for. We have also made it clear where we stand on Liu Xiaobo. A few minutes ago the hon. Member for Bassetlaw (John Mann) accused the Government of supine weakness, but he was guilty of rather spectacular ignorance because it was one of the main issues that we flagged up on international human rights day, and which I placed on the Foreign Office website and spoke about in my message on international human rights day, so we have been clear where we stand on the awarding of the Nobel prize, and of course our ambassador attended that ceremony.

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

May I join the Foreign Secretary in his tribute to Richard Holbrooke? The right hon. Gentleman will agree that this is a moment when we should not just pay tribute to Ambassador Holbrooke’s previous work, but recognise that his death is a great loss to the peace process in Afghanistan and to the work that is ongoing.

The Foreign Secretary referred to the EU Council, which will meet on Thursday to discuss a treaty change that has not been debated in this House, where for the third time since the election we have not had a pre-Council debate. Why are the Government agreeing to treaty changes without debating them first in the House, and will they propose any further treaty changes of their own?

[Mr Hague]

The right hon. Lady is quite right about Ambassador Holbrooke. I spoke about his previous outstanding record, and it is quite true as well that we will feel his loss in current events and in the work that is ongoing in Afghanistan and Pakistan. We clearly stand united in the House in reflecting on that.

On the European Council and the subject of debates, there is some force in the points that hon. Members make about such matters being debated in the House. The days that were previously set aside for European Council debates are among those that have gone into the pot, as it were, to be allocated by the Backbench Business Committee. The right hon. Lady might say that the Government should allocate more time, but the Government gave away that time, and let us be fair, the Opposition also have time on the Floor of the House, with their Opposition days. That is the current position, however, and the Backbench Business Committee should very much take those points into account.

In accordance with the European Union (Amendment) Act 2008, no Government can agree to a treaty change without bringing it to the House for a vote and, indeed, to the other House, so, the Government’s formal agreement to a treaty change will in any case require a debate and vote in this House. We will treat any new treaty change in line with the requirements of the European Union Bill, which is now before the House, meaning that a change will also require an Act of Parliament. So, any such change that might be agreed this week will require exhaustive examination in this House.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I just gently remind the House that topical questions are supposed to be characterised by short and snappy, as well of course as informative, answers.

[Pauline Latham (Mid Derbyshire) (Con)]

T4. Will the Minister outline what actions his Department is taking to strengthen the democratic process in the run-up to and during next year’s elections in African countries, other than in the Sudanese referendum?

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)]

The ongoing problems in Côte d’Ivoire illustrate the importance of elections running smoothly. That is why in Nigeria we are supporting the electoral commission in the run-up to next year’s presidential elections. In Uganda, we are providing a range of assistance and advancement actions, including the Department for International Development’s “deepening democracy” programme. Finally, on Zimbabwe, there must be credible action that commands the support of the world community.

[Anas Sarwar (Glasgow Central) (Lab)]

T3. Will the Foreign Secretary update the House on what recent discussions he has had with his US counterparts on the planned closure of Guantanamo Bay and the return of the remaining detainees to their home countries, including Shaker Aamer, who has been held for nine years without trial?

[Mr Hague]

I raised this with Secretary Clinton on my last visit to Washington a few weeks ago, I think on 17 November—I mentioned specifically the case of Shaker Aamer. My right hon. Friend the Deputy Prime Minister also raised that case with Secretary Clinton, when he met her in Astana in Kazakhstan a couple of weeks ago, so the US Administration are very clear about where we stand and, indeed, our overall position on the closure of Guantanamo Bay. That is going through a process of examination in the State Department and in other US Government Departments, but they are in no doubt of our request.

[Rory Stewart (Penrith and The Border) (Con)]

T5. What defined Ambassador Holbrooke was not simply his energy and his knowledge of language and culture, but his ability when he was a young diplomat in Vietnam to speak truth—uncomfortable truth—to power. What is the Foreign Secretary doing to ensure that young diplomats who follow in Ambassador Holbrooke’s footsteps—who understand language and culture and speak truths to power—are promoted within the Foreign Office system?

[Mr Hague]

Working with the Foreign and Commonwealth Office board, I have recently launched a diplomatic excellence initiative. The initiative is designed to bring about exactly the kind of thing to which my hon. Friend is referring and to ensure that we achieve the highest standards of policy making and diplomatic action in the Foreign Office for the long-term future. It is vital for this country that the FCO is a strong institution for the long term, with great geographical expertise and real diplomatic excellence and policy skills. We are taking other action to bring in external expertise in the area of human rights—I have formed an external group of experts—and I am open to other suggestions and advice from around the House.

[John Robertson (Glasgow North West) (Lab)]

T8. Further to the question of my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), which the right hon. Gentleman did not answer, what kind of amendments are the Government proposing to bring to the meeting on Thursday?

[Mr Hague]

The situation will, of course, be discussed by the 27 Heads of Government at the European Council. We are very clear that if there is a treaty change concerning the eurozone, there must be no obligation on the United Kingdom. If eurozone countries wish to form a mechanism, it cannot be one that places an obligation on the United Kingdom. As the hon. Gentleman will recall from the October Council, we are also working on the next financial perspective because, unlike the previous Government who gave away billions of pounds of British taxpayers’ money in negotiating a financial perspective, we want the next European financial perspective to reflect the budgetary disciplines of the member states involved.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

T6. We learned last week that the United States considers the growth of China’s influence in Africa to be a very worrying development. Will my right hon. Friend indicate whether the Government are also concerned about the Chinese Government’s rush to secure the friendship of undemocratic yet often resource-rich African countries?

[Mr Bellingham]

When I was in Angola last week, I had a chance to see the scale of Chinese investment. It is clear to us that China offers great opportunities for many African countries. Transparency and governance are key if we are to get the best out of such investments. That is why my right hon. Friend raised these issues in the recent UK-China dialogue on Africa and the subsequent UK-China summit.

[Angus Robertson (Moray) (SNP)]

The UK Government say that they want to improve bilateral and defence relations with Norway. The Secretary of State will understand that the Norwegians are particularly concerned about maritime reconnaissance and fast jet co-operation. How can UK claims have any credibility, given that the UK has just scrapped its maritime reconnaissance fleet and is still considering the closure of the fast jet base closest to Norway?

[Mr Hague]

I discussed some of those matters with the Norwegian Foreign Minister when he was here a few weeks ago. My colleague, the Secretary of State for Defence, has also had discussions with Norwegian Defence Ministers. As I mentioned earlier, my right hon. Friend the Defence Secretary is intensifying co-operation with other states towards the north of NATO on what we can do together. Those countries, including Norway, continue to regard the United Kingdom as an indispensible partner in the years ahead. We are a great deal more indispensible than we would be if the country were broken up and Scotland became an independent nation.

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

T7. Can my hon. Friend the Minister give an assessment of the position of Christians in Iraq and of the respect for the human rights of minorities in that country?

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)]

I was in Iraq a couple of weeks ago and had meetings both with Government Ministers and Archbishop Matoka, the archbishop in the diocese where the church was so outrageously attacked a few weeks ago. Ministers are well aware of the need to protect minorities in Iraq. The way in which any state looks after minority communities, particularly the uniquely vulnerable Christian community in Iraq, is taken as an indication of how that country functions. Ministers are well apprised of world-wide concern and have a desire to look after that community.

[Mike Gapes (Ilford South) (Lab/Co-op)]

In an earlier answer, the Foreign Secretary referred to the intention to hand provinces and districts in Afghanistan over to Afghan security forces. Will he confirm that the original plans put forward by General McChrystal have been scrapped and that the position being put forward by the international coalition is based on a hope, a wing, a prayer, and an assumption that the Afghans will come forward in an effective way, but that we have no basis on which we can know that?

[Mr Hague]

It is not just based on a hope, a wing and a prayer; to say that would be unfair to everyone involved. I hope that the hon. Gentleman will look at the report that I have laid before the House today, which looks at the Afghan national army’s 28 brigade and corps units and says that seven are now capable of undertaking operations with minimal advice, and then goes through to grade the rest of them. It is also important to bear in mind that, as the report points out, 70% of the violence in Afghanistan is in four of its 34 provinces. That illustrates how dramatically different conditions are in different parts of Afghanistan, which means that transition will be able to take place in some areas years before it can take place in others.

[Charlotte Leslie (Bristol North West) (Con)]

Is the Minister aware of the situation facing my constituent, Mr Shrien Dewani, and can the Minister inform the House of what measures his Department is taking to ensure that my constituent receives appropriate British support?

[Mr Bellingham]

I am grateful to my hon. Friend. When I was in South Africa 10 days ago, I raised this case with the consul general and his team. He made it clear not only that everything possible had been done to support Mr Dewani but that if he returns to South Africa, he will receive full consular support. My hon. Friend has done all that she possibly can to help the family and has been absolutely exemplary in what she has done to assist them.

[Mr Frank Roy (Motherwell and Wishaw) (Lab)]

What improvements have happened to the lives of ordinary families in Helmand province to justify a change of policy in moving forward to 2011 the 2014 date for the beginning of withdrawal of troops?

[Mr Hague]

As I have said before, I stress that there is no change in policy. The Prime Minister has also reiterated what he has said before. However, that very much depends on the conditions prevailing on the ground. There are improvements in Helmand; there is no doubt about that. There are security improvements. There are places in Helmand where vastly more people are going to school, where more roads are working, and where health centres are open, which was not the case one year or two years ago. What we do in Helmand, and any withdrawal of troops from Helmand, will continue to be dependent on those improvements in conditions.

[Mel Stride (Central Devon) (Con)]

T9. My right hon. Friend the Foreign Secretary has spoken out against the dreadful plight of Sakineh Ashtiani, who was convicted in Iran of having so-called illicit relationships and now faces the prospect of death by stoning. Will he update the House on what recent steps the Government have taken to press the Iranian authorities to stay this barbaric execution?

[Mr Hague]

The Government do press the Iranian authorities. Indeed, our ambassador in Tehran has recently been sharply criticised by the Iranian Government for raising human rights issues so clearly in his own comments. What is even more striking is that far beyond Government, the people of this country—the civil society of this country, and those of so many other countries around the world—are appalled that the barbaric and mediaeval punishment of stoning can still be contemplated, and are additionally sickened by the idea that a pretence can be made of releasing this lady only to make a film that is then meant to assist the Iranian state in saying what it wants to about her case. We believe that the punishment should be set aside and that Iran would do itself a great deal of good in the world if it did so, and we call upon Iran again today to do so.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

Does the Secretary of State agree that the success of joint projects between Israel and the Palestinians, such as the tourism initiative between Jenin and Galilee, exposes the absurdity of calls for boycotts of Israel?

[Alistair Burt]

Yes, the hon. Lady makes a fair point. It is not through boycotts that influence is exercised but through continuing co-operation. That is the best way forward to the negotiated settlement that we all want to see in the interests of all those in the middle east.

[Jo Swinson (East Dunbartonshire) (LD)]

The UK rightly supports an international ban on cluster munitions, which is why it was very concerning to read the published claims on WikiLeaks that the last Labour Government had allowed the US to stockpile cluster munitions on UK territory. What reassurances can the Secretary of State give that no such violation has occurred, or will occur, under this Government?

[Mr Hague]

Those things on WikiLeaks would be concerning if they turned out to be true, but I see no evidence that Parliament was misled. Of course, we do not have access to the papers of the previous Administration, but I have not seen anything that suggests that Parliament was misled. My hon. Friend will be glad to know that the withdrawal of cluster munitions from all United Kingdom territory has been completed ahead of schedule.

[Jeremy Corbyn (Islington North) (Lab)]

Will the Foreign Secretary raise with the Moroccan Government the situation facing Western Sahara and the future of UN negotiations that aim to bring about a referendum on self-determination and bring an end to that more than 30-year conflict?

[Alistair Burt]

I was in Algeria and Morocco recently and raised the issue of Western Sahara. We have pressed all parties to continue negotiations and to look to the UN to assist. Ambassador Ross is working to that end. We have pressed in particular the importance of an independent monitoring process in Western Sahara, to assist transparency when looking at events such as the recent tragedy in Laayoune. This issue has gone on for too long, and it will not solve itself.

[Several hon. Members]

rose—

[Mr Speaker]

Last, but not least, Mr Stewart Jackson.

[Mr Stewart Jackson (Peterborough) (Con)]

On human rights abuses in Iran, does my hon. Friend share my concern over the fate of the Christian pastor, Youcef Nadarkhani, who has reportedly been sentenced to death by the Iranian authorities for apostasy? Will the Foreign Secretary set out what the Government intend to do to relieve pressure on Christians and other minority groups in Iran?

[Alistair Burt]

In 2009, there were some 388 executions in Iran, including those of juveniles and women. We join with other nations around the world to condemn the way in which it is used as a form of punishment. I understand that Pastor Nadarkhani’s sentence and case are under review by the Iranian authorities. It is essential that the world continues its pressure in relation to Iran. A state is judged by how it looks after its minorities. In Iran, that includes the vulnerable Christian community and other communities of faith, such as the Baha’i.

Courts Service Estate

Tuesday 14th December 2010 Commons Chamber

15:36

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

With permission, Mr Speaker, I wish to announce the Government’s response to their consultation on Her Majesty’s Courts Service estate. Thank you for allowing me to release details of the courts covered in the statement to Members in advance.

This statement will be of interest to many hon. Members and to many hard-working members of HMCS staff. It will also be of interest to the judiciary, both to professional judges and the very many magistrates who give freely of their time to serve their communities. My announcements pave the way for a better, more efficient and more modern justice system that has more efficient courts, better facilities, and the faster conclusion of cases for the benefit of victims, witnesses, defendants, judges and the public at large.

The announcements complement the Department’s wider plans to help and encourage people to resolve their issues out of court, using simpler, more informal remedies such as mediation where appropriate; to overhaul case management procedures and get rid of wasteful layers of bureaucracy; to move forward with technological innovations such as video links, which have the potential to revolutionise the way in which justice is delivered in our country; and to involve communities much more closely in the justice system, particularly through problem solving and restorative justice approaches.

On 23 June, my right hon. and learned Friend, the Secretary of State for Justice and Lord Chancellor, made a written statement announcing consultations on proposals to close 103 magistrates courts and 54 county courts in England and Wales, and to merge some local justice areas. The consultation was clear that failures in the last decade to manage the Courts Service estate properly have led to a service that would be unsustainable at any time, let alone in the current financial circumstances.

It is unsustainable that in 2009-10, our 330 magistrates courts sat for less than two thirds of their available time and that courtrooms in our 219 county courts sat on average for only 180 days a year. It is unacceptable that dozens of buildings never intended, and not fit, for the requirements of a modern court system are still being used. It is undesirable in the current financial position that the taxpayer continues to fund buildings that offer outdated and inadequate facilities to victims and witnesses.

I am grateful for the many contributions to the consultation. I understand the strength of feeling that is has generated, and I have listened to the many points made by respondents. Much has been said by Members about travel times to court. I can reassure the House that our plans will only very slightly reduce the percentage of the population able to access their nearest court by public transport in under an hour, from just under 90% to 85%. I also remind the House that very few of us actually attend court more than once or twice in our lives, and even fewer use public transport to get there. It is simply not good use of taxpayers’ money to operate courts simply to shave minutes off a journey that many will never need to make.

Arguments were also made during the consultation about the potential erosion of local justice. I take that accusation extremely seriously, but the closures will not mean people losing access to local justice. In fact, I would suggest that they will mean quite the opposite—better local justice. They will mean the provision of a better, more efficient and more modern justice system with good facilities, efficient courts and the faster conclusion of cases for the benefit of victims, witnesses, defendants, judges and the public.

Having taken all those points into consideration, the Government have decided to close 93 magistrates courts and 49 county courts. Of those county courts, however, 10 will remain open for hearings under the control of other local county courts. We will also retain 10 magistrates courts and five county courts on which we consulted, and I will list them. Magistrates courts will be retained at Abergavenny, Harlow, Kettering, Newbury, Newton Abbot, Skipton, Spalding, Stroud, Waltham Forest and Worksop. County courts will be retained at Barnsley, Bury, Llangefni, the Mayor’s and City of London, and Skipton.

It is estimated that those measures will save £41.5 million during the spending review period, excluding closure costs, and bring in £38.5 million in receipts from the sale of assets. In addition, I expect substantial cost avoidance through avoided maintenance costs for closed courts and better targeting of resources for the Courts Service, as well as savings for the National Offender Management Service and the Crown Prosecution Service. Copies of all the relevant documents, and of the decisions on local justice area mergers and counter services, have been placed in the House Library.

This is the start of an important programme of reform for the Courts Service. I am determined to develop a proper, modern Courts Service and estate that does our communities proud. We are taking the difficult action on court closures that the last Government failed to take, so that we can raise the quality of the courts estate significantly across the board.

With that in mind, I can announce today that £22 million of capital will be reinvested to improve and modernise the courts to which work will be transferred. Within that are three particularly large projects: in London at Camberwell Green magistrates court, in Staffordshire at Newcastle-under-Lyme magistrates court and in Wales at Prestatyn magistrates court. There are also smaller schemes to make some receiving courts better. They include additional interview rooms and a secure dock at Huddersfield magistrates court and the conversion of rooms at Watford magistrates court to provide additional staff accommodation and security. In the next spending period, new courts will open in Chelmsford, Colchester and Westminster, and Woolwich Crown court will be extended. We will make further announcements on new court building schemes early in the new year.

We have, however, cancelled existing plans for a new magistrates court in Liverpool, because the scheme that was proposed is unaffordable, but I will investigate more affordable options to provide suitable accommodation for magistrates court work in Liverpool.

Our courts are failing fully to embrace technological advances that have the potential to revolutionise the way in which justice is delivered in our country. There is much that can be done. Court-to-prison video links provide a much more efficient way of doing things, but they are used in too few cases. In future, we want victims and witnesses, when appropriate, to be able to give evidence in trials by live video link from a more convenient location.

We will begin by testing the principle of police officers giving evidence in summary trials by live video link from the police station. We expect that that will save the police time and money and enable more officers to spend more time out on patrol. We intend to test the idea in London in January, and in at least one other area soon afterwards, with the first cases likely to be heard in that way before the end of March. If successful, that could pave the way for civilian and expert witnesses to give evidence from a police station or other, more convenient locations, rather than having to travel to court.

We also want to give communities a greater say in how justice is administered in their areas. Proposals for problem solving and restorative justice were included in my Department’s sentencing and rehabilitation Green Paper, published last week. We will consult on the use of neighbourhood justice panels to deal with low-level cases, empowering people to develop their own solutions to local problems and increasing community confidence.

In summary, this announcement forms an important part of my Department’s clear vision for a step change in our justice system—one that protects communities from crime and works for, rather than against, the most important people in the system: the victims and witnesses. I commend the statement to the House.

[Mr Andy Slaughter (Hammersmith) (Lab)]

I am pleased to see the Minister at the Dispatch Box for this important statement on the delivery of justice in local communities. I thank him for a copy of his statement in advance.

We missed the Minister in the debate on legal aid in Westminster Hall this morning. Members from all parties spoke passionately in defence of their law centres and citizens advice bureaux, which, like local courts, are facing wholesale closure. He will be pleased to hear that his hon. and learned Friend the Solicitor-General did as well as the Minister would have done in carefully avoiding responding to the many points that were raised.

Launching the consultation on court closures in June this year, the Minister said:

“The Government is committed to supporting local justice, enabling justice to be done and seen to be done in our communities.”

I agree with that statement, but his statement today does not achieve that ambition. Perhaps a clue as to where the Government started to go wrong can be found in the next paragraph of the statement launching the consultation, which said that

“we increasingly use the internet and email to communicate…and we travel further…to do our weekly shop.”

Perhaps we do, but that misses two points. First, courts are not like Facebook or Tesco. They are an important part of many communities in the same way as people regard police stations and town halls.

Claimants and defendants, witnesses and victims will all be inconvenienced and, in many cases, disconcerted by the loss of the local criminal or civil court, or both, only to find them replaced with anonymous court centres many miles away. Secondly, not everyone has the mobility or resources to travel long distances to find justice, especially in rural or remote areas. My first question to the Minister is to ask him to produce the calculations that have been done to determine the time it will take and the distance that will be covered in travelling to the replacement courts. He says that only a minority of court users will be disadvantaged, but that is not the view of the Lord Chief Justice or of his own colleagues. Responding on behalf of the Lord Chief Justice, Lord Justice Goldring noted that poor public transport meant it would be difficult for many people to

“arrive at court before 10am or return home after 4pm”.

Will the Minister look again at travel arrangements and the times of journeys to the remaining courts after the Department for Transport and council cuts have taken effect?

The Minister consulted on closing 103 magistrates courts and 54 county courts, 30% of the total in England and Wales. He said today that 90% of that number will close—some 142. That would give an annual saving, based on his previous figures, of about £13 million, which is not significant in the context of the wholesale cuts going on in other parts of his Department but is a sizeable proportion of the running costs of lower courts. Will all this simply be handed to the Chancellor in the compliant if not willing way the Lord Chancellor has taken to adopting in asset stripping his Department? Or will some be reinvested in the remaining courts estate to improve the service to the public that the Minister says he wishes to see and to cope with the increased traffic from the closed courts?

The Minister said that some capital will be reinvested in specific projects, but there is no allowance for the extra pressures on remaining courts. Is that not proof that this is no more than a crude cost-cutting exercise with none of the benefits that he half-heartedly claims? He also said in July that

“Providing access to justice does not necessarily mean providing a courthouse in every town or city.”

We would not disagree with that. Needs change and buildings wear out or prove unsuitable. It is right to seek economies while maintaining access and making the administration of justice more efficient. Although every closure decision is difficult, and many older courts have a historic and nostalgic importance, in government we were prepared to close less well-used or poorly functioning courts. We were endlessly criticised by the Minister for doing so, but the difference between our programme of review and his wholesale massacre of the local justice system is clear both from the quantity of closures proposed and the haste with which they will now proceed.

What is the Minister’s timetable for shutting the doors of those historic courts? Why has he not published the results of the consultation before today? What impact assessments have been done? Is he prepared to defend the debilitating effect that longer journey times and unfamiliar surroundings will have on the frailest in our society, who often attend courts as victims and witnesses? Many domestic violence courts and family courts will have to move or close. What arrangements has he made to ensure that they go to suitable locations?

Under the previous Tory Government between 1979 and 1997, courts closed at the rate of 25 a year and, under the previous Labour Government, that fell to 13 a year, but now the Minister is proposing to close almost 150 in this Government’s first year. To be fair, his colleagues have been as critical of the closure programme as Opposition Members, none more so than the Solicitor-General, the hon. and learned Member for Harborough (Mr Garnier), who told his local paper:

“I urge residents of Harborough and the surrounding locality to respond to the consultation…we need to organise and get the campaign rolling.”

The International Development Secretary was even more incensed about the proposed closure of Sutton Coldfield court. He told his local paper that the

“very strong arguments which successfully defeated the attempt to close Sutton Magistrates’ Court eight years ago will be just as strong, if not stronger”.

The Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), criticised the Treasury. He said:

“The Ministry of Justice seem to have made serious errors with their figures…it’s not just us they’re after, but 102 other courts across the country. Yet I believe the fight is worth having—and that we can win.”

No critic was stronger than the former shadow Justice Minister, who is now Attorney-General. He said:

“It makes a mockery of British justice that this government is considering closing 21 magistrates courts, despite the serious problems of violent crime and anti-social behaviour we face.”

Conservative and Lib Dem Members have all sounded off in their local press and in the House, but as reported in the Evening Standard, this is an

“I back cuts - but Not In My Backyard”

policy. Opposition to the Minister’s policy is growing all over the Government Benches, including from those on the Front Bench. Opening the gates of the prisons and handing ballot papers to the few left inside looks positively—

[Mr Speaker]

Order. I trust that the shadow Minister is in his final sentence. He has taken almost as long responding to the statement as the statement itself took. Members must realise that this is not a debate. A response to a statement is a brief response and a series of questions. I hope that that is now clear for the future, because sight has been lost of it, and must be regained at once.

[Mr Slaughter]

I am most grateful, Mr Speaker—you predicted absolutely correctly that I am coming immediately to the end of my response to the Minister’s statement.

This wholesale closure sums up the Government’s approach to cutting local services in this and every other area—“Let’s get on with the cuts and worry about the effects later.” This programme of closures amounts to a wholesale destruction of this foundation stone of much of British justice, and the Minister should be ashamed to bring it before the House.

[Mr Djanogly]

In his rather concise statement—or perhaps it was not—the shadow Minister said that the savings are not particularly significant, and then immediately went on to accuse the Government of asset stripping. I do not see the consistency in that. However, the economic circumstances that Britain faces and the imperative of reducing the national debt pile amassed by the previous Government’s bout of carefree spending impacts on our proposals, which form part of the commitment of the Ministry of Justice to reducing spending by £2 billion.

Savings apart, I am convinced that the current court system is not efficient enough, that it should provide better value for money, that it should make better use of technology, and that it should provide a better service for court users. The hon. Gentleman accuses me of the wholesale closure of legal aid and CABs, and of the wholesale massacre of the Courts Service, but he must tell us where he would rationalise and save.

The Labour party manifesto said:

“To help protect frontline services, we will find greater savings in legal aid and the courts system”.

If the hon. Gentleman is to be credible, therefore, he must give us his view of how justice is to be delivered. If he would put more money into legal aid, would he take even more money out of the courts, or vice versa? Until he tells us how he would be prepared to spend the money, I am afraid that he will not get people’s trust on this matter. He seems to suggest that closing courts is bad in every case.

The hon. Gentleman asked for the financial workings, and I am pleased to say that the impact assessments have been published and are there for him to look at. The utilisation figures take into account the additional work and remaining courts that will come into existence. The timetable is that the first courts will start to close on 1 April next year, and I can confirm that travel arrangements will be organised on a local basis. It is important to make the point that during these reorganisation proposals, we have been considering not just closures but how we can best reorganise the remaining Courts Service. That includes looking at how people can best get to their local courts.

Delivering justice is about more than protecting bricks and mortar. The hon. Gentleman talks about it being like Facebook. In reality, courts are not like post offices either—they are not places that people go to every day of the week. Of equal importance is the quality of justice. It is important that people have use of a fit-for-purpose building that has good listing facilities and gets cases heard promptly. Proximity is important, but it is only one of a number of issues to be considered, and we have considered those issues carefully.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

There is clearly a case for making savings where courts are close together or little used. However, why have Ministers taken relatively little account of the representations of the Lord Chief Justice, particularly on the Courts Service in what he described as vast rural areas, such as Alnwick and Tynedale in Northumberland and places elsewhere in the country? Will benches not find it necessary—at least sometimes—to go out to parts of their areas, possibly even to hear cases in places where they are still courthouses, given that they cannot be sold and are still public property?

[Mr Djanogly]

My right hon. Friend is passionate about the Courts Service, as I know not least from my appearance before him and the Justice Committee. However, it is important to point out that the Lord Chief Justice’s response came from the foreword to a report of the senior presiding judge, and that the report did not represent a response on behalf of the entire judiciary. The senior presiding judge was collecting the remarks by various judges around the country. It needs to be seen in that context. Indeed, the report was given careful consideration, as were all the responses.

[Several hon. Members]

rose—

[Mr Speaker]

Order. As usual, there is much interest and little time, so brevity from Back-Bench and Front-Bench Members is vital if I am to accommodate the level of interest.

[Mr George Howarth (Knowsley) (Lab)]

The Minister is well aware, not least from correspondence from me, that the data on which he based the Knowsley magistrates court decision were deeply flawed. He has not yet addressed that deeply flawed data. Why has he gone ahead with a proposal that he knows will not work? To make matters worse, why has he also decided that there will be no additional capacity in Liverpool by scrapping the capital investment programme? The Deputy Prime Minister refers to this as a progressive Government, but the past two days have proven that it is a wrecking-ball Government.

[Mr Djanogly]

It is not the case that we have not reinvested. As I said in the statement, we are reinvesting in the remaining courts. The right hon. Gentleman asked about errors in the consultation data. There were 16 area consultation documents. A small number of errors were found, but none was considered to be material to the consultation. In one area—north Wales—even though we were advised that the errors did not affect the consultation, I personally decided that the consultation documents should be sent out again, and that was done. However, we do not maintain that the figures were put out in error—quite the opposite. On the whole, they were accurate.

[Mr Roger Gale (North Thanet) (Con)]

On 16 November, one Under-Secretary at the Ministry of Justice told me in a parliamentary answer that it would be highly desirable if more work that was currently done by Crown courts were carried out by magistrates courts. He agreed that there was waste in the Crown courts. On the same day, the other Under-Secretary at the Ministry of Justice told me that following the closure of magistrates courts the same amount and the same type of work would be done by the other magistrates courts. Which is right?

[Mr Djanogly]

It is true that in terms of capacity, Crown courts are almost bursting at the seams, which is why my hon. Friend will see that not a single Crown court is proposed for closure in the list. One of the great challenges that we face is to ensure that work that should more appropriately be carried out in magistrates courts does not go to the Crown court. Both the legal aid Green Paper and the sentencing and restorative justice Green Paper have provisions to encourage that.

[Hazel Blears (Salford and Eccles) (Lab)]

I frankly do not understand the Minister’s decision on Salford magistrates court. Not only do we have the support of the Lord Chief Justice—who said that Salford city council’s alternative proposal should be supported and the court should remain open—but the city council would have met the maintenance backlog and the ongoing revenue costs for the court. There would have been no cost to the Department. I believe that this decision flies in the face of all logic. We have had a court in our city for 1,000 years, doing fantastic community justice work of the kind that the Minister has talked about. We have had a court for 1,000 years: it has taken this Government just six months to put an end to that.

[Mr Djanogly]

The right hon. Lady came to see me with members of her local authorities, and she spoke strongly in support of her court—I recognise that—as did members of her visiting delegation. However, that court has a low utilisation rate, and a building and facilities that are not adequate. The court is going to be closed because of those factors, as well as its close proximity—about half a mile—to Manchester City magistrates court, which can import the work. I am afraid that it is that close—1,000 paces to one of the finest magistrates courts in England and Wales.

[Heather Wheeler (South Derbyshire) (Con)]

I wrote to the Minister at the time regarding the potential closure in Burton. People in South Derbyshire go there, and it takes much more than an hour to get to Derby. There is no way on God’s earth that we can get to Newcastle-under-Lyme, so would he be kind enough to arrange a meeting to look at our plan B in South Derbyshire, for a new civic centre that can take over such work?

[Mr Djanogly]

My hon. Friend the Member for Burton (Andrew Griffiths) secured an Adjournment debate in July, and I think he accepted the need to make savings, but urged Ministers to consider the wider impacts. There is a high density of county courts in Staffordshire and west Mercia. Burton sat for 199 days in 2009-10, and there are no members of the judiciary based permanently at the court. Although facilities are adequate, closure would mean that Her Majesty’s Courts Service would not be liable for an additional investment of around £450,000. None the less, I would of course be delighted to meet my hon. Friend to discuss the matter further.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

The maintenance figures used by the Minister to justify closures in Wales were wildly inaccurate. On the second attempt he got them wrong again, and on the third attempt they were wrong yet again. He is using fairytale figures to support his arguments. The closure of Pwllheli magistrates court—which was vehemently opposed by the Lord Chief Justice, the presiding judge and everybody who knows anything about that area of Wales—leaves my constituency with one court to serve a patch that measures 100 miles north-to-south and 100 miles across. Is that local justice?

[Mr Djanogly]

Having considered the matter, we believe that local justice will be maintained in the hon. Gentleman’s constituency. The fact of the matter is that Pwllheli magistrates court has a very low utilisation rate—29% in 2009-100—offers limited facilities for victims and witnesses, and is only partially disability-compliant. The work undertaken at that court can be easily accommodated in the recently purpose-built Caernarfon criminal justice centre, which offers far superior facilities for all court users.

[Stephen Barclay (North East Cambridgeshire) (Con)]

There will be great dismay at the closure of Ely and Wisbech magistrates courts in North East Cambridgeshire, particularly as the magistrates court in the constituency next door—the Minister’s own—is to be retained, as are county court hearings. There were factual errors in the consultation on Wisbech court, such as taking one-off costs as running costs. There were also omissions, such as ignoring the potential of transferring work from Ely to Wisbech to increase its utilisation rate, and underestimates of revenue, involving such elements as charging the police nothing for the use of the court building. In the light of that, will the Minister place in the Library the figures that were used after those errors were pointed out, so that we can see exactly what this decision was based on?

[Mr Djanogly]

Yes, I am pleased to say that the impact assessments have been published today, and my hon. Friend will be able to have full sight of those figures.

[Simon Danczuk (Rochdale) (Lab)]

To say that this announcement is disappointing is an understatement. Justice will no longer be done in Rochdale, nor will it be seen to be done. If the Minister believes that victims, witnesses and the accused will travel mile upon mile for justice, he is sadly mistaken. Rochdale court has one of the highest utilisation rates in Greater Manchester, and some of the best possible facilities, including video links and secure rooms for witnesses. It has a fantastic bench and great staff, and it is completely fit for purpose. This decision will not affect people like the Minister, but it will affect people who live in Rochdale. Will he reconsider his decision?

[Mr Djanogly]

No, I am afraid to say to the hon. Gentleman that the decision has been taken. Rochdale magistrates court is a busy court with a good utilisation rate, but it will close because of low utilisation across the Greater Manchester area. It is important to point out to the hon. Gentleman and other hon. Members who are making related points that during the consultation we did not look at the individual courts in isolation. Yes, we looked at each court on its own, but we also looked at them in the context of other courts in that local justice area. That has sometimes meant that courts with high utilisation figures have still had to close because, in an area context, they are not efficient.

[Tessa Munt (Wells) (LD)]

I would like to tell the Minister about my concerns for the people who live in rural Somerset. That includes my constituents and those of my hon. Friend the Member for Somerton and Frome (Mr Heath). The Government intend to close Bridgwater court and Frome court, which, as the Lord Chief Justice has recognised, will leave any number of people unable to reach a court inside one day’s travel by public transport. Will the Minister consider introducing a proper system for booking appointments, so that people can attend court at 3 or 4 o’clock in the afternoon? In that way, there might be some hope of their reaching the court in which they are intended to appear. Secondly, can he make certain—

[Mr Speaker]

Order. I think we will make do with one question. Just before the Minister replies, may I remind the House that I am trying to help Members, but that Members must be prepared to help each other? That means short questions and short answers.

[Mr Djanogly]

Thank you, Mr Speaker.

The court was used for only 23% of the available time in 2009-10, and the standard of accommodation falls far short of what is now expected by court users. However, consideration is to be given to those living in the north of the area having their cases heard at a more convenient court in the Avon and Somerset area.

[Mr Eric Illsley (Barnsley Central) (Lab)]

The Minister has already announced that Barnsley county court will be retained, but can he confirm that he has accepted the view of most of the statutory agencies that the county court should be joined with the magistrates court? Is that merger going to take place?

[Mr Djanogly]

I do not have an answer to that question. I will look into the matter and come back to the hon. Gentleman.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

The Minister is to be commended for coming to the House to make an oral statement on what was inevitably going to be a difficult announcement. Will he confirm that Harwich magistrates court was already earmarked for closure by the Labour Government? Can he also give me an assurance that Harwich will stay open until the new court facilities in Colchester have been constructed and are up and running?

[Mr Djanogly]

The answer is yes, in both cases.

[Ann Clwyd (Cynon Valley) (Lab)]

The shadow Minister, my hon. Friend the Member for Hammersmith (Mr Slaughter), asked whether the Minister would share with the rest of us his calculations on travel times. I assume that he will also put his answer in the Library, and I would like him to confirm that. There will be considerable anger in the Cynon Valley about the decision to close the Aberdare courthouse, and I do not know where the Minister’s calculations on travel times have come from. I invite him to join me on a bus through the Cynon valley, to find out that from many of those areas it is impossible to reach Merthyr Tydfil within an hour.

[Mr Djanogly]

Travel times were worked out by the Courts Service. The difficulty is that times will vary from one part of an hon. Member’s constituency to another, so it is the average times that have to be taken into account.

[Julian Smith (Skipton and Ripon) (Con)]

I thank the Minister for listening to my constituents in Skipton and the Yorkshire dales. Will he pay tribute to the campaign run by the local newspaper, the Craven Herald, which explained the devastating impact that the closure of the court in Skipton would have had in this most rural part of England?

[Mr Djanogly]

My hon. Friend spoke forcefully in an Adjournment debate and then met my officials and me. He made a persuasive case, and his local area made a persuasive case, and when we thought it about carefully we decided he was right that the court should stay open.

[John Mann (Bassetlaw) (Lab)]

I am relieved that the robust campaign for Worksop magistrates court has eventually been listened to. To avoid ambiguity in the future, will the Minister confirm that the previous functions of Worksop county court will be run from Worksop magistrates court in the future?

[Mr Djanogly]

That is my understanding, yes.

[Dr John Pugh (Southport) (LD)]

Why is the Minister still looking for magistrates court space in Liverpool while closing down the purpose-built Southport magistrates court? Where is the sense or the saving in that?

[Mr Djanogly]

Replacement of the inadequate facilities at the Liverpool magistrates courts at Dale street and Victoria street is, and remains, a top-priority scheme for Her Majesty’s Courts Service.

[Rehman Chishti (Gillingham and Rainham) (Con)]

I welcome the Minister’s statement. Will he confirm that millions of pounds are wasted each year by commuting prisoners to and from court, and that better use of technology could deal with PCMHs—plea and case management hearings—first appearances and mentions at the Crown court and the magistrates court?

[Mr Djanogly]

I am absolutely convinced by what my hon. Friend has to say. Millions of pounds are currently wasted by witnesses, lawyers and defendants all moving around the country. Many problems could be solved through the use of technology.

[Albert Owen (Ynys Môn) (Lab)]

I acknowledge and welcome the retention of the county court at Llangefni—and I congratulate the Minister on pronouncing it correctly. The Minister said that part of the exercise was to save money. Will he acknowledge the important economic impact of courts and legal services on towns across the United Kingdom, and was that taken into account during the review?

[Mr Djanogly]

The purpose of the review was not to look at the impact of the closure of courts on the wider economies within towns, but the work will go to the remaining courts, which will have implications for putting money back into the system in those other courts.

[Mr David Burrowes (Enfield, Southgate) (Con)]

I declare an interest as a court duty solicitor. I welcome the reprieve of Waltham Forest magistrates court, which has particularly effective family and youth court provision. I urge my hon. Friend to develop opportunities with local authorities to accommodate appropriate youth court hearings, so that we can deliver effective localised justice.

[Mr Djanogly]

Effective localised justice is an important part of the Green Paper that my right hon. and learned Friend the Secretary of State published last week, so I can say yes to that. As regards Waltham Forest, again, a delegation of Conservative and Labour Members came to see me and made a very persuasive case for that court.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Ammanford court in my constituency was recently refurbished at a cost of £59,000 to make it one of the most modern courts in west Wales. Is it not a colossal waste of public money to close that court now?

[Mr Djanogly]

We have had to take some tough decisions; of that there is no doubt. As I said before, we are dealing with this on an area basis as much as on a court-by-court basis. That is an important point, because people have been able not only to assess how courts impact on an area overall, but to see how their own areas have been treated in comparison with other parts of the country. That, to me, has made this a very fair consultation.

[Robert Halfon (Harlow) (Con)]

My constituents will strongly welcome the decision to keep Harlow magistrates court. Ours is a growth town that provides value for money. Will the county court’s functions be transferred to the magistrates court or to Chelmsford? If they are transferred to Chelmsford, will consideration be given to people who have difficulty in travelling? Will a satellite county court be provided?

[Mr Djanogly]

Yes, and it is hoped that the retention of the magistrates court will enable business to be conducted across both.

[Andrew Percy (Brigg and Goole) (Con)]

Goole magistrates court is provided by the local police authority at a peppercorn rent, and is connected with recently refurbished cells at the police station. Its closure will leave residents in the western part of the East Riding a considerable distance from local justice. Will the work at Goole be transferred to Hull, or will my constituents be expected to get on a bus, travel past the magistrates court in Hull, change buses and continue on a different bus to Beverley, as was suggested in the consultation?

[Mr Djanogly]

The court at Goole is closing not least because of low utilisation, but when we looked at the responses to the consultation, we realised that the travel arrangements of people using public transport were different from those of people using private transport, and we think that it will be possible to use not only Beverley but Hull. That was one good outcome of the consultation.

[Dr Sarah Wollaston (Totnes) (Con)]

My hon. Friend has confirmed that the work of Totnes magistrates court is to be relocated. I know he is aware that the building provides an useful facility for the coroner and those who assist him in his work, such as Victim Support, and also that the citizens advice bureau has worked extensively on a plan to share the court building. Can he assure us that this important local asset will be put to its best local use by those valuable organisations?

[Mr Djanogly]

My hon. Friend has raised an important point. I hope that the answer is yes, and if I can be of assistance she should get in touch with me to that end. Courts will be empty, and there may be local authorities or other local agencies that could make use of them. Now that we have a final list of the courts that will close, that process can begin.

[Alun Cairns (Vale of Glamorgan) (Con)]

The Minister has announced the closure of Barry magistrates court. I believe that that decision was simply wrong. More than £1 million was spent on the court last year, it has extremely high utilisation rates and it is the only court in the county of Vale of Glamorgan. Will the Minister share with me the data on which he based the decision, and will he confirm his agreement to meet the chairman of the bench and me to discuss the matter?

[Mr Djanogly]

I certainly will, but, again, the court has low utilisation, and Cardiff is just 9 miles away, with a good public transport infrastructure.

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

The Minister says that his proposals will provide a better and more efficient justice system. Will he accompany me to the east end of Sheppey, and explain to residents there how justice will be improved now that they will be forced to travel to Canterbury or Medway—a journey that can take up to three hours on public transport, if public transport is available, which it is not after 6 pm?

[Mr Djanogly]

Of course I will meet my hon. Friend if that is what he wants, but I have already met him and we have discussed the issues. Again, the court was considered in the context of the area, and we believe that we made the right decision.

[Mr Mark Williams (Ceredigion) (LD)]

May I ask the Minister to reflect not just on north Wales, as he has been asked to do, but on the huge tract of west Wales which will now be left without convenient access to a magistrates court, and, critically, without the public transport that would allow him to realise his dreams? There simply is not adequate public transport to take people from Ceredigion up to Aberystwyth. Will the Minister think again about the transport issues on which he and his officials have reflected?

[Mr Djanogly]

We have considered transport very carefully, and we concluded that one hour on public transport was the right amount of time. Originally, a lot of those courts were instigated on the basis of half a day’s horse ride, but we thought one hour on public transport should be adequate.

[Bob Blackman (Harrow East) (Con)]

There will be widespread concern about the closure of Harrow magistrates court, not least because it is fully utilised and we demonstrated in the consultation that it will cost money to close it rather than keeping it open. The alternative means transferring the work to areas that are impossible to reach by public transport, even in London. There will also be concern that the Minister refused to receive an all-party delegation from Harrow council and the bench, and I ask him to hear those people so they can put their arguments in person.

[Mr Djanogly]

I am afraid that the time for consultation has now passed and the decision has been taken. The problem with Harrow is that there is considerable capacity at neighbouring courts, and they offer much more modern facilities.

[Sheryll Murray (South East Cornwall) (Con)]

The Minister will be aware that documents on his website cite the travel time from Liskeard to Bodmin because it is proposed to close Liskeard magistrates court, but he does not seem to have taken into account the travel time from the rural parts of my constituency such as St Cleer and Kelly Bray. Can he confirm that he has taken into account that travelling time, and the availability of public transport?

[Mr Djanogly]

Yes, we did take those into account.

[Nigel Adams (Selby and Ainsty) (Con)]

What consideration was given to the fact that just two years ago the thick end of £1 million was spent on making Selby magistrates court Disability Discrimination Act-compliant? I fully understand that the Government inherited a financial mess, but if Selby magistrates court is now to be closed and sold off, the taxpayer will be facing a huge loss. My constituents will be keen to see the impact assessment on which that decision was based.

[Mr Djanogly]

Investment has been made in various parts of the estate at various times, but the courtroom capacity at York magistrates court, coupled with the flexible listing practices, will enable Selby’s work to be absorbed effectively into York.

[Mr Robert Walter (North Dorset) (Con)]

I am doubly disappointed, because the Minister did not give me prior notification of a court closure in my constituency. The closure of the court at Blandford means that residents of Dorset will have access to justice only on the coast. Residents in the expanding towns of Shaftesbury and Gillingham will not be able to get to Weymouth before 12 noon, and will have to leave by 2 o’clock in order to get back the same day. Will the Minister meet me and the lay magistracy to talk about this matter?

[Mr Djanogly]

As I have said to other hon. Members, the consultation period has now finished, but I must point out that my hon. Friend’s local court was used for only 29% of the available time. I am sorry to hear that he had not received notice, and I will look into why that was the case.

[Jonathan Lord (Woking) (Con)]

The Minister will appreciate that I am extremely disappointed by the decision to close Woking magistrates court. As he saw in my submission and that of the bench, it has very high utilisation rates, a purpose-built court, fantastic disabled access and excellent youth witness provision. How does this decision fit with the criteria for the consultation, because many outside independent people, including judges, looked at it and did not think that Woking fitted those criteria?

[Mr Djanogly]

My hon. Friend made a very cogent case for the retention of his court, and put the local case very strongly. I have to say that the judgment was finely balanced, but ultimately this decision was taken because the utilisation rate in the Surrey courts has been below 80%, and transferring work to Staines and Guildford magistrates courts will result in the rate increasing to 89%.

[Guy Opperman (Hexham) (Con)]

I disclose my former profession as a barrister. Tynedale in Northumberland has almost 1,000 square miles without a court. The consultation used poor-quality figures and they were badly applied. If they are wrong, does the Minister accept that the claim is capable of judicial review?

[Mr Djanogly]

We do not believe that the figures we consulted on were wrong.

[Neil Carmichael (Stroud) (Con)]

I am delighted that Stroud magistrates court will remain open. I regard it as an example of an efficient modern court, and I think it is consistent with the whole approach of the Ministry of Justice. Does the Minister agree?

[Mr Djanogly]

On review, yes.

[David T. C. Davies (Monmouth) (Con)]

I, too, am deliriously happy today, and I thank the Minister for listening to the arguments that I and the people of Monmouthshire put forward to save Abergavenny court from closure. Will he assure us that consultations by this Government will continue to be proper exercises, and not just the shams that we have seen in the past 13 years?

[Mr Djanogly]

I thank my hon. Friend for those comments. Clearly, things were not all bad in Wales. We wanted to do a full consultation, as the previous Government had been closing courts in dribs and drabs—a court here and a court there. One of them was operating as a pizza shop, and another had had the roof burned off for three years before we came in and closed it. This Government are consulting fully and putting forward a strategic plan across local areas where people can take a strategic view on a national basis.

[Mr Philip Hollobone (Kettering) (Con)]

Residents in the borough of Kettering will be pleased that the Minister has listened to the vigorous local campaign and decided to save Kettering magistrates court. What were the main factors behind his very welcome decision?

[Mr Djanogly]

The court will remain open because of concerns raised about the capacity of the receiving court at Northampton in light of the decision to close Daventry and Towcester magistrates courts.

[Mr David Nuttall (Bury North) (Con)]

I, too, remind the House of my former profession as a solicitor. I warmly welcome the Minister’s statement, particularly the welcome news that Bury county court will remain open. Will he confirm that that is not a temporary reprieve but a permanent decision? Also, I am slightly concerned that the decision to close Rochdale magistrates court will require a great deal of extra capacity at Bury magistrates court, especially as Rochdale already takes in the Heywood and Middleton benches. Has he taken that into account?

[Mr Djanogly]

Yes, we have: we will be doing about £170,000-worth of work to accommodate the work from Rochdale magistrates court.

[Christopher Pincher (Tamworth) (Con)]

The state of the public finances notwithstanding, many people in Tamworth will be bitterly disappointed by the loss of both our county court and our magistrates court, which is the most utilised court in Staffordshire. What assurances can my hon. Friend give my constituents that the video-link technology between courts and police stations will be rolled out quickly so that our police will not spend all their time on the A38 to Burton, and that vulnerable people who will have to spend a day-long round trip going to Stafford county court will not have justice put beyond their means?

[Mr Djanogly]

The court is closing because it has a sitting day allocation of only 76 days, and the work will transfer to Burton magistrates court. I can tell my hon. Friend that we will be pushing ahead with the additional use of technology, which we see as the future. As things stand, the Courts Service does not make adequate use of modern technology.

[Andrew Griffiths (Burton) (Con)]

The Minister has already heard the genuine concerns about the closure of Burton county court. He said today that nobody should have to travel for more than an hour to get justice, but under these proposals my constituents will have to go to either Derby or Stafford. On public transport, that takes two hours and 23 minutes; on the train it takes an hour and 40 minutes. Will he meet me to ensure that my constituents will get access to the court in Derby rather than the one in Stafford?

[Mr Djanogly]

We would be happy to discuss that with my hon. Friend. We propose that work will transfer to either Derby or Stafford depending on which is closer for the parties involved, so I think we are heading in the right direction.

[Michael Ellis (Northampton North) (Con)]

I declare my interest as a barrister—in fact, I have appeared in a couple of these courts. The Minister mentioned how busy Northampton magistrates court is, and said that that had been factored into some of his decisions. Some of the hearings in magistrates courts are very short, and some magistrates courts are under-utilised, so can my hon. Friend confirm that because of the shortness and frequency of such hearings, they are particularly susceptible to the use of video link and other modern technology, and that savings could thus be made across the board?

[Mr Djanogly]

They are indeed. I have visited the pilot projects in south London, which work extremely well. We have to review their cost implications and we want to extend the pilots to help witnesses.

[Angus Robertson (Moray) (SNP)]

On a point of order, Mr Speaker.

[Mr Speaker]

Order. I am grateful to the hon. Gentleman for the advance notice, but points of order come after the next business.

RAF Bases

Tuesday 14th December 2010 Commons Chamber

Application for emergency debate (Standing Order No. 24)

16:30

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I seek leave to discuss a specific and important matter that should have urgent consideration—the closure of RAF bases.

Members on both sides of the House will be concerned about recent briefings from the Royal Air Force and the Ministry of Defence on the proposed closure of bases that have been reported in today’s press. As the House will now know, the RAF has made a series of recommendations to the MOD about the proposed closure of bases. My concerns, and the reasons why I am proposing a debate under Standing Order No. 24, are twofold: first, the Government have not provided coherent criteria on which the decisions are to be made and, secondly, they have still failed to give a timetable for making and announcing the decisions.

The Government have left the affected communities, service personnel and their families and Members of the House unclear and confused as to the basis on which they will make those important decisions. The Chief Secretary to the Treasury said that the decision would be motivated by socio-economic considerations, while the Secretary of State for Defence said yesterday that it would be a strategic defence decision alone and the Prime Minister and his Chancellor have said that the decision would be based on budgetary considerations.

With Christmas only a few days away, this is obviously causing a great deal of uncertainty for our service personnel, some of whom are currently serving overseas, and for their families. I do not believe that is fair or just. Furthermore, the next scheduled Defence questions are not until the end of January, which will mean a seven-week wait for clarity and for scrutiny of Ministers. Our serving personnel and their communities deserve to know on what basis—from the three put forward by individual members of the Government—the decisions will be made, and when.

As you know, Mr Speaker, I have huge respect for the House and the role it can play in bringing clarity to issues that affect communities across the United Kingdom. If my application is successful, the debate will give right hon. and hon. Members the opportunity to present their cases. That will ensure that the debate is open and constructive, thereby affording the Government and the House a more rounded picture of community interests and feelings about an important issue before the House rises for Christmas.

Our gallant armed forces, who are serving their country, deserve better than the shoddy treatment they have received today.

[Mr Speaker]

I have listened carefully to what the hon. Gentleman said, and I have to give my decision without stating any reasons. I am afraid that I do not consider that the matter he has raised is appropriate for discussion under Standing Order No. 24 and I cannot, therefore, submit the application to the House.

Points of Order

Tuesday 14th December 2010 Commons Chamber

16:33

[Angus Robertson (Moray) (SNP)]

On a point of order, Mr Speaker. Moray is the most defence-dependent community in the UK, and the Government have already announced the closure of RAF Kinloss in the region, while the future of neighbouring RAF Lossiemouth has been under review. It has now been widely reported that the Royal Air Force has made a recommendation for the retention of RAF Lossiemouth, which would reflect the strong defence and financial arguments in its favour. Unfortunately, it appears that RAF Leuchars in Fife is now being considered for closure. Has the Ministry of Defence given any indication that it will make a statement on those recommendations, as we need an end to uncertainty both in Moray and in Fife?

[Sir Menzies Campbell (North East Fife) (LD)]

Further to that point of order, Mr Speaker. You have gone out of your way to emphasise that when important Government decisions are announced, they should be announced in the House and not in any other way. The issue of Royal Air Force bases in Scotland and elsewhere appears to have been the subject of a number of leaks. I have no notion where these leaks come from, but there is no doubt that they add to speculation and to the kind of uncertainty that the hon. Member for Dunfermline and West Fife (Thomas Docherty) mentioned in his application for a debate under Standing Order No. 24. I hope you might take the opportunity today, Mr Speaker, to reinforce your belief that when important announcements are to be made, they should be made to this House and not elsewhere.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

Further to that point of order, Mr Speaker.

[Mr Speaker]

We will have a last go from Mr Fitzpatrick on a point of order, then I will respond to them all.

[Jim Fitzpatrick]

I am grateful, Mr Speaker. Much of air-sea rescue is delivered by the Royal Navy and the Royal Air Force, but some is delivered by the Maritime and Coastguard Agency. It is suggested that the coastguard service’s stations and the bases run by the MCA will be cut. That is a major statement which the Government ought to make to the House, rather than have it leaked by the MOD, the Financial Times, a civil servant or whoever. I strongly support my hon. Friend the Member for Dunfermline and West Fife (Thomas Docherty) and right hon. and hon. Members who ask that the Government explain to the House the future of the air-sea rescue service.

[Mr Speaker]

The hon. Members for Moray (Angus Robertson) and for Poplar and Limehouse (Jim Fitzpatrick) and the right hon. and learned Member for North East Fife (Sir Menzies Campbell) have all raised extremely important points of order on the back of the speech in support of the application for a Standing Order No. 24 Adjournment debate.

First, I am conscious of press commentary, not least because of what right hon. and hon. Members have said, but I think it fair to point out that there is sometimes a difference between press commentary and speculation on the one hand, and a firm Government decision on the other. Secondly, I note the presence of two responsible Ministers in the Chamber, which I think is appreciated by the House. I noted that when the point was made about statements needing to be made to the House, the Under-Secretary of State for Defence, the hon. Member for South Leicestershire (Mr Robathan) was nodding vigorously his assent to that proposition.

The last point that I would make, specifically responding to the right hon. and learned Member for North East Fife, is that he is right. If a decision has been made, it should be reported timeously to the House so that the responsible Minister is subject to scrutiny. I hope the House will understand if I say today that I am not in a position to issue a verdict, but the point has been made forcefully. I hope it will have been heard on the Treasury Bench and that all proper procedures will be followed in this matter. I hope they will be, and I am quite sure, in light of the experience and perspicacity of the Members who raised their concerns, that if there were anything amiss or awry, those Members and others would bring it to my attention and that of the House before very long.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

On a point of order, Mr Speaker. I wonder if you can assist me. The court closure announcement that we heard just now was, in the case of Welsh courts, predicated on back maintenance figures which proved to be 100% inflated. Even on the second attempt to correct them, they were completely inaccurate. Were the announcement made outside the Chamber, I would say that it was justiciable. What can I do about this? I feel badly let down by the process.

[Mr Speaker]

The hon. Gentleman is seeking to continue the debate. I understand his frustration. My advice to him is that he should look for an opportunity to air his concerns in the Chamber. As he is aware, there is an innovative version of the Christmas Adjournment debate taking place under the auspices of the Backbench Business Committee next week. He might want to view that as an opportunity. There are opportunities in Westminster Hall. There will be further opportunities at Question Time. In the meantime, the hon. Gentleman has reminded his constituents of the importance that he attaches to the matter.

Banking and Financial Services (Community Investment)

Tuesday 14th December 2010 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

16:39

[Hazel Blears (Salford and Eccles) (Lab)]

I beg to move,

That leave be given to bring in a Bill to make provision for a voluntary mechanism through which banks, building societies and other providers of financial services can support community projects through reinvestment of part of their profits and assistance in kind; and for connected purposes.

This Bill is intended to address the challenges facing communities and voluntary organisations throughout Britain, and I hope to show the House that the funding shortfall facing such groups is of such significance that without urgent action we run the risk of losing them. The Bill then proposes a solution that I hope the Government will consider to be an equitable and practical means of remedying the situation.

A recent New Philanthropy Capital report found that the Government’s deficit reduction plan will lead third sector income to drop by between £3.2 billion and £5.1 billion, and that that gap is far too large to be filled by philanthropy and charitable giving alone. Only last week, Mr Thomas Hughes-Hallett, the chief executive of Marie Curie Cancer Care, warned of signs that charitable giving might fall sharply, and dramatic figures, such as Croydon council’s 66% reduction in grants for voluntary organisations, are causing all such groups to fear for their future.

This means that organisations such as Wooden Hill in Bedford, a social enterprise that trains adults to work with and mentor young people, and Accept Care, which operates in Northern Ireland and works with disabled people to give them skills to be active in their communities, face possible closure. It is those organisations that this Bill is intended to help.

Everyone agrees that we cannot have a big society without money, and the Bill seeks to demonstrate that, if we really are all in this together, that has to include the financial sector as well. During the global financial crisis, when the financial sector was in trouble, banks turned to the public to provide the vital funds needed to help stabilise the financial sector. Now, community projects need help, and the Bill would give banks and financial institutions the opportunity to put something back and to provide communities with the funding and stability that they need.

A recent report by the Institute for Public Policy Research into the financial sector estimates that next year, in 2011, profits and bonuses in the UK financial sector could be as high as £90 billion. Even during 2007-08, only months before the bail-out, the financial sector reported gross trading profits of £58.2 billion. The IPPR report projects bonuses to increase to almost £15 billion by 2011-12, and it shows that the average bonus in the financial sector is more than eight times larger than the average bonus in the rest of the economy.

I do not use those statistics to bash the banks, because it is in all our interests to have a strong, vibrant financial sector in the United Kingdom; I use them to demonstrate the enormous figures involved. Given the size of the bail-out that the public provided, I believe it only fair that financial service providers consider investing some of their profits in our communities. By creating a mechanism through which they can do so, the Bill would ensure that community enterprises have the funding that they need to thrive and prosper and to serve local people.

Many of our banks, building societies and financial service providers are already active in our communities. Last year, the Barclays community finance fund was launched, giving grants to organisations that provide affordable credit to people in deprived areas. The scheme has been so successful that it is being extended, and over the next three years it will allow local authorities, other organisations and Members to nominate local community finance organisations, such as credit unions, to receive money from the fund. Furthermore, Barclays staff now voluntarily participate in various community schemes, making it a real partnership between the corporate sector and local community enterprises.

Last year, the Co-operative Foundation, with which many Opposition Members will certainly be familiar, invested £11.3 million in our communities, and more than 50,000 people responded to a survey to ensure that that funding was directed to the areas and projects that really needed it. Part of the success of the Co-op and Barclays schemes is that they use resources in places where they can make a real difference, leveraging other investment and making sure that our communities are sustainable for the long term.

The problem is more than just purely financial, however. The fundraising expectations survey of more than 900 voluntary groups showed that 70% are having difficulty recruiting staff and getting people into their organisations to do the work. That impacts most heavily on groups in the north. Understandably, many financial institutions focus their community work in the areas where they are based, and that is often in the south-east. By creating a fund that is accessible to all voluntary groups throughout the country, we can address that issue and ensure that funding for voluntary groups is not governed by their proximity to a financial centre. The Bill would also provide for non-financial contributions, for example, mentoring, help with personal development and practical measures, such as room hire. It would therefore create a framework to allow for an ongoing relationship between business and communities, instead of merely creating an extension of philanthropic giving.

The Bank of New York Mellon has been operating in my community of Salford for two or three years. It has 300 volunteers in the community who work with Salford young people. They give them experience, provide role models, go out to our schools and read in our schools. The bank has a fantastic relationship with the community and it is able to do that—and is encouraged to do that—because, in America, there is a system of tax credits for companies that take part in voluntary and community activity.

It is important to stress that the Bill would create a voluntary mechanism. It would not create duties or obligations but would provide incentives and opportunities for the providers of financial services to build a constructive partnership with their communities. There would be real benefits for the banks and financial institutions if they chose to take part. Through co-operation with their communities, the Bill would allow them to market themselves as being fully embedded with local people, and they could use that as a way of demonstrating their real commitment to corporate social responsibility. The Bill would not penalise those companies who chose not to take part, but it would certainly reward those who did. If banks get involved in such work, their reputation will rise—and goodness me, the banks’ reputation certainly needs to be repaired in the light of recent events.

The aims of the Bill are to ensure a sustainable source of funding for community projects; to establish a strong framework to support them; and to increase fairness by giving every community the opportunity to access the fund. That would benefit every area that we serve in the House. I am delighted that the Bill has received cross-party support, and I know that many members of the public will agree that developing the relationship between finance and communities can only be a good thing.

Hon. Members may have seen that senior bankers and customers of the Royal Bank of Scotland have recently enjoyed a £250-a-head Harry Potter Christmas party. They have enjoyed shopping in Diagon Alley and they have played Quidditch on broomsticks. That must be the financial wizardry we so often hear about. I hope that the House will join me in urging our banks and bankers to consider supporting our community projects; otherwise, we might have to get the Ministry of Magic involved and, unlike the British public, it might be willing to let some of our banks simply disappear.

Question put and agreed to.

Ordered,

That Hazel Blears, Jon Cruddas, Dr Stella Creasy, Chris White, Tim Farron, Mr David Blunkett, Harriett Baldwin, Siobhain McDonagh, Ms Gisela Stuart, Mr Bob Ainsworth, Paul Goggins and Simon Danczuk present the Bill.

Hazel Blears accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 18 March 2011, and to be printed (Bill 127).

superannuation bill (programme) (no. 2)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Superannuation Bill for the purpose of supplementing the Order of 7th September 2010 (Superannuation Bill (Programme)):

Consideration of Lords Amendments

1. Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion two hours after their commencement at today’s sitting.

Subsequent stages

2. Any further Message from the Lords may be considered forthwith without any Question being put.

3. The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Mr Dunne.)

Question agreed to.

Superannuation Bill

Tuesday 14th December 2010 Commons Chamber

Consideration of Lords amendments

After Clause 1

Consultation in relation to civil service compensation scheme modifications

16:49

[The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)]

I beg to move, That this House agrees with Lords amendment 1.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this we may take Lords amendments 2, 3 and 7.

[Mr Maude]

When I opened the debate on Second Reading in September, I set out—at some length, I regret to say—the history and background of compensation in the civil service since 1859. I do not propose to do the same this afternoon. However, it is timely to bring the story up to date as regards what has happened since the Bill left this House on 13 October to go to the other place.

I reiterate that from the day I first announced that the Government intended to reform the civil service compensation scheme on 6 July, extensive discussions have taken place between my officials—and myself on a number of occasions—and the civil service trade unions. Proposals were put to the Council of Civil Service Unions on 24 September. In the event, the council did not accept those proposals, but five of the unions—Prospect, the First Division Association, the Prison Officers Association, the GMB and Unite—approached the Government directly and asked to continue discussions on those terms. There followed an intensive period of meetings between the five unions and officials, which on 5 October resulted in an agreement between the negotiators on terms that might form the basis of a new compensation scheme. Later that day, the five unions wrote to confirm that they had accurately recorded an agreement that all their negotiating teams were able to recommend positively to their executives as being the best that might be achieved in negotiation.

Soon after 5 October, agreement was reached between the Government and the trade union negotiating teams. The POA’s executive committee voted to distance itself from that agreement and to request further discussion. The sixth union, the Public and Commercial Services Union, withdrew from the talks at the point when the five other unions had agreed to negotiate separately with the Government. While the Bill was in the other place, the Government agreed a number of changes to it, and this House now has the opportunity to consider those. The group of amendments that we are dealing with responds to a commitment that I made when we discussed this on Report—that is, to reinforce the requirement for meaningful consultation on any changes to civil service consultation schemes.

The new clause includes a clear requirement that future consultation on any changes that would reduce the value of the civil service compensation scheme must be undertaken

“with a view to reaching agreement”,

and it requires a report to be made to Parliament setting out the details of the consultation that had been carried out with the unions. My noble Friend Lord Wallace of Saltaire accepted an Opposition amendment in the other place to delete wording that would have limited the content of that report to such information as the Minister considered appropriate. Lord Wallace also agreed that we would table written ministerial statements in both Houses when the imminent new scheme is laid before Parliament to draw attention to it and to the steps that have been taken to consult the unions. Furthermore, we agreed to limit to three years—this is the subject of the next group of amendments—the power to revive the caps in the Bill by order, and to drop our proposals that would have allowed that time limit to have been extended by a further six months at a time.

During the Bill’s passage through the other place, the Government remained committed to trying to reach an agreement with the Council of Civil Service Unions. I made a number of personal approaches, both orally and in writing, to the PCS general secretary and to the POA inviting the CCSU to put forward alternative proposals for a reformed civil service compensation scheme and seeking to engage further. I reiterated the Government’s continuing aim of reaching an agreement with all the unions. I have offered every opportunity to those unions that wish to engage constructively in negotiations. As I said, five of them did so, and their proposals formed the basis of the agreement on which the new proposed scheme is based. If the Bill goes through its processes and achieves Royal Assent, I would intend to lay that scheme before Parliament before Christmas.

On 9 November, the Council of Civil Service Unions wrote to me with suggestions for areas that could be considered in further talks, and I responded on 15 November. I have to say that the suggestions made in the council’s letter would have had the effect of reducing the level of compensation paid to many lower-paid civil servants, and so it could not form the basis of further discussions. Having a new scheme that provides genuinely better protection for the lowest-paid civil service workers, many of whom are members of the PCS, has been crucial in all the discussions we have had. As I have made clear throughout the process, including when I made the announcement of our intention to reform and on Second Reading, that is crucial to the aims of the coalition Government.

I explained to the Council of Civil Service Unions that, in the absence of detailed proposals from the PCS, work would have to proceed on drafting the rules for a new scheme. Last week, my officials sent the draft rules for the new compensation scheme to the Council of Civil Service Unions to seek its views. Those rules will form the basis of the new compensation scheme, which as I said I intend to lay before Parliament as soon as possible, assuming that the Bill completes its passage and achieves Royal Assent.

The Lords amendments are intended to reassure the House, the unions and all stakeholders that the Government will consult fully with the unions should there be future proposals to change the compensation scheme that would reduce the benefits for civil servants. They merely put into statute what has always been our intention. Arguably, that requirement is already contained in the Superannuation Act 1972, but the amendments will put it beyond peradventure or doubt.

The amendments reflect the lengthy consultation process that I have just described. They are Government amendments that were made in the other place to respond to commitments that I made on Report and Third Reading. I am grateful for the constructive involvement of the unions and those on the Opposition Front Bench throughout the process of refining the amendments to achieve the maximum consensus.

Lords amendment 1, which is the lead amendment, inserts a new clause after clause 1. As I said, it makes it clear that consultation should be undertaken

“with a view to reaching agreement”,

and it requires that a report of that consultation be laid before Parliament. The new provisions will apply when there is a change to the compensation scheme that will result in reduced benefits. The report would have to include details of

“the consultation that took place”,

the steps that were taken

“with a view to reaching agreement”

with the unions or other persons consulted, and

“whether such agreement has been reached.”

I repeat that the Government are committed to consultation with the unions. Like the previous Administration, we will always seek to reach agreement with all unions on changes to the compensation scheme. We know from experience that that may not always be possible, and in such cases, the report will explain why.

The effect of Lords amendments 2 and 3 is that the consultation provisions will come into force two months after Royal Assent. That is the standard interval before the commencement of new legislation. However, because of the need for certainty, the other provisions of the Bill will come into force immediately on Royal Assent. As a consequence, the requirement to publish and lay before Parliament a report on the consultation will apply to future changes to the compensation scheme, and not to those currently being developed for implementation when the Bill is enacted.

A requirement for a report on the current consultation would be nugatory, because no one can claim that there has been anything other than long and extensive consultation, carried out not just by myself and my officials, but by my predecessor in this process, the right hon. Member for Dulwich and West Norwood (Tessa Jowell), and the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who is now on the Opposition Front Bench. This process goes back a long time; there have been three years of drawn out extensive consultation and negotiation. Parliament is well aware, and nobody can have any doubt, that the process has been extensive and thorough; it has been described by the right hon. Gentleman, the right hon. Lady and myself. Equally, it would be wrong to risk a further delay, while a report was prepared and laid before Parliament, before the proposed scheme could be introduced. I have agreed, as Lord Wallace said in the other place, to table written ministerial statements to set out what consultation there has been.

I hope the House will recognise that the Government are seeking to provide the additional reassurance that was sought by the Opposition, and that the changes to the Bill meet my earlier commitments.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

May I start by expressing my gratitude to the Minister for the Cabinet Office and Paymaster General for the way in which he has brought the House up to date on his discussions and negotiations, for the tone and tenor of his remarks this afternoon, and for restraining himself from repeating the history of civil service compensation since 1859? The whole House is in his debt for that.

As we have said throughout all the stages of the Bill, we agree that civil service compensation is in need of reform. Indeed, we set it on its way. We now need to take account of the result of the judicial review, which tells us that what is needed is reform, but the right reform made in the right way. As we set about that exercise, and what I hope is the finalisation of our debates on the Bill this afternoon, it is incumbent on us to remember that for 500,000 civil servants—people who have given their lives to working in the public service—the Bill should not be a “blunt instrument” for negotiating purposes. For many people, it is about how they might keep their home, help their children through university or avert financial hardship while they have to look for a new job. The House must remember that the Bill’s provisions are important and will have real-world impacts.

17:00

On Report, my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell) made it very clear that there were several areas in which we thought the Bill was not quite perfect and needed modification. The first cause of worry was what was then new clause 1. Throughout the process we have recognised the need for reform of the Superannuation Act 1972, and the High Court judgment made it very clear that there was a case for ensuring that the Government could compel a settlement and that no one union could veto changes to the civil service compensation scheme. However, the Government’s ability to compel a settlement must be an activity of last resort once it is clear that common agreement cannot be reached. That was why we were not able to support new clause 1 on Report. It would have allowed the Government simply to impose changes to the scheme at any point, without consulting either the work force or representative trade unions.

We are very pleased that the Minister has made substantial progress as the Bill has proceeded through both Houses. As he eloquently summarised it, the latest draft of the new clause, which stands before us as Lords amendment 1, requires a report to Parliament on the consultation that has been carried out with trade unions if there are any further reductions in future. I was particularly grateful to hear him confirm that future consultation on changes would have to be undertaken with a view to reaching agreement. That is substantial progress and we are pleased that the Government have accepted our arguments on some helpful changes. No doubt we could quibble about the details, but the thrust of the Government’s changes is in the right direction. We will therefore support Lords amendments 1, 2 and 3 and the consequential Lords amendment 7.

[John Hemming (Birmingham, Yardley) (LD)]

It is rather sad that, again, there are relatively few people in the Gallery when we are debating such an important issue. We need to value the work of people who work for society and all our public servants. Obviously the terms of the civil service compensation scheme do not affect those in the NHS or local authorities, who have varied schemes that are often much worse than even the proposed new terms of the civil service scheme.

This is an important matter, and I am pleased to support the Lords amendments. They make it very clear that we will be bound by good practice and enter into proper and meaningful consultations, with a view to coming to an agreement. Although one particular trade union may continue to try to veto the scheme, that does not mean that we should ignore the need to try to obtain an agreement using a reasonable approach. I am very pleased with the Government’s strategy of protecting people on lower incomes. That is an excellent thing to do, so I am pleased to support the Lords amendments.

[John McDonnell (Hayes and Harlington) (Lab)]

Lords amendment 1 requires the Government to consult with the aim of seeking agreement, and provides for a report to Parliament in due course. Lords amendments 2 and 3 will bring the Bill into force two months after Royal Assent and I find it extraordinary that the Government see that as some form of concession, because the bulk of the staff who will be made redundant in the coming period will be made redundant under a scheme that is still to be imposed. The Government intend that that scheme will be introduced within the two months after Royal Assent, so there will be no report to Parliament, no commitment to consultation and no commitment to take steps to reach agreement, as is embedded in Lords amendment 1. The terms of the scheme, as they stand in the original proposals in the Bill, will be imposed. So although Lords amendment 1 proposes a system whereby there is at least some commitment to parliamentary scrutiny of the willingness and commitment of the Government to negotiate and seek an agreed settlement, Lords amendments 2 and 3 take away that commitment, because we know that the scheme will be amended within the two months to which Lords amendment 1 does not apply.

I cannot think of a better mechanism to incite industrial action. It could be construed as an act of contorted bad faith. Although there have been commitments in ministerial written statements, there has been no commitment to adhere to Lords amendment 1, because it would not otherwise be virtually vetoed by Lords amendments 2 and 3. In my view, that will not only result in industrial relations deteriorating but enhance the potential for legal challenges. It certainly will not enhance the legal protections for which the Government were hoping as a result of the amendments.

The amendments do not address the problematic core of the Bill, which is the imposition of caps and limits on the compensation scheme without the agreement of the unions representing the members affected. I have heard a lot about the four out of the six unions agreeing or recommending the scheme that is being imposed. I remind the House, however, that of the two main unions that represent the vast bulk—more than 75%—of the members affected, one, PCS, or the Public and Commercial Services Union, has not agreed the scheme and is recommending that its members reject it in the ballot; the executive of the other, the POA, has recommended that its members reject the scheme in the ballot, too.

I find it an absolute irony that in any future negotiations, which will, I suppose, probably be relatively minor because the Government will impose the bulk of the change in the next couple of months, the House will have some form of scrutiny of the negotiations as a result of Lords amendment 1, but it will not be able to exercise it in those two months. The reason for that is that if there was a full exposure of what went on in the negotiations, it would provoke even more anger among PCS and POA members.

This has been the worst example of industrial relations practice that we have seen in years. First, there was the use of a “blunt instrument”—I use the Government’s own words—of the threat of a Bill’s being brought forward to impose such severe caps that many would have lost more than two thirds of the redundancy payments that they had acquired as accrued rights over the years. There was then an extremely crude attempt to divide and rule the unions. I believe that the POA is seeking some form of legal redress against the Minister for the Cabinet Office for some of his statements. Those practices have now resulted in the virtual chaotic breakdown of the formal negotiating structures that have held good under past Governments throughout the decades.

If Lords amendment 1 comes into force, at least there will be some reflection of the negotiations that took place—and it might be more accurate. As the Minister has dwelt on the process of the negotiations, perhaps I might put on the record an alternative historical account of what occurred. Yes, the civil service unions—all six of them—sought to negotiate some form of agreed settlement throughout the summer. They did that in the light of the threat of the imposition of a Bill that would cut significantly their members’ redundancy payments.

In September, the Treasury intervened to insist on a cash cap on the new scheme, so there was no room to manoeuvre to improve the scheme beyond that cap. I believe that that significantly undermined the potential for a settlement. On 28 September, the Minister declared that he was pursuing agreement with five of the unions, excluding the PCS, and on 4 October a formal offer was submitted. On 11 October, PCS and the POA held a constructive meeting with the Minister, focusing on the cap on redundancy proposals and making proposals to redistribute from high earners to the vast majority of civil servants, enhancing the protection for the majority.

[Mr Maude]

The hon. Gentleman refers to a report of that meeting, but I can give him another account, because I was there—it was my meeting. No concrete proposals were made at that stage, and certainly not proposals that could in any way remotely or realistically redistribute benefits away from higher earners, whose payments are anyway capped under the scheme that we have agreed, towards the lower paid and particularly the lowest paid, who are much better protected now than they were under the previous Labour Government’s scheme of last February.

[John McDonnell]

My understanding is that on 11 October, PCS and POA tried to explore with the Minister opportunities to make the scheme fairer and more just for their members, and to set out certain parameters in which negotiations could take place. The PCS executive was scheduled to meet on 26 October to consider the next steps in its negotiations with the Government, but on 25 October it received a letter from the Minister, who told them that negotiations had been concluded and that he would implement the proposals that he set out on 4 October. I do not consider that an appropriate way to seek agreement.

As a result, PCS wrote to the Minister on 26 October to say that it was willing to submit proposals. He welcomed that offer and confirmed he would reopen talks if proposals came from the Council of Civil Service Unions, which is exactly what the PCS did—it submitted the parameters and proposals via the CCSU in a constructive approach to reach agreement. The Cabinet Office made no attempt to go into any detail on those proposals or to cost them, and on 9 November, the CCSU submitted terms to open the detail of talks with the Minister, who must have been aware of the background to that letter and of the detail of the PCS proposals. However, on 15 November, he said that the window for talks was closed. Although PCS sent a further letter on 16 November, it was informed that there would be no future talks.

That is a different historical account of those negotiations. The unions, which represented the vast majority of their members, were open to continuing talks to reach an agreed settlement. If amendment 1 had been in place before those talks, the House might have had a more objective historical account of the negotiations than the Minister or I have given—at least we would have had the opportunity of receiving a full report. However, the Minister’s amendments have denied us the opportunity of a report on those negotiations and allow a report only of future negotiations. That is extremely disappointing. It is another act that will undermine civil servants’ confidence that they are being treated fairly by the Government at this critical time in their lives—we are told that 360,000 of them will lose their jobs because of the comprehensive spending review and subsequently.

In addition to souring the industrial relations climate, the Government have opened up a vista of legal challenges—under article 11 of the European convention on human rights and article 1, protocol 1—which has occurred before. Amendment 1 is the Government’s attempt to find legal cover for their infringement of those articles, particularly article 11, but it does not go far enough. In fact, amendments 2 and 3 take away that cover completely in respect of the current negotiations. The Government’s proposals are legally precarious to say the least. I am sure that there will be a legal challenge from PCS. I believe that it will be successful.

In the previous Government’s negotiations, PCS threatened legal challenge, and it was advised by civil servants—they met us a week before the general election was declared—that the Government were confident of winning in court. The same civil servants advise this Government of the same thing. They were wrong before the election, and I believe that they are wrong now. In fact, PCS is yet to lose a case against the Government. We have the prospect of tens or perhaps hundreds of thousands of civil servants being made redundant. If the Government’s proposals are overturned, the civil servants who are made redundant under the imposed scheme could seek legal redress and compensation, which could run into many millions of pounds.

17:15

The challenge will be on two grounds. The first will be article 11, which is meant to protect the right of trade unions to negotiate on behalf of their members. Until 2008, the European Court of Human Rights treated the right to collective bargaining and the right to strike merely as examples of individual aspects of freedom of association that states could choose as means of complying with article 11, ensuring that unions could at least be heard. However, Demir and Baykara v. Turkey changed the atmosphere and legal standing of article 11 and that of the right to collective bargaining. The grand chamber resiled specifically from the original rulings and elevated the right to collective bargaining to the status of an essential element of article 11. Interference with this right has to be justified against the background of the historical circumstances of the country. However, in this country, there is a long history of the right of civil servants in negotiations and of collective bargaining by the civil service, which I believe enforces the article 11 rights of this particular union. On that basis, I believe that the amendments do not go anywhere near far enough to protect the Government from legal challenge.

The second basis for a legal challenge against the amendments, which fail to provide the Government with cover, is that dealt with by the Joint Committee on Human Rights. The amendments fail to address the need for agreement by the unions over their protected and accrued rights under the compensation scheme. Article 1 of the first protocol of the European convention on human rights insists on the right to peaceful enjoyment of possessions. Under the scrutiny of the Joint Committee, the Bill has been found to be lacking in providing that protection. First the Government argued that they were not possessions, but that was quashed by the law courts in their last judgment against the previous Government.

The Joint Committee found the Government’s arguments over possession to be unacceptable. They are accepted then as accrued rights, which means that they can be interfered with only as a result of agreement—amendment 3 insists not on agreement but simply consultation—or if the interference is justified. However, the Joint Committee determined that the Government had brought forward no justification—and, in fact, had not even addressed seriously the justification for interference with these accrued rights, which the civil service has garnered over years of negotiation and service. For that reason, the amendments will fail to protect the Government against further legal challenge.

I urge the Government, therefore, to think again. On the legalities of the Bill, even as amended by the Lords amendments, we are entering legal quicksand, and the Government will regret that. I think they recognise that and have inserted the changes into the legislation rather than the original scheme because they were worried about the scheme being quashed very quickly in the UK courts of law. Even with the amendments, however, the Government are entering an industrial relations minefield and a political morass. So I urge the Government, even at this late stage, to step back. PCS, the POA and the other unions are still willing to meet and negotiate, to see whether a reasonable settlement can be obtained. I urge the Government to take up the offer of getting back around the table.

The unions are willing to negotiate because these measures will have such a significant impact on their members. In Committee, we heard example after example of the impact on individual lives of such a severe deterioration in the redundancy payments being offered to civil servants. The POA and PCS are reflecting the views of their members about this Government’s threat to their redundancy payments. It is for that reason that the POA and PCS are willing to get back round the table and seek a reasonable agreement with the Government.

However, I believe that, failing that, there will be legal actions and industrial action. They will undermine the credibility of this Government in any future negotiations or when they want to make changes not just to the scheme in question, but to other conditions of service across the civil service. Surely it is better to bring along a willing work force—a committed work force, with high morale and people who are willing to implement the Government’s policy with enthusiasm because they enjoy their jobs, rather than people living under the threat of being made redundant without adequate compensation. I urge the Government, even at this late state, to back off—to pull the Bill this evening, enter negotiations, get back round the table and seek an agreed settlement that brings in all the unions, rather than trying to divide them in the way that the Government have.

[Mr Maude]

I am grateful to the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who spoke from the Opposition Front Bench, and to my hon. Friend the Member for Birmingham, Yardley (John Hemming) for their support for the amendments and for where the Government have got to. I would like to say one or two words in response to the points that have been raised.

The first point to make is that the coalition Government are deeply committed to supporting the civil service and supporting its independence. We profoundly believe in the ethos of public service and political impartiality that motivates the civil service and with which it is imbued. We wish to support that, and, just as with the previous Government’s attempt to reform the compensation scheme, nothing in what we are attempting to do should be interpreted as anything other than a desire to treat people fairly and achieve the right balance between the interests of the taxpayer and the interests of hard-working, dedicated civil servants who, as the hon. Member for Hayes and Harlington (John McDonnell) said, have in many cases spent their lives in public service. We honour and respect that, and we want them to be treated fairly. I want to put that firmly on the record.

We were happy to accept the point that consultation must be serious, which is why we accepted an amendment that said that consultation has to take place with a view to reaching agreement. It is not enough for the Government to go through the motions. I do not think that anyone who has taken part in the consultations and negotiations that have brought us to this point would say that they were about going through the motions—I think the right hon. Member for Birmingham, Hodge Hill would bear that out. Rather, they were about serious work aimed at getting agreement, and it is a matter of great regret that such agreement has not been reached. The suggestion that the ability for collective bargaining has in some sense been reduced and that this is a breach of the European convention on human rights simply does not stack up. The changes that we are making actually strengthen the commitment to consultation, making it more necessary that, in making any future changes, the Government should consult seriously, with a view to reaching an agreement. The commitment on collective bargaining is enhanced, not diminished.

[Mr Nigel Dodds (Belfast North) (DUP)]

I have listened to the debate with great interest, particularly on the consultation with the POA, PCS and the other unions, but what is the position, both in the current negotiations and in any future consultations relating to the provisions that we are debating, on those who are not in unions? We found from our experience of negotiating with civil servants in Northern Ireland that many were not in unions, which raised a whole lot of other issues. How does that play into the consultation provisions that the right hon. Gentleman is introducing and the current negotiations?

[Mr Maude]

The right hon. Gentleman raises a good point, which is that it is by no means true that all civil servants belong to a trade union. The figures show that something in the region of 60% of civil servants belong to a trade union, but many are unrepresented. I am not sure that the Superannuation Act 1972 or what we are proposing in the Bill makes requisite any particular form of consultation with those who are unrepresented. However, he raises a good point that those who engage in future consultations should be alive to.

The hon. Member for Hayes and Harlington referred to his concern that, because the consultation requirement will not be commenced for two months, there will somehow be no obligation to consult. There has been extensive consultation. He raised concerns about the proposals that he claims were made by PCS and the POA, but the outline suggestions that eventually emerged from PCS, if implemented within the cost envelope, which I have always said exists and which would have existed under whichever Government were in power, would have had the effect of reducing the compensation available to those over pensionable age—that is, those over 50 and approaching retirement—and reducing the benefits available to the lowest paid. I say again that our primary concern has been to ensure that there is proper additional protection for those who are lower paid.

[John McDonnell]

I am sure that the right hon. Gentleman would not want inadvertently to mislead the House. Just for the record, that is contested by the unions themselves, because it was open to the discussions that the union was hoping to pursue with him, but which he declined.

[Mr Maude]

The concern raised by the unions at the time was that there was insufficient compensation in the scheme that we were developing with the other unions for those who were above the £23,000 salary underpin. We could have increased the compensation payments for them only by taking away from others. The only ways in which that could have been achieved—these suggestions were canvassed—would have been by lowering the £23,000 underpin so that all those earning less than that would have been penalised, or by taking away the significant protection that rightly continues to exist for those over 50. I recognise that someone who started work as a civil servant as a teenager straight after leaving school, and who has worked as nothing else until leaving the civil service in their 50s, might not find themselves in a fantastic place in the labour market. It is therefore right that there should be proper protection for people in those circumstances. That is why protecting those approaching retirement and the lowest paid people in the civil service was an absolute priority for us. I believe that the scheme that we have put in place meets those commitments and priorities.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

Two pieces of information have come out on this. First, we received a Cabinet Office circular from the right hon. Gentleman which sets out in detail how the negotiations went. It specifically makes the point that PCS made a proposal that would have reduced the amount of money being made available to lower paid staff in order to pay for enhanced benefits for those at the higher end of the scale. However, the trade unions have said that that is not the case. In order to give us more information about the negotiation process, can the Minister provide the figures to demonstrate how much would have needed to go to those at the top to cover those enhancements, and how much would have been taken away from those at the bottom?

[Mr Maude]

It is really hard to do that, because, as I pointed out in the letter that I sent to all Members, there were only outline suggestions made by PCS. Back in September, five of the unions—the five not including PCS—wrote to me with some proposals that they had signed up to, and that PCS had declined to sign up to. At their request, we entered into discussions with the five unions, and the ensuing proposals formed the basis of the new scheme that we have developed. They are not totally reflected in the scheme, but they formed the basis for it. I constantly and consistently urged PCS to join that process and to make concrete proposals, but it had declined to sign the letter that the other five unions had signed, despite being asked to do so by the five unions.

That protracted process involved meetings with Mark Serwotka of PCS and Steve Gillan of the POA, at which I urged them to make concrete proposals that would enable us to work towards a full agreement. All that emerged, however, after protracted delays, were outline suggestions. When asked how any additional protection for higher-paid people—not highly paid people, but those above the £23,000 underpin—was to be paid for, the only suggestions were either to lower the underpin, which would have meant that all lower-paid workers would have been penalised, or to reduce the protection available to those over 50. We were not willing to do that because providing protection was a priority for us.

[John McDonnell]

Following on from an earlier point, the Minister will know better than most of us that these negotiations are complex. He has said that it was difficult at times to calculate the overall consequences. That is why the Public and Commercial Services Union—through the Council of Civil Service Unions as the Minister requested—put forward outline proposals for detailed negotiations with staff. However, the Minister for the Cabinet Office then closed the window for those negotiations, just as they were becoming productive. There are complexities and if the Minister objected to issues like that, those points could have been taken up in the next round of negotiations.

17:30

[Mr Maude]

I have to take issue with the hon. Gentleman’s phrase about the process just beginning to become productive, because it was not. The outline suggestions were vague and the only way of paying for them would have been by taking money away from lower-paid workers or people approaching retirement. We explored whether there was any other source from which those funds could be redistributed, but it turned out that there were no alternatives.

[John McDonnell]

If that is the right hon. Gentleman’s only concern and his only objection to the position of PCS, supported by the POA, why can he not simply reopen negotiations now to resolve the matter?

[Mr Maude]

The hon. Gentleman talks as if this were a trifling consideration, but it is not. This process has been going on for three years. If the Bill goes through the remainder of its stages and on to the statute book, the new scheme that I hope to lay before Parliament before we rise for the Christmas recess, superseding the current scheme, will have been the product of many months—indeed, years—of protracted discussions. I know that he disagrees, but I have to say that despite repeated requests, the PCS has been tardy, to say the least, in coming forward with proposals and has, at best, made outline suggestions but never concrete proposals that could have formed the basis of an agreement. The other five unions did, and I am grateful to them for their engagement, which enabled us to forge a new scheme—as I said, we hope to lay it before Parliament next week—that will provide a fair balance between the interests of taxpayers and the interests of civil servants and protect those approaching retirement and the lowest paid.

[John McDonnell]

I am grateful to the Minister for giving way. Let me quote to him his statement to the House on 30 October, when he gave a commitment that he would “strain every sinew” to achieve a negotiated settlement. What I am suggesting is that, if he has identified an issue as an impediment to a negotiated settlement, he should now adhere to his commitment to strain every sinew and meet the unions again. It is no use repeating over and over again the fact that five out of six unions have agreed a settlement. They have not. The two unions that represent the vast majority of members have rejected the Minister’s proposals. Surely it behoves him now to go the extra mile and strain that extra sinew to seek a negotiated settlement before he provokes industrial action or legal challenge.

[Mr Maude]

Those are not concerns that have just arisen; they have been there throughout. I have been forthright in ventilating them with the leadership of the PCS and POA, and they know that. We have been clear about the envelope within which it would be possible to make changes because increasing protection for one group can be done only at the expense of other groups. There is no way around that. That is the basis on which we have formulated the new scheme, which I hope to lay before Parliament before the Christmas recess. That is the basis of my case.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

All the Lords amendments to the Bill engage the financial privilege of the House. If they are agreed to, the appropriate record will be made in the Journal of the House.

Lords amendment 1 agreed to, with Commons financial privileges waived.

Lords amendments 2 and 3 agreed to, with Commons financial privileges waived.

Clause 3

Final provisions

[Mr Maude]

I beg to move, That this House agrees with Lords amendment 4.

[Mr Deputy Speaker]

With this we may take Lords amendments 5 and 6 and amendment (a) thereto.

[Mr Maude]

The amendments respond to concerns raised by Opposition Members on Second Reading in the other place about the potential for the caps in what is now clause 2 to be revived after being put into abeyance, which is what I propose to do next week before the House rises and before the new scheme is laid. The Government also proposed the amendments to respond to the comments about the unusual use of a sunrise provision in clause 3(4)(c) that were made in the third report of the House of Lords Delegated Powers and Regulatory Reform Committee, published on 28 October. My noble Friend Lord Wallace of Saltaire provided a full response to the Committee in his letter of 1 December. We are grateful to the Committee for its report.

The Committee also commented on the other provisions in clause 3 which would enable, by order, the caps included in clause 2 to be repealed and also to be extended by six months at a time. That would override the so-called sunset provision in clause 3(3), which would otherwise mean that the caps on civil service compensation provided in clause 2 would expire automatically after 12 months. The Committee said that “these arrangements are complex”, but added that the two delegated powers

“do not appear to the Committee to be inappropriate”.

However, the Committee was not so persuaded of the need for the power in clause 3 to revive the caps in clause 2, that being an unlimited power that would have been available to any future Government in circumstances that we cannot predict today. The amendments respond to that point. The Government accept that there should not be an unlimited power to revive clause 2. Lords amendment 6 therefore provides for subsection 3(4)(c) itself to expire three years after Royal Assent, which is in effect a sunset of the sunrise provision. I can see why some people might say that that was a bit complex, but I think that, when fully parsed, it makes perfectly good sense.

The sunset of the power to revive clause 2 would mean that it would be there, as the Government intend, as a fallback to revive the caps in clause 2, just in case they were needed because of future problems in implementing the new civil service compensation scheme. However, the introduction of the three-year time limit should provide a reassurance that the power to revive clause 2 would not be available indefinitely to future Governments.

The caps are there as a potential fall-back so that we can be certain—as both the last Government and we have wanted to be—that we can reform the civil service compensation scheme. We have an absolute obligation, in the public interest, to address the unfair and unaffordable nature of the current scheme, and we need to ensure that if a legal challenge is mounted to our revised scheme—and it has been suggested that that may well happen—there is a fall-back option, albeit one that we have absolutely no desire to use. We do not expect or intend to use the powers to impose the caps in clause 2; what we want is to see in operation as quickly as possible is the reformed civil service compensation scheme. We are determined that, if all else fails, there will be a fall-back position so that we are not left high and dry—as the last Government were—because of a legal challenge to the details of the new scheme.

Before the new scheme is laid before Parliament, I intend an order to be made under clause 3(4)(a) to repeal the caps in clause 2 in relation to any new scheme. We intend the order to include a saving provision so that the caps could be applied if, and only if, the old unreformed scheme had to be reintroduced. The saving provision would allow that to happen automatically, without the need to use the revival power by order under clause 3(4)(c). I should make it clear that this saving provision would apply only if there were an attempt to revert to the old scheme. An order under clause 3(4)(c) would be required, subject to the affirmative procedure, if it were ever proposed to revive the caps in clause 2 and to impose them over the new civil service compensation scheme that will be put in place following the completion of this Bill’s passage.

Finally, unless further extended by order under clause 3(4)(b), clause 2 in its entirety—including the saving provision—will expire 12 months after Royal Assent. From that point on, any revival of the caps would have to use the order-making power in clause 3(4)(c), which, because of these Lords amendments, will be available only within three years of Royal Assent. I very much hope that by then the new civil service compensation scheme will be in place and be operating satisfactorily for all concerned—civil servants, departmental employers and the civil service trade unions—and that the taxpayers’ interests and the proper interests of civil servants will be being met. Amendments 4 and 5 are consequential on amendment 6.

[John McDonnell]

The House needs to be aware of what this measure actually means, and I make it clear that I will press my amendment to a Division.

[Mr Deputy Speaker]

The hon. Gentleman will be able to move his amendment formally later.

[John McDonnell]

Thank you very much for that advice, Mr Deputy Speaker. I get confused when we are talking about sunset and sunrise clauses.

Let me explain what this measure means. Despite all we have heard today from the Government about their willingness to achieve a negotiated settlement on a new compensation scheme and their wish to ensure that all the trade unions are signed up to it and that it is acceptable both to members of those unions and to people not in those unions, the fact is that they will retain the power, over a three-year period, to impose the caps set out in the Bill.

We should remind ourselves of what those caps are: for a compulsory redundancy, an amount equal to a person’s earnings for 12 months, and that amount for 15 months for a voluntary severance. We heard in evidence in Committee—this has been repeated in the Chamber time and again—that that will mean a cut of up to two thirds in the redundancy payments of many civil servants; 60% to 70% was the figure cited by the Joint Committee on Human Rights. Any Government will have the power to impose those caps at a later date, and to impose that level of penalty on civil servants who are made redundant.

If the Government are confident of being able to negotiate an agreed solution under the new scheme in this coming period, why do they need the right, over a three-year period, to impose these caps unilaterally? I still think that if they sought to do that, it would be subject to a legal challenge, but why would a Government seek to retain that power if they were entering into negotiations with good will, genuinely seeking an agreement, and taking every reasonable step to secure one?

My amendment simply seeks to reduce the period to 12 months, as an act of good will on behalf of this House in respect of its employees in the civil service. I believe the Government have set the period at three years because they want to maintain their original purpose for the Bill, as previously described: to use it as a blunt instrument to bludgeon the unions into submission so they agree to the Government’s proposals. That is unacceptable. I also think this will be another factor that leads to people rejecting the overall scheme in the ballots that are currently taking place, and instead moving on to take action to stop the scheme being imposed upon themselves and their fellow trade union members.

I urge the Government to think again, as 12 months should give them sufficient time to negotiate and introduce a new scheme, and to introduce any reforms or amendments that might be needed to hone it to make it more workable if there were any problems with its implementation. It is unacceptable for the Government to have the threat of this blunt instrument to hold over civil servants for three years. Introducing this measure would be another contributory factor to the deterioration in the relationship between the Government and their staff, who are meant to implement, with high morale, the policies they introduce.

17:45

[John Hemming]

As someone who interests himself in procedural issues, perhaps I could think of the clause as being more like a supernova clause after which the sun will not rise again. Not being a Government Minister, I have the advantage of having no confidential knowledge whatever of the Government’s strategy. The interests of judicial review are relevant given that one would expect a judicial review when the order for the new scheme is laid, as it would be laid under the Bill relatively soon. In those circumstances, the Government will not want to take a completely new piece of legislation through the House because of a judicial review. It is possible to accelerate the proceedings of a judicial review, and the courts would probably look on such an approach favourably given the situation for the country and the importance of having legal certainty, but it is quite important to have the facility to deal with such a situation if it arises. However, I support the idea of having a supernova clause because there is a point at which the sun need not rise again.

[Mr Byrne]

I want to speak briefly about Lords amendments 4, 5 and 6, as well as amendment (a), tabled by my hon. Friend the Member for Hayes and Harlington (John McDonnell). During proceedings on the Bill, my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell) has consistently raised concerns about the arbitrary caps that the Government introduced at the start of this process, which now form the body of clause 2. I confess that we are still not clear about why the caps are still in the Bill given that clause 1, which was newly introduced on Report, effectively gives the Government the power to impose any settlement after the consultations that we discussed earlier have been completed. We heard, in the Minister’s helpful update to the House, that there is a degree of agreement with at least some of the trade unions, which the Government have declared will supersede the terms in the Bill. Why then do they not seek to introduce a sharp instrument containing the specific terms they have agreed with the trade unions, rather than the blunt instrument containing general powers that is the Bill before us?

We are pleased that the Minister has given a clear commitment, in a letter to right hon. and hon. Members, that it is his ambition to

“repeal the caps in clause 3 insofar as they could impact on the new civil service compensation scheme”.

His letter also says that if the caps were ever revived he

“would table an order…so as to increase the caps to such a level that would…reflect what would otherwise apply under the new scheme.”

Most of us will welcome that good progress.

In earlier debates, we raised concerns that the Bill would allow the revival of caps at any time in the future even after a negotiated settlement was in place. We fear that the relevant measure, which the Government call a sunrise clause, would put an undesirable amount of power in their hands during negotiations, as they could simply threaten to revive statutory powers whenever they ran into any dispute on any matter, not just issues of redundancy. Given that it would allow the Government to resurrect the terms of a long-dead provision, it is not so much a sunrise clause as a zombie clause, which would live on for ever. Whatever we call it, the measure is entirely without precedent in a Bill of this nature. Indeed, the only recorded precedent of such a measure is in the Prevention of Terrorism Act 2005.

We are pleased that there will be a limit of three years on the caps if they are revived, and that the Government cannot extend that period. Given what the Minister has said this afternoon, however, I do not see how he can argue that the correct balance of time and the correct limit to any revived power should be three years. The whole House will welcome what the Minister said this afternoon about his ambition that the revival of the caps should never be triggered. If that is true—and I am prepared to accept that it is—I do not see why he cannot accept the very sensible amendment tabled by my hon. Friend the Member for Hayes and Harlington. Although we are happy to accept amendments from the Lords, we shall support amendment (a).

[Mr Maude]

The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) asked why we needed to keep the caps at all. The answer is simple. The caps will be established in primary legislation, but the new civil service compensation scheme, which I hope to lay before Parliament next week, before the House rises, does not have the full force of primary legislation, despite the changes to the Superannuation Act 1972 made by clause 1.

I shall be frank. We want to avoid being in the position that followed the High Court judgment in May this year, which resulted in the previous Government’s February scheme being quashed. The effect of the scheme being quashed is that the existing scheme remains unreformed and in force. Indeed, the old scheme—unaffordable, unsustainable and unreconstructed—is in force today. Of course, in preparing the new scheme we were at some pains to ensure that it would be legally robust, and we shall vigorously defend any legal challenge to it. However, as was apparent from the litigation against the previous Administration’s scheme, there can never be guarantees in litigation. Even litigation that is destined ultimately to fail can be disruptive, because of the uncertainty it causes until the case is concluded.

[John McDonnell]

Could we clarify what the Minister has just said? Is the provision he supports simply a device to be used to prevent UK courts from quashing the Government’s proposals?

[Mr Maude]

I shall be clear: both sides of the House have accepted that the current scheme is unsustainable and needs to be reformed. With the possible exception of the hon. Gentleman, everyone—and certainly Opposition Front Benchers—has accepted that it is unacceptable for it to be possible for a union, or two unions, to veto reform of the scheme. It must be possible for the Government and Parliament to effect reform of the civil service compensation scheme. If there is a successful legal challenge to a new civil service compensation scheme—unlikely though that may seem—we cannot have the position where the old scheme trundles on in its unsustainable, unaffordable and unfair form. That is why there must be a fall-back position for a limited period. We have listened to the arguments and we have accepted that it will be a limited period, so that caps on the use of the old scheme will be in existence, should the new scheme be quashed as the previous Government’s scheme was, by order of the High Court.

What is the right period for the power to revive the caps? Is it one year, three years, five years or 10 years? There is no precise science, because no one knows how long the period is beyond which we could be sure that a successful legal challenge would not be raised. It is our judgment that three years is the right period. That is the view that we have taken. That is why we urged the Lords to agree, and I urge the House to accept that view today. We would thus be agreeing with the Lords in their amendments, and disagreeing with the amendment proposed by the hon. Member for Hayes and Harlington.

Lords amendment 4 agreed to, with Commons financial privileges waived.

Lords amendment 5 agreed to, with Commons financial privileges waived.

Amendment (a) proposed to Lords amendment 6.—(John McDonnell.)

Question put, That the amendment be made.

17:55

Division 155

Ayes: 225

---

Labour: 213
Scottish National Party: 3
Democratic Unionist Party: 2
Plaid Cymru: 2
Liberal Democrat: 2
Independent: 2
Social Democratic & Labour Party: 1
Green Party: 1

Noes: 313

---

Conservative: 264
Liberal Democrat: 49

Lords amendment 6 agreed to, with Commons financial privileges waived.

Lords amendment 7 agreed to, with Commons financial privileges waived.

Terrorist Asset-freezing etc. bill [Lords] (Programme) (No. 2)

Ordered,

That the Order of 15 November 2010 (Terrorist Asset-Freezing etc. Bill [Lords] (Programme)) be varied as follows:

1. Paragraphs 4 and 5 of the Order shall be omitted.

2. Proceedings on consideration and on Third Reading shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on the Motion for this Order.—(Mr Hoban.)

Terrorist Asset-Freezing etc. Bill [Lords]

Tuesday 14th December 2010 Commons Chamber

Consideration of Bill, as amended in the Public Bill Committee

Clause 2

Treasury’s power to make final designation

18:11

[Dr Julian Huppert (Cambridge) (LD)]

I beg to move amendment 2, page 2, line 1, after ‘believe’, insert

‘on the balance of probabilities’.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Amendment 3, page 2, line 27, clause 3, at end insert—

‘(aa) explain, as fully as possible consistent with the public interest in non-disclosure, the reasons why they are satisfied that the conditions in section 2(1) are satisfied.’.

Amendment 5, page 13, line 41, clause 28, at end add—

‘(5) In section 67(3) of the Counter-Terrorism Act 2008 (Rules of court about disclosure)—

(a) in paragraph (c) after “that”, insert “subject to paragraph (ca) below”; and

(b) after paragraph (c) insert—

“(ca) that in relation to a final designation, the material disclosed by the Treasury on which they rely is sufficient to enable each designated person to give effective instructions to a person appointed as a special advocate to represent that party’s interests;”.’.

Amendment 11, page 29, line 28, schedule 1, at end insert—

(fa) leave out rule 79.2.’.

[Dr Huppert]

I am delighted to move amendment 2, and to speak to amendments 3, 5 and 11, which are also in my name. They reflect recommendations from the Joint Committee on Human Rights, and Members might wish to see its more detailed report if they have not done so already. The amendments are all about ensuring proportionality and a fair hearing.

We should clearly be able to restrict funds that help terrorists in their activities, but people who are accused of such activities should not automatically lose their regular status in this country. We have a great principle in this country whereby a person is innocent until proven guilty; it is a great British tradition and one that we should support. We should also accept, however, that errors are made in legal processes, by the court and by Governments, and that is why we should have principles of fair hearing and high thresholds before we take state action.

Amendment 2 is about errors and the thresholds that we require. How can we be sure that the courts or the Treasury are making the right decision? How much error is acceptable? Various thresholds are already used for various decisions. We have the threshold of beyond reasonable doubt, which roughly equates to our saying that we do not accept even a 1% error—to the extent that we can attach numbers to it. Then, we have the civil standard, or the balance of probabilities, whereby we want to be sure that we are probably right. We want at least a 50:50 chance—in other words, with the balance of probabilities, we say that we want to be wrong less than half the time; we want to be probably sure that we are right.

If we go any lower with a threshold, we take steps—we punish people—when we say that we believe that they were probably not involved in the given situation. That is the consequence of a threshold below the balance of probabilities. None of us wants that, and none of us wants to take steps against people when we think that they were probably not involved in the first place.

I accept the principle of a lower threshold for interim designations. It is more akin to arrest, which takes place at a much lower threshold, but that is not the same as the permanent designation. I strongly urge the Government to reconsider their proposal. They should consider taking such steps against people only when the Treasury believes that they were probably involved, rather than on the basis of anything lower.

Amendment 3 is a simple requirement. A fair hearing must mean knowing the accusations—the reasons why the Treasury believes that somebody has been involved in funding terrorist activities. The amendment includes an important safeguard for public interest in non-disclosure, so damaging information would not come out, only that which we could afford to release. Again, I should have thought that we all agree with such a position.

During the Bill’s passage, the Government have said that, effectively, the amendment’s intention will be achieved but they do not want to see it in legislation. I am always concerned, however, about the principle that we should not write things into legislation but trust in the benevolence of Governments—this or any future Government. If the Minister will not accept the amendment, will he clearly commit to disclose such reasons subject to the public interest requirement, as the amendment says—even if that takes place in a non-legislative way?

Amendments 5 and 11 deal with the hearing itself. Section 67(3)(c) of the Counter-Terrorism Act 2008 puts a heavy weight on the principle of non-disclosure. Although that is an important principle, we must counter it with the principle of a fair hearing. Currently, the balance goes far too far in the direction of non-disclosure.

In the case of AF, it was held that similar rules are not appropriate to control orders, so I find it hard to see why the courts will not in time hold the same principle on terrorist asset freezing. There are more details on that reasoning in the Joint Committee’s report. The courts have yet to take such a decision, but surely as a principle it would be better not to go through costly legal action, but to save time by making the changes now.

There is a review of the use of sensitive material in judicial proceedings, and I welcome the fact that there will be a consistent approach. If the Minister will not agree to including such safeguards in the Bill, will he commit to the Bill being updated when the review is complete in order to reflect that consistent approach and to introduce a better system throughout those areas? I shall listen carefully to the Minister’s comments on all those suggestions, and I hope he takes on board what has been said.

[Mr David Hanson (Delyn) (Lab)]

I am grateful to the hon. Member for Cambridge (Dr Huppert) for introducing the amendments, which represent important issues that the Joint Committee on Human Rights considered. However, the Opposition believe that the test of reasonable belief is appropriate to the circumstances covered by the Bill. Indeed, I said so in Committee.

The tests for the asset-freezing regime are strict. In clause 2(1)(a)(i) to (iii), the Treasury has to consider real issues about the involvement of individuals in terrorist activity before such powers can be invoked. Those considerations are:

“(i) that the person is or has been involved in terrorist activity,

(ii) that the person is owned or controlled directly or indirectly by a person within sub-paragraph (i), or

(iii) that the person is acting on behalf of or at the direction of a person within sub-paragraph (i)”.

If we changed from reasonable belief to a situation in which the Treasury had to satisfy the balance of probabilities, as the amendment proposes, we would water down the ability of the Treasury and, therefore, the Government to take early action on the use of resources to finance terrorist activity in relation to the items detailed in clause 2. The asset-freezing regime must be preventive to be effective. One must be able to use it at an early stage to disrupt and prevent terrorist acts, and a threshold of a balance of probabilities would not enable the Government to act when action is needed.

The balance of probabilities test is applied by the courts in the context of civil proceedings and requires one party to demonstrate to the court that it is more likely than not that a particular fact is true. If that test were applied to asset freezing, it would require the Treasury and, indeed, the Minister to be satisfied and able to demonstrate to a court that a person is more likely than not to be, or to have been, involved in terrorism. That is too high a burden at the moment, because the burden of proof would rest with the Treasury.

If the Treasury brings forward proposals under this legislation in due course, I rest assured that it will have had solid grounds, from the intelligence and information provided to it, for doing so. If the picture were unclear, and an equally plausible argument could be made for an individual not being involved in terrorism, the Treasury would not be able to impose an asset freeze. That might put the constituents of Cambridge and, in my case, north Wales, or any constituent in the country, at risk of terrorist attack.

[Dr Huppert]

I am sure that the right hon. Gentleman knows of the existing power for an interim designation. It has a much lower threshold, so in emergency cases, such as those that he mentions, there would be no problem and we would be safe. I am delighted that he cares about the people of Cambridge so much, but the amendments are about longer-term designations.

[Mr Hanson]

Indeed, but I speak as somebody who in the previous Parliament was the Minister responsible for terrorist issues and policing. Those are serious matters, and the Government need to take action on them. There is always a balance to be struck between the civil liberties of individuals and the civil liberty of ordinary people to live their lives in peace without the threat of terrorist activity. On balance, my judgement is that we need to support the Government’s proposals in the Bill, which initially had its genesis in the previous Government, so that all measures are taken to ensure that the asset freeze can take place and action can be taken accordingly.

I understand the concerns of the hon. Member for Cambridge; they are valid and should be explored. However, in clause 26 there is a right of appeal for designation both at an interim and final stage. If an individual feels aggrieved, he can undertake to exercise that right of appeal. However, very few people will do so if the Bill becomes law, because the Treasury will have taken steps to ensure that those individuals are rightly in the frame, for the reasons that the asset regime has been introduced, and I trust the Treasury to take those actions; that is not something we say all the time but, on this occasion, I have done so.

I hope that the hon. Gentleman feels that he has raised the issues of concern. I am sure that the Minister will give, almost word for word, the exact response that I would give. I am happy to talk about the amendments in more detail, but my message to the hon. Member for Cambridge is clear: in the event of him pushing the matter to a vote, he will find not just the Financial Secretary against him, but the shadow Minister.

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I shall respond to each of the amendments proposed by the hon. Member for Cambridge (Dr Huppert). I welcome the approach adopted by the right hon. Member for Delyn (Mr Hanson), who speaks with some authority on these matters, having dealt with them in government. Looking around the Chamber, he is probably the Member with the most experience of tackling these issues. The amendments were considered in Committee. They were tabled by the hon. Member for Carshalton and Wallington (Tom Brake), and I made the same comments in response to them then as I do today. He sought to withdraw them in Committee and I hope that the hon. Member for Cambridge will do the same today.

As I said in Committee, amendment 2 would change the threshold for the making of a final designation from the Treasury from reasonably believing a person is or has been involved in terrorism, to needing to be satisfied on the balance of probabilities. As I emphasised on Second Reading and in Committee, the asset-freezing regime needs to be preventive to fulfil our UN Security Council obligations and to meet our national security needs. In other words, it must be capable of being used at an early stage to disrupt and prevent terrorist acts.

In our view, a threshold on the balance of probabilities would not enable us to act when needed. The balance of probabilities test is applied by courts in the context of civil proceedings and requires one party to demonstrate to the court that it is more likely than not that a particular fact is true. If that test were applied to asset freezing, it would require the Treasury to be satisfied and to be able to demonstrate to a court that a person is more likely than not to be or to have been involved in terrorism.

That may sound reasonable but—to echo the words of the right hon. Member for Delyn—it is, in fact, a high burden. The fact that the burden of proof would rest with the Treasury means, for example, that if the picture were unclear and an equally plausible argument could be made that an individual was or was not involved in terrorism, the Treasury would be unable to impose an asset freeze. The serious threat posed by terrorism means that in such cases where the reasonable belief standard is met, the Treasury should be able to freeze assets on a preventive basis to protect the public. The alternative is to hold back until further evidence is accumulated. However, that runs the risk of an individual being able to carry out a terrorist act without preventive action being taken.

I hope that the hon. Member for Cambridge bears it in mind that—as eminent judges such as Lord Justice Laws and Lord Rodgers have remarked—we need to be mindful of the fact that material available to the authorities about terrorist plots may be fragmentary and incomplete. The picture may not be complete for good reasons, but that does not mean that the material is wrong. Such a situation simply reflects a number of real-world facts about terrorism: that intelligence has to be gathered covertly; that terrorists take considerable steps to disguise their activities; and that the need to protect the public sometimes means that plots have to be disrupted at an early stage, rather than allowed to run on further to accumulate more evidence. For those reasons, moving to a balance of probabilities test would have significant risks for our national security.

I also explained in Committee that a balance of probabilities test would be out of line with international best practice. The Financial Action Task Force makes it clear in its guidance on terrorist asset freezing that a legal threshold of reasonable suspicion or reasonable belief should be used. We are not aware of any other country that uses a balance of probabilities test to freeze terrorist assets in accordance with UN Security Council resolution 1373. As I set out on Second Reading and in Committee, for those reasons we remain convinced that a reasonable belief test is the right threshold for making a designation and that it strikes the right balance between protecting our national security on the one hand and protecting civil liberties on the other.

[Mr Hanson]

Will the Minister confirm again what I think he said in Committee, which was that whatever the outcome of the review of terrorist legislation—including the review of the case of AF and control orders—the Bill will stand as it is now without amendment in that respect?

[Mr Hoban]

If we assume that the legislation will receive Royal Assent, it will stand. However, clearly, all terrorism legislation is kept under review and it would be wrong to prejudge the outcome of any other court case. We have taken forward the best form of the legislation, which was, as the right hon. Gentleman knows, based on the previous Government’s proposals. The Bill reflects case law as it stands.

Despite the approach we have taken on reasonable belief, the Bill will not result in the Treasury making decisions where it thinks it is more likely than not a person is not involved in terrorism. The point is that the decision maker should believe, from a careful assessment of what may well be a complicated intelligence picture, that a person is involved in terrorism. The threshold of reasonable belief for a decision is one used in many contexts, including in decisions made about terrorism, such as under the Anti-terrorism, Crime and Security Act 2001 and under schedule 7 to the Counter-Terrorism Act 2008. The courts are then asked on an appeal or review to determine whether there are reasonable grounds for that belief. That is the right test. It provides an assurance that a proper burden is placed on those seeking to impose a designation but, at the same time, it enables action to be taken to protect national security when needed.

Let me move on to amendment 3, which, as the hon. Member for Cambridge pointed out, reflects the report by the Joint Committee on Human Rights. I understand that the amendment would ensure that individuals are sufficiently informed of the reasons for their designation at the point their assets are frozen in order to enable them to mount an effective challenge. As I stated in Committee, the Government do not believe it is necessary to include such an obligation in the Bill because the JCHR’s proposal was intended only to ensure that the Treasury complies with the basic administrative law principle of giving reasons for such decisions. It is the Government’s view that administrative law principles apply regardless of whether a duty is specified in this legislation. Writing such an obligation into the Bill is therefore unnecessary. I think that that was the commitment the hon. Gentleman was seeking.

Amendments 5 and 11 were considered in the other place and in Committee. It is worth reminding the House that the Prime Minister announced in July that the Government will review the whole matter of the use of sensitive material in judicial proceedings and will issue a Green Paper next year. We expect the Green Paper to be published in the summer. The Government do not consider it appropriate to pre-empt it, which we would certainly be doing if we were to accept amendment 5.

Let me consider the amendment in detail. It seeks to create a new subsection within section 67 of the Counter-Terrorism Act 2008, which provides for the content of court rules about disclosure in financial restrictions proceedings and which will apply to court rules made in relation to challenges to decisions under the Bill. The amendment would place a requirement for the court rules, which are to be made initially by the Lord Chancellor for England and Wales and Northern Ireland, to ensure that the Treasury provides sufficient open disclosure to enable the designated person to give effective instructions to the special advocate. That form of words is based on the European Court of Human Rights judgment in the case of A, which was applied by the House of Lords in the case of AF and others to the stringent control orders that were before it. The effect of the amendment would therefore be to apply “AF No. 3” principles to challenges to final designations. I reassure the hon. Member for Cambridge that persons designated by the Treasury will have the full protections afforded them under article 6 of the European convention on human rights. Section 67(6) of the 2008 Act states:

“Nothing in this section, or in the rules of court made under it, is to be read as requiring the court to act in a manner inconsistent with article 6 of the Human Rights Convention.”

It is therefore absolutely clear that article 6 rights apply in full to asset freezing.

18:30

However, the Government do not accept that “AF and others” principles automatically apply to asset freezing. The application of this judgment to asset freezing has not yet been determined by the courts. The courts have determined that “AF and others” principles apply to the stringent control orders before them in that case and also to the financial restrictions under the Counter-Terrorism Act 2008. However, the courts have not determined that “AF and others” principles apply to asset-freezing cases, and it would be wrong to say that legally there is no room for doubt on this.

As I said in Committee, in our view “AF No. 3” principles do not apply to asset freezing because asset freezes are not as significant in their human rights impact as stringent control orders can be, nor are they as wide-ranging in their financial and economic impacts as decisions to impose financial restrictions under the 2008 Act. However, this is something that it is open to the courts to determine if the Government’s position were to be challenged. Should the courts decide that “AF and others” principles apply to asset-freezing cases, any court rules that cut across this will be read down to ensure compatibility with the ruling. It would not be necessary to amend the legislation. I hope that hon. Members agree that it would not be right to prejudge such a determination by the court and require now the disclosure of sensitive information that could damage national security or the detection or prevention of crime. Doing so would clearly not be in the public interest.

Let me return to my point about the Green Paper. It would also be wrong to adopt a piecemeal approach to this important issue. The issue of special advocates and the use of intelligence material clearly cuts across a number of areas. If we try to address these important issues ad hoc in individual pieces of legislation, we risk ending up with different requirements in different pieces of legislation.

[Dr Huppert]

Notwithstanding the answer that the Minister gave to the shadow Minister, if the result of the Green Paper process suggests that we should update the legislation in this respect, will he agree to do so?

[Mr Hoban]

In the context of this amendment, which seeks to affect the court rules, the court rules would be reinterpreted in the light of any action taken forward as a consequence of the Green Paper.

The Green Paper will ensure that such a coherent and consistent approach is taken to the use of sensitive material in judicial proceedings. Its timing should allow for judgment to be handed down in the lead case in relation to whether the judgment in the case of AF and others applies more widely than to stringent control orders—that is, in the employment tribunal case of Tariq. That case will be heard by the Supreme Court in January, and we expect a judgment in the spring.

As I said, it would be wrong to pre-empt the Green Paper. I hope that having heard my arguments, the hon. Gentleman will welcome and support the approach that we are taking and withdraw his amendment.

[Dr Huppert]

I thank the Minister for his comments and for the assurances and commitments that he was able to give. I continue to disagree with him about the standard that should be required, and I still find it concerning that we are not moving towards a balance of probabilities. However, I will not press the matter to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 31

Independent review of operation of Part 1

[Mr Hanson]

I beg to move amendment 1, page 15, line 25, leave out ‘a person’ and insert ‘the Independent Reviewer of Terrorist Legislation, as appointed under section 36 of the Terrorism Act 2006.’.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss amendment 6, page 15, line 25, at end insert—

‘( ) A person may not be appointed under subsection (1) unless—

(a) the Secretary of State lays a report before both Houses of Parliament which recommends the person and sets out the process by which he was chosen,

(b) a Minister of the Crown tables a motion in both Houses to approve the report laid under this subsection, and appoint the person, and

(c) such a motion is agreed by a resolution of both Houses of Parliament.’.

Amendment 7, page 15, line 31, leave out ‘send the Treasury a’.

Amendment 8, page 15, line 32, after ‘report’, insert ‘to Parliament’.

Amendment 9, page 15, line 34, leave out subsection (4).

Amendment 10, page 15, line 37, at end add—

‘( ) Appointment under subsection (1) shall be for a non-renewable term of five years.’.

[Mr Hanson]

We had a good debate on this issue in Committee. It is my contention that if we are to create a post to review the operation of this Bill once it achieves Royal Assent, it makes eminently logical sense for the person who is appointed by the Treasury to review the legislation to be the same person as the one appointed by the Home Office under section 36 of the Terrorism Act 2006 to review terrorist legislation and its impact from the Home Office perspective. As the House will know, Lord Carlile is currently appointed to that position. He is independent of government; he has an office outside the Home Office as well as a secure office in the Home Office; and he provides an independent review of a range of issues, including control orders and other legislation under the 2006 Act. Clause 31 of this Bill allows for an individual to be appointed by the Treasury. In Committee, I tested the Minister on whether he had discussed with the Home Secretary the possibility of appointing the same person under clause 31 to review part 1 of this potential Act as is currently appointed by the Home Office to review legislation under the 2006 Act.

Whatever our agreements in Committee, there is also, I hope, an agreement that we do not want to see duplication of these roles. The role of reviewing whether a designation has been made fairly and is being operated fairly is the same as that of reviewing whether an individual’s control order has been judged and operated fairly. I accept that there are differences, as alluded to by the Minister in Committee, but in broad terms an individual appointed under clause 31 to review part 1 of this potential Act will be dealing with similar issues and similar evidence—sometimes evidence supplied by agencies within government—and undertaking similar assessments of the effectiveness and fairness of the operation of the legislation.

The current reviewer, Lord Carlile, will finish his tenure in that role very shortly. Mr David Anderson QC will be the new independent reviewer of terrorism legislation from, I think, 1 January next year. He has expertise in the European Union, in public law and in human rights. He is a Queen’s counsel of more than 10 years’ standing, and he is a recorder and a visiting professor at King’s college London. The skills that are required to review control orders under the 2006 Act are, in my view, the same as those required to review the provisions in this Bill. I am making this proposal because there could be synergy between the two posts.

I am equally interested—I know that the Minister will have a wry smile at this—in the costings and the operation of the parallel regimes in the event of the Minister appointing somebody different to review the provisions of this Bill when enacted. The Home Office supplies the reviewer with administrative facilities, office support and research support as needed. He has an independent private office in central London as well as secure rooms in the Home Office that he uses to deal with information to help him in his task. I question the need to establish a parallel regime with a separate person being appointed through a separate recruitment procedure and having separate offices inside and outside the Treasury, given that very often, and potentially even more so in this current age, the individual may be reviewing activities that impact on the same small group of people who are seeking to do harm to our citizens in the United Kingdom as a whole.

I would welcome an update from the Minister on my suggestion and on whether he has had an opportunity to talk to the Home Secretary about this matter. Has the Minister had an opportunity to consider whether the person who will be appointed under clause 31 should be the same person who is appointed by the Government to review Home Office legislation under the 2006 Act?

My amendment has been unduly twinned with the rest of the amendments in the group, which were tabled by the hon. Member for Cambridge (Dr Huppert). They relate to the method for appointing the reviewer—whether they are appointed as under my proposal or as under the Bill. The hon. Gentleman has again drawn on the report of the Joint Committee on Human Rights in proposing that the House of Commons should ultimately be the appointing body for the independent reviewer.

Unusually, I think that I will find myself agreeing with the Minister. Whatever my views on a range of issues, I cannot accept amendment 6, because the post of the independent reviewer must ultimately be a Government appointment. It reports to and supplies information to Ministers, and it is ultimately funded by the Government to provide that information. It is crucial, however, that the post is independent of Ministers. It reports to them, provides them with information and is funded by them, but it ultimately acts independently of them. It advises them and can cause difficult issues for them, because of its independence. If the post was appointed and supported by a resolution of both Houses of Parliament, it would be in a very different position from an independent reviewer of legislation.

Lord Carlile was independent. Never once did he ask me for information that he could not access appropriately. Never once was he compromised by Ministers, of whatever hue, in relation to his jurisdiction and duties. He has provided a fair assessment of the operation of the legislation to date.

I hope that the Minister reflects positively on amendment 1. I suspect that he will not support amendments 6 to 10, which were tabled by the hon. Member for Cambridge, because the independence of the post is crucial. If we tie it to the Minister or to the House of Commons, we will betray that independence and do a disservice to the role. If the Minister cannot give me good news on amendment 1, I hope that he can encourage me generally on the appointment. I look forward, also, to hearing the hon. Member for Cambridge speak to his amendments.

[Dr Huppert]

I will speak briefly to amendments 6 to 10, which come from the Joint Committee on Human Rights, on which I am privileged to serve. I agree with the right hon. Member for Delyn (Mr Hanson) that the key issue is the independence of the reviewer. The amendments seek to strengthen that independence, by ensuring that the reviewer is a creature not of Government, but of Parliament. Being nominated by Government and approved by Parliament would give the reviewer greater independence.

There is also a question of accountability. Who should hold accountability on behalf of the British public—Parliament or Government? Should the reviewer’s report go directly to Parliament, or should there be the potential for it to be filtered by Government? Although I accept that that does not generally happen, there is the potential for it to happen.

[Mr Hanson]

I ask the hon. Gentleman to consider that Ministers are accountable to Parliament. I rose because of his use of the word filter. When I was the Minister with responsibility for policing and terrorism, not once did I change a single word of a reviewer’s report to Parliament, even though such reports were produced ultimately by Ministers for this House. I do not expect that any other Minister would do so, because the independent reviewer would make a play of it and the relationship would be devalued tremendously.

[Dr Huppert]

Indeed, I was saying that I did not believe that that had ever happened, and I am grateful for the assurance that it never has. That shows exactly why amendment 6 makes sense. If no Minister would ever filter such reports, there should be no requirement for them to go through Ministers. That creates a potential filter that we hope will never be used. I hope that the Government simply agree with my position, so I will not labour the point. However, I doubt that the Minister will say that he agrees.

I will raise something that I mentioned on Second Reading, which might provide a compromise. As the Minister is aware, there is a recent precedent for Select Committees to approve independent appointments. That happened with the Office for Budget Responsibility and I hope that it will happen with other bodies. Perhaps the Minister will agree that it would be helpful for the reviewer to be confirmed by an appropriate Select Committee in a similar way, to ensure that there is certainty for Parliament as well as Government that the reviewer will perform their role properly and independently.

18:45

[Mr Hoban]

I did not know that we were going to proceed at such a quick pace this evening, although perhaps it is not as quick as you, Mr Deputy Speaker, and other colleagues might have hoped. I hope that we will not detain the House too much longer on the matters before us.

I will deal with amendments 6 to 10 first, before returning to amendment 1. As the right hon. Member for Delyn (Mr Hanson) pointed out, amendment 1 relates to a topic that gave rise to one of the longer debates in Committee.

The amendments tabled by my hon. Friend the Member for Cambridge (Dr Huppert) relate to the appointment of the independent reviewer and the terms by which he will report. My hon. Friend and other hon. Members will be aware that such amendments were debated at length during the Bill’s passage in the other place and in Committee. As I said in Committee, the proposals are based on the provisions of the Prevention of Terrorism Act 2005 that relate to the independent reviewer of terrorism legislation. That provides an effective and suitable model for the statutory independent asset-freezing reviewer.

Amendment 6 would require the independent reviewer to be approved by Parliament. I believe that the intention is to ensure that the reviewer is suitably independent of Government. I hope that I can reassure my hon. Friend that the Government are fully committed to the independence of the reviewer. Independent oversight is an essential element of the safeguards that the coalition Government have introduced into the Bill, and it will be the principal objective of any appointment. I will touch on the recruitment process later.

We do not believe that it is necessary for Parliament to approve the independent reviewer. That would be a significant departure from standard practice. The appointment of the reviewer by Government reflects the long-standing principle of ministerial responsibility. It is Ministers who are accountable to Parliament and to the public for the people whom they appoint. Parliament will, of course, be able to scrutinise the work of the reviewer and to hold him or her to account through existing mechanisms—for example, through Select Committee scrutiny.

My hon. Friend proposed the compromise of a requirement that an appropriate Select Committee approve the appointment of the reviewer. The Minister for the Cabinet Office and Paymaster General is due to meet the Liaison Committee shortly to discuss the pre-appointment hearing process. A decision to add new appointments to the list of posts subject to pre-appointment scrutiny may be announced as a result of that meeting.

Amendments 7, 8 and 9 would replace the independent reviewer’s obligation to report to the Treasury and the Treasury’s obligation to lay that report before Parliament with an obligation for the reviewer to report directly to Parliament. To draw a comparison, all the annual reports and ad hoc reports produced by Lord Carlile, the current independent reviewer of terrorism legislation, have been provided in the first instance to the Home Office to check that they do not inadvertently contain any classified material that cannot be published. Hon. Members will recognise that asset freezing deals with sensitive and classified information. That is why the Government believe that a similar approach is appropriate.

The independent reviewer will have access to all relevant papers and evidence, including highly classified intelligence reports and, on occasion, material that is being considered as part of a separate criminal prosecution. It is important to ensure that published reports do not include classified or sub judice material, and Parliament could not undertake such a check. I reassure my hon. Friend that the Government will not seek to influence the outcome of any report. The reports will be provided to Parliament as quickly as possible after they have been delivered, and they will be available to the public.

Amendment 10 suggests that the appointment of the independent reviewer should be for five years, and that it should not be renewable. We do not believe it necessary or desirable to have a statutory limit on the length of time that a reviewer should remain in post. There might be valid reasons why someone wishes to step down at an earlier stage, but there might also be valid reasons why they wish to occupy the position for a longer period. They will build up significant experience and significant knowledge of how legislation works, and that will be invaluable.

It is important to take the opportunity to learn from the experience of the current reviewer and see how he feels the system should work. In the debate in the other place, Lord Carlile said about appointment procedures:

“As to the way in which the independent reviewer is appointed, I do not have any very strong views. Appointment by a Minister does not make the reviewer any less independent. Many public appointments have sprung surprises on government; for example, chief inspectors of prisons. Independence is in the way the person concerned operates.”—[Official Report, House of Lords, 25 October 2010; Vol. 721, c. 1085.]

I notice that the right hon. Member for Delyn raises his eyebrows at the reference to the chief inspector of prisons—he clearly knows from his own experience how independent such people can be once they are appointed.

On the question of whether submitting reports to the Government, rather than directly to Parliament, would run the risk of reports being altered in any way, Lord Carlile said:

“I cannot imagine any circumstances in which any honourable person appointed to this role would be prepared to change their report at the behest of a Minister or civil servant for political reasons. It has never happened. It did not happen with any of the reviewers before I was appointed, it has not happened during my period of tenure, and I do not think it will happen with any successor I can foresee under the present or changed arrangements.”—[Official Report, House of Lords, 25 October 2010; Vol. 721, c. 1086.]

That reinforces the right hon. Gentleman’s experiences.

It is essential that the independent review of the asset-freezing regime is robust, impartial and transparent, and we are satisfied that the provisions in the Bill regarding the appointment and operation of the reviewer are appropriate to achieve that. I therefore hope that my hon. Friend the Member for Cambridge will not press his amendments.

Amendment 1, tabled by the right hon. Member for Delyn, would, as he said, ensure that whoever fulfilled the role of Home Office independent reviewer of terrorism legislation would also fulfil the role of independent reviewer of asset freezing. I shall provide the House with an update on the Treasury’s position on the appointment of an independent reviewer, but first I wish to set out why we do not support the amendment.

The Government do not accept that the independent reviewer for asset freezing must always be the same person as the Home Office counter-terrorism reviewer. Requiring them to be the same person would unnecessarily reduce flexibility, and could therefore constrain the Government’s ability to appoint the best person to the post. There might be good reasons why, in a particular case, both roles could not be held by the same person. For example, the best qualified person for the job might simply not have the time to carry out both roles to the level required.

We have to remember that both roles are demanding and important. Counter-terrorism legislation is an expansive and complex area, and the issues raised concerning the balance between protecting security and protecting civil liberties are of fundamental importance. Moreover, individuals may well wish to combine their work as independent reviewers with other ongoing professional commitments. That is entirely reasonable, as long as it does not give rise to conflicts of interest. In the light of that, it would be wrong to say that we must only ever appoint somebody who can perform both roles. We need to retain flexibility and always look for the most suitable person to do the job.

We recognise, however, that there are good arguments for combining the two roles where it is possible and desirable to do so. That might produce greater consistency and coherence and better value for money, as the right hon. Member for Delyn said in Committee. As I have said, however, we need to consider the matter on a case-by-case basis and not just assume that combining the two roles is the only approach that can work.

I now turn to the current situation. My officials have been in close contact with Home Office and Cabinet Office officials to explore the matter further. There has also been an initial discussion with the incoming counter-terrorism reviewer, David Anderson, to explore whether he would be willing to be considered for the asset freezing reviewer post. Mr Anderson has indicated that he would be willing to take up the post were it to be offered to him, and that neither he nor the Treasury is aware of any impediment to his taking on the role were it to be offered.

At this stage, the Treasury has not made an offer of appointment to the role, and in our view it would be premature to do so. After all, the Bill is not yet law and the post does not yet exist. However, I reassure the House that the Treasury is considering all the relevant issues, including value for money and the interconnection of the two roles. The process of appointing a reviewer is on track, and the appointment will be made in plenty of time for the reviewer to prepare their first report, which is due nine months after the Bill comes into force. I hope that that update will reassure Members of the progress that the Treasury is making in filling the post, and of its recognition of the points made today about costs and the interconnection of the two roles. On that basis, I hope that the right hon. Gentleman will be willing to withdraw his amendment.

[Mr Hanson]

I think I will take that as a sort of yes from the Minister about the principle behind the amendment, even though he is not accepting it. I feel reassured by what he has said. He has been very fair in his assessment that there are synergies between the two roles and potential cost savings. An individual could undertake both roles, and from my experience the two posts may be reviewing a similar pool of people. I believe that progress has been made.

The Bill obviously needs Royal Assent very quickly, because of the expiry of the previous legislation. I urge the Minister to ensure that, upon his final approval of a person to review the operation of the Bill, he tables a written ministerial statement. The individual needs to be in post prior to the time set out in clause 31(2) for the production of the first set of reviews, which is nine months after part 1 comes into force. It is important for the House to have feedback on that, and that will keep the House informed, at least in part, of matters related to the other amendments in this group.

I am very pleased to “bag” my amendment. The Minister has made his case and come as near as he can to saying what will happen. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Third Reading

18:58

[Mr Hoban]

I beg to move, That the Bill be now read the Third time.

I start by thanking right hon. and hon. Members from all parts of the House for their participation on Second Reading, in Committee and now on Report, and for helping the Bill reach this stage. It has been given careful scrutiny, even though it has not been the most lengthy scrutiny process. The issues have been dealt with thoroughly both in Committee and on the Floor of the House.

We have considered very closely the civil liberties issues that have been raised in our debates and how best to address them without compromising national security. I am confident that the Bill strikes the right balance between protecting national security and protecting civil liberties, but it is right that we have considered carefully both in Committee and on Report amendments that would strike a different balance.

I am grateful for the Opposition’s constructive approach. The Bill’s genesis was legislation that they developed in the previous Parliament. We have taken that legislation forward and, I think, improved it by introducing additional safeguards to protect fundamental freedoms.

The Opposition could have extended the debate on these changes, had they so wished, but they did not do so. I recognise that the right hon. Member for Delyn (Mr Hanson) brought his experience to our debates. That helped to enlighten the scrutiny process. It is right that where there is agreement between Government and Opposition, we should make it clear that that is the case and co-operate in the national interest, in the same way as, when we were in opposition and faced with the Supreme Court judgment that triggered the Bill, we worked with the then Government to ensure that the temporary legislation reached the statute book quickly to maintain the security of our nation.

I think that we all recognise that the Bill is necessary to the United Kingdom’s continued national security. We have seen again with the events in Sweden at the weekend the threat posed by international terrorism. The Government must have the right tools to combat terrorism in the UK and overseas, and among those tools must be options to act preventively and to be able to disrupt terrorist plots in their planning stages. It is worth bearing in mind that the Bill covers assets in the UK but might relate to parties overseas. The most recent set of figures that I have shows that of the 57 freezing cases covered by this Bill, 25 of those involved are resident in the UK and the remainder are resident overseas. The most durable freezing orders are those that relate to people outside the UK. Of the 46 cases that are more than four years old, 31 relate to cases outside the UK. It is important to bear in mind that we must have the tools to combat terrorism wherever it happens.

One of the most effective ways of limiting terrorists’ actions is to limit their ability to finance attacks, maintain their infrastructure, provide training, equipment and recruitment, and promote their message of hate. The UK’s terrorist asset-freezing regime is an important and valuable tool. That is why there was cross-party support for the emergency legislation earlier this year and why I hope the House will unite behind the legislation today.

Let me reiterate some of the changes that have been made to make the Bill stronger and better. The Bill introduced in the other place was a significant improvement on the current regime. It included more targeted prohibitions to limit the impact of asset freezing on innocent third parties; a provision to ensure that, in accordance with a ruling in the European Court of Justice, the regime did not catch the payment of state benefits to the spouses or partners of designated persons and so did not have the draconian impact on family life that the Supreme Court was concerned about; and the establishment of an independent reviewer—something we talked about today and in Committee—to ensure that there is proper independent scrutiny of the asset-freezing regime.

Further safeguards were introduced by Members in the other place to raise the legal test for freezing assets for more than 30 days from reasonable suspicion to reasonable belief and to strengthen judicial oversight by ensuring that there is a full merits-based review of designation decisions. Combined, those important new safeguards will serve to make the asset-freezing regime significantly more proportionate and more transparent in its application, in addition to raising the legal threshold that must be met for a freeze to be imposed. However, I also believe that they are changes that will not undermine the effectiveness of the regime or risk the UK’s continued compliance with international best practice. I welcome the endorsement that many Members have given the changes, both in this House and the other place.

In summary, I believe that the Bill we are considering for the final time today strikes the right balance between protecting public safety and protecting civil liberties, and that the balance we have struck commands widespread and cross-party consensus in Parliament. The Bill will put the UK’s terrorist asset-freezing regime on a secure legislative footing and significantly improve it. We have made excellent progress against a tight deadline, and I am pleased to be able to commend the Bill to the House.

19:04

[Mr Hanson]

I simply want to say on behalf of the official Opposition that we welcome the Bill, which, as the Minister has said, had its genesis with the previous Government. Previous Treasury Ministers have worked with officials to develop a regime that is, in my view, about protecting civil liberties. We hear a lot about civil liberties in these debates, and the Bill is about protecting those liberties and protecting individuals’ rights to live their lives without fear of terrorist attack. The terrorist asset-freezing regime that is in place and that will be in place once the Bill receives Royal Assent will help to develop still further the protections to ensure that those who wish to do harm to our society do not use such resources to do that harm.

The Bill has obviously been subject to great and detailed scrutiny, not just here but in the other place. It has also been scrutinised by the Joint Committee on Human Rights. As a House, we have considered the arguments put to us about several issues and we have ultimately decided that they do not hold merit. That is an important part of the process. The Bill leaves us with the full support of the Opposition. It will, I hope, provide greater safety for our community and help to ensure that we take action against those who use finance to undertake terrorist acts.

I am pleased that the Minister has given a strong indication that he will consider seriously the two roles of the reviewer. One is set out in clause 31 and the other—the reviewer of terrorist activity, who will soon be David Anderson, QC—is set out in previous legislation. There is merit in that synergy. Having heard what the Minister has said today, I wish the Bill well and the Opposition support it.

19:06

[Dr Huppert]

I have spoken on a number of issues already, so I shall be brief. I agree with the general sentiment that we must prevent terrorist activity and the funding that supports it. I would rather that we had seen a court-based system that was fair and safeguarded civil liberties in the ways that I tried to draw out, but I accept that that is not what we have. The system that I would like to see would provide the national security that we need while protecting the civil liberties that we deserve, but I accept that that is not the settled will of the House.

There is still one issue of detail that I would like to explore. Clause 25(1) contains the fascinating phrase:

“Nothing done under this Chapter is to be treated as a breach of any restriction imposed by statute or otherwise.”

Let me give the Minister a further chance to comment. Could he perhaps reassure me that that phrase is not intended to mean that the Human Rights Act 1998 and common law rights would not apply? That is one possible reading of it. I believe that that is not the intended meaning, so can he assure me that the Human Rights Act and common law will remain sovereign? If he wants to say that, I shall be delighted to let him intervene.

In the meantime, while the Minister reads the clause, let me reflect on what the Bill does. It is interesting to consider the scale of the problem. There was a statement from the Minister on 23 November about how many accounts had been frozen—a total of 205 accounts as of 30 September, containing less than £290,000. Although terrorist activities can be carried out on relatively small sums of money, we should be clear with ourselves and with the public about the amounts that are involved. Of that £290,000, only £140,000 would be covered by the Bill, as it was covered by the predecessor legislation. That is a relatively small amount although it can, of course, have a large effect.

The Bill is not as good as it could be and that is a shame, but it is a lot better than its predecessors. I welcome that fact and the effort that the Government have made to accept amendments in the other place, if not here. I am happy to see it pass its Third Reading.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.

[Mr Gerry Sutcliffe (Bradford South) (Lab)]

On a point of order, Mr Deputy Speaker. The House was due to have the opportunity to discuss the Lords amendment to the Identity Documents Bill, but I understand that Mr Speaker will not allow that to happen because of the lack of a money resolution. Will we have any opportunity to debate what the Lords have said about the fairness of ensuring that those people who bought identity cards can have some compensation?

[Mr Deputy Speaker (Mr Nigel Evans)]

I thank the hon. Gentleman for that point of order, of which he gave me short advance notice. As will become apparent from what I am about to say, the next bit of business will give him his answer.

Identity Documents Bill

Tuesday 14th December 2010 Commons Chamber

Consideration of Lords amendment

[Mr Deputy Speaker (Mr Nigel Evans)]

I must draw the House’s attention to the fact that financial privilege is involved in the Lords amendment. Having given careful consideration to the amendment, Mr Speaker is satisfied that it would impose a charge on the public revenue that is not authorised by a resolution of this House. The amendment is therefore deemed to be disagreed to, and is not available for debate, in accordance with Standing Order No. 78(3).

Ordered, That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendment;

That Damian Green, James Duddridge, Mr Gerry Sutcliffe, Mark Tami and Dr Julian Huppert be members of the Committee;

That Damian Green be the Chair of the Committee;

That three be the quorum of the Committee.

That the Committee do withdraw immediately.—(James Duddridge.)

Committee to withdraw immediately; reasons to be reported and communicated to the Lords.

Business Without Debate

Tuesday 14th December 2010 Commons Chamber

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Road Traffic

That the draft Road Safety (Financial Penalty Deposit) (Appropriate Amount) (Amendment) Order 2010, which was laid before this House on 15 November, be approved.—(Mr Vara.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Excise

That the Tobacco Products (Descriptions of Products) (Amendment) Order 2010, (S.I., 2010, No. 2852), dated 29 November 2010, a copy of which was laid before this House on 30 November, be approved.—(Mr Vara.)

Question agreed to.

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Corporate Governance in Financial Institutions and Remuneration Policies

That this House takes note of European Union Document No. 10823/10 and Addendum 1 relating to a Green Paper on corporate governance in financial institutions and remuneration policies; and supports the Government’s approach to work closely with the European Commission to deliver a strong, principles-based framework for financial sector corporate governance.—(Mr Vara.)

19:12

Division 156

Ayes: 281

---

Conservative: 236
Liberal Democrat: 45

Noes: 195

---

Labour: 183
Scottish National Party: 5
Democratic Unionist Party: 2
Plaid Cymru: 2
Conservative: 1
Independent: 1
Green Party: 1

Pension Funds

Tuesday 14th December 2010 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Vara.)

19:25

[Jon Cruddas (Dagenham and Rainham) (Lab)]

Somewhat earlier than I anticipated, I rise to make a few comments about the operation of pension funds and their transparency.

Everyone knows that the world of pensions is changing fast. With the decline of defined benefit schemes and the shift to defined contribution, pension savers are shouldering more and more of the investment risk to their savings, and with the advent of auto-enrolment in 2012, even more people’s future well-being will be bound up with the capital markets through their pension funds. These trends make greater transparency of pension fund investments an urgent imperative for three reasons. First, if ordinary savers are bearing the risk to their investments, it is only right that they should be in a position to scrutinise how their agents are managing those risks. If we expect individuals to take more responsibility for providing for themselves in old age, they should at least be given the tools to hold accountable those on whom their retirement security depends.

Secondly, the huge—and hugely profitable—industry charged with looking after people’s savings has an extremely poor record. In recent decades, we have seen the growth of an enormous cadre of agents and intermediaries who extract huge fees at the direct expense of ordinary savers at the bottom of the investment chain. For instance, a report published last week by the Royal Society for the encouragement of Arts, Manufactures and Commerce—known as the RSA—found that the total fees charged by pension funds swallow up an astonishing 40% of the end value of the average British pension, which is much more than in our European counterparts. One might at least expect that this is paying for superior skills and therefore higher returns on investment, but pension fund returns are actually declining: between 2000 and 2009, they collapsed to an average of 1.1% per year. Paul Woolley at the London School of Economics has calculated that excessive short-termist trading in shares is likely to erode rather than enhance the long-term value of pension pots. Pension fund investment strategies are a very real issue for any Government who are serious about tackling the looming pensions crisis, which we all acknowledge.

The third reason transparency matters is that pension funds are huge institutional investors with enormous collective influence on the financial markets and the wider economy. If the financial crisis taught us anything, it was the danger of handing over ordinary people’s money to financial institutions and assuming that they will take care of it without the need for further scrutiny. The interests of pension savers are, by definition, long term, yet in the build-up to the financial crisis, many pension funds engaged in the same short-termist strategies and herding behaviour as the rest of the market.

The American academic Keith Johnson has described the influence of these investors as akin to unleashing

“a flock of 900-pound lemmings”

into the economy. There is, therefore, a legitimate public interest in how pension funds behave, including in how they exercise their ownership rights. The financial crisis exposed the dangers of share owners acting like what Lord Myners dubbed “absentee landlords” or, worse still, actively encouraging their investee companies to pursue short-term profit at the expense of the long term. Ultimately, it is millions of ordinary people who provide the capital and suffer the economic consequences when that capital is not used responsibly. The case for greater transparency is compelling.

So what should that mean in practice for the Government? Earlier this year, the Financial Reporting Council published a stewardship code for institutional investors aimed at encouraging responsible ownership. It is far from perfect, but it is a start. In particular, its strong focus on transparency, including transparency in the exercise of voting rights, is welcome. However, there is a danger of the interests of pension savers being forgotten in this process. The code’s provisions on voting disclosure are a tacit recognition that people have the right to know how the voice of shareholders is being used on issues such as executive pay, takeover bids or environmental resolutions. However, the code is largely aimed at asset managers.

Ordinary people cannot be expected to know which asset manager their pension fund uses and proactively to seek out that manager’s disclosures. Improvements in fund manager transparency will give savers the accountability and visibility that they deserve only if pension funds play their part too. Disappointingly, although the FRC has stated that pension funds have an important role to play, the pensions regulator has not yet produced any official guidance for pension funds on how they should apply the stewardship code. The role of pension funds has often been left to the National Association of Pension Funds, which is an industry body—a less-than-ideal situation, I tentatively suggest. Does the Minister agree that it would be appropriate for the pensions regulator to look into the matter? Will he raise it when he next meets the regulator’s newly appointed chair?

Notwithstanding what I have said so far, it is clear that the stewardship code will not be a panacea when it comes to accountability and transparency. FairPensions, the campaign for responsible investment, yesterday published an analysis of fund managers’ performance on transparency, including their reporting under the stewardship code. Although it showed some improvements, almost one in six asset managers surveyed still did not disclose any information about their voting records. One manager justified that by saying that it was up to the clients—that is, the pension funds—to disclose such information. However, recently published guidance from the National Association of Pension Funds makes it clear that it thinks that disclosure is up to the asset manager and is not the pension fund’s responsibility. There is a real danger that such buck passing will result in nobody disclosing and the pension savers at the bottom of the chain remaining in the dark about how their money is being managed.

The Government could avoid that danger by doing two things. First, they could make voting disclosure mandatory for asset managers by exercising their reserve powers under section 1277 of the Companies Act 2006. I understand that this is not within the Minister’s gift, but I hope that it will be considered by his colleague the Secretary of State for Business, Innovation and Skills, as part of his review of economic short-termism. Secondly, the Government could clarify pension funds’ obligations in this area by amending the regulations, which already require pension funds to disclose their voting policy, to make it clear that they should also disclose information about their voting practices. Alternatively, that could be included in the pensions regulator’s guidance.

I do not believe that either approach would impose an unreasonable burden on pension funds. If their fund managers are already required to report on their exercise of voting rights, it should be sufficient in most cases for pension funds simply to provide a link to that information on their websites. That would be a small matter for the fund in question, but a huge improvement in accountability for the pension saver. It would also make information directly accessible to the pension saver—instead of them being expected to go hunting for it—and would help to embed transparency right down the investment chain. In the US, the duty of disclosure is now a recognised part of pension funds’ fiduciary duties towards their beneficiaries. That is right, and I hope that we can move down that road here.

Those in the investment industry who are unwilling to open themselves up to scrutiny in that way have come up with various arguments over the years to defend their secretive business models. Most such arguments—the idea that such a proposal would be enormously costly, or compromise commercial confidentiality or even damage relationships with the company—have been comprehensively discredited over the years. The latest argument appears to be that it is pointless to require investors to disclose such information because nobody would read it. The Minister should be able to tell us that this argument is nonsense. I understand that in June he received some 1,500 e-mails from supporters of FairPensions asking him to support their right to access such information.

Earlier this year, more than 6,000 people contacted their pension funds to ask how they would be voting on shareholder resolutions about tar sands at BP and Shell’s annual general meetings. As it turned out, those savers’ concerns about the risks of unconventional oil extraction proved well founded, at least in the case of BP. Those pension funds might have found themselves in a better position financially if they had listened to their members a little more. There is clearly a growing movement of people who want to know what is being done with their money—a movement that is being held back by a pervasive lack of transparency and a culture of hostility to the people whose money is at stake having the impertinence to ask questions.

That brings me to the final point that I want to stress. It is vital that any moves towards greater transparency pay enough attention to environmental, social and governance issues—sometimes known as ESG. Survey after survey has shown that savers care about such issues. The rise of socially responsible investment products and the success of campaigns, such as that on the tar sands resolutions, show that people want to act on that concern, but they must be given the information and the tools to do so. The previous Government sought to give them that information some 10 years ago, by introducing regulations requiring pension funds to state the extent to which they take environmental, social and ethical concerns into account in their investment policies.

Since then, the G in ESG—governance—has received a huge amount of attention, after it became obvious that conflicts of interest, excessive pay and poor risk management contributed to the financial crisis. Yet with typical myopia, many investors still neglect the E and S of ESG—the environmental and social. The Deepwater disaster, which forced BP to cancel its dividend for the first time since the second world war, should have been a wake-up call for anyone who still doubted that companies that ignore such issues face serious financial risks. It should also have been a wake-up call for pension funds—for which the BP dividend was a significant source of steady income—to pay attention to such issues as a key part of their fiduciary duty to pension savers, as the legal opinion obtained for the United Nations Environment Programme confirmed some five years ago.

The challenge of climate change makes recognition of that duty even more urgent. Climate change is not only an investment risk, which it clearly is; it also has innumerable ramifications for the retirement security of the next generation of pensioners. A 25-year-old pension saver clearly has a broad interest in ensuring that his or her savings are reducing rather than increasing the risk that they will grow old in a world ravaged by catastrophic climate change.

The Ministers responsible for the 2000 regulations clearly intended to nudge pension funds into taking account of non-financial issues. To some extent they were successful, as the UK Sustainable Investment and Finance Association noted, in marking the 10th anniversary of the regulations. ESG integration is more mainstream than it was 10 years ago, but there is clearly still a long way to go. It would be wrong to say that the objectives of the 2000 regulations have been achieved. A 2009 United Nations report expressed “disappointment” that investment consultants still advise pension funds to include boilerplate statements on environmental, social and ethical issues that

“meet the letter but not the spirit of the law.”

Members who ask about specific voting decisions are often directed to such generic statements, which are of little or no use to them. Indeed, that is exactly what happened to Members of this House who inquired about their own pension fund’s stance on the tar sands resolutions earlier this year.

Research by FairPensions also suggests that such box ticking is often not accompanied by much substantive action. Its 2009 survey of pension funds showed that almost all had a policy stating that they took non-financial issues into account, but around a third did not integrate the policy into their agreements with fund managers or assess their fund managers’ ability to implement it, nor did they require them to report on its implementation. It is reasonable to ask what those funds were doing to implement their stated policies. It is also reasonable to ask how those policies gave any meaningful insight to the curious member wanting to know what their fund was doing about environmental and social issues. As the UN report concluded,

“the time may have come to review how”

the disclosure regulations’

“effectiveness could be improved with additional reporting and disclosure requirements that will supersede mere ‘tick box’ compliance.”

In other words, perhaps we need a further nudge, some 10 years on from the initial regulations.

I understand that the Minister’s official position is that the existing regulations are adequate, but in a recent parliamentary answer, his colleague Lord Freud confirmed that his Department has made no assessment of how the regulations are operating. Given that so many others who have done such analyses have concluded that change is needed, will the Minister commit to exploring how the situation might be improved? Guidance from the pensions regulator on stewardship could provide an opportunity to clarify what constitutes an adequate policy under the 2000 regulations, encouraging pension funds to go further than boilerplate positions.

Perhaps more importantly, the Government could require pension funds to report on a regular basis on how they were implementing that policy. That could be helpful in focusing minds and ensuring that these policies are not, as one fund manager described them, a “dead document” but a genuine commitment that is given full weight in investment decisions. Again, this is not an unreasonable thing to ask. Pension funds are already required to produce an annual report, including an investment report. Under the stewardship code, it is reasonable to assume that this should include a summary of their stewardship activities during the year. It is also reasonable to assume that the report exists to give pension savers meaningful information with which to judge the fund’s performance. Environmental and social issues should be no exception to this. There is popular demand for such information, and that demand should be met.

I hope I have shown that pension funds’ behaviour as responsible investors, including with regard to environmental and social issues, is neither a trivial sideshow nor an issue that concerns only policy makers dealing with corporate governance or financial services. It has real implications for our ability to meet the challenge of providing a decent pension, and a decent standard of living, for all our citizens across the country.

To recap my questions to the Minister: will he discuss these matters with the pensions regulator? Will he encourage the regulator to produce some guidance? And will he look again at the disclosure regulations and explore ways in which they could be updated or supplemented to ensure that pension savers are getting the levels of transparency that they deserve?

19:41

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I congratulate the hon. Member for Dagenham and Rainham (Jon Cruddas) on securing this debate and raising such an important issue for many of our constituents. Pensions are sometimes seen as a bit of a minority sport for anoraks, but the issue of what is happening to our money, and of whether it is being invested well, and in an environmentally and socially beneficial way, matters very broadly, and the more we can do to reduce the barriers that people face in obtaining that information, the better.

As the hon. Gentleman was speaking, I was reflecting on the fact that I bank with Smile, the internet arm of the Co-operative bank. As a member of the Co-operative movement, I periodically receive mailings about ethical investment issues and about the policies of the bank and how they could change. I have some interest in those matters professionally, but even just as a private citizen I find that process quite engaging. The process of raising such issues directly with individuals to enable them to make informed choices without always having to be proactive and to go and dig them out, makes me feel more positive about the institution that I am dealing with.

The hon. Gentleman is right to raise these issues. He mentioned the organisation FairPensions, and I congratulate it on its research, which is often thorough and careful. It is neither broad-brush nor high-level, but it examines the detail of the law and the regulations to determine how things might incrementally be improved. I welcome the fact that he has brought to the House’s attention some of the issues that he and Fair Pensions are concerned about.

I want to respond mainly on the questions of corporate governance and accounting transparency, but I also want to touch briefly on charges. The hon. Gentleman mentioned a figure of 40% of pensions going to pay charges, and that is a figure that we often hear quoted. It is worth correcting the record on what that does and does not refer to. It is certainly not an average or a norm. Someone who pays 1.5% charges through the life of their product might end up losing 40% of the fund on retirement, but there is no reason why anyone with a standard product need pay those charges. The stakeholder cap would start at 1.5% and fall to 1%. The new National Employment Savings Trust—NEST—pension will have an equivalent average management charge of 0.5% a year. Every charge represents a bit coming out of the final return, but people are paying for a service and charges are therefore legitimate provided that they are transparent. It is important not to overstate the extent of charges.

One thing that we hope will happen as a result of introducing the NEST corporation into the market next year, and more fully in the coming years, is that it will have a downward impact on charges across the market. When stakeholder pensions were introduced there was evidence that some charges—which might have been even higher than the figures quoted by the hon. Gentleman—were brought down, and we think that the same will happen again.

That raises the issue of the relevant roles of regulation, on the one hand, and of alternative strategies, on the other. I find a lot of common cause with the points that the hon. Gentleman raised. He is an intelligent and thoughtful contributor to these debates. One of the paradoxes that he raised is illustrated by asking whether further regulation is the solution to regulation that is not achieving what we want it to achieve. Or should we consider better enforcement of existing regulation, or alternative strategies? I suspect that the answer might be a mix of all three. He used powerful terms such as “boilerplate”, “paragraphs”, “dead documents” and “tick-box” mentalities. We do not want to create new tick-boxes. We want to ensure that the spirit of the law and the guidance is adhered to.

The NEST corporation has done some interesting work on attitudes to ethical investment, which is worth sharing with the House. It was actually the predecessor body to NEST, the Personal Accounts Delivery Authority, that conducted some public consultation on how NEST should invest its members’ money. NEST will be a pension fund with the potential to cover millions of people, many of whom will never have had a pension before and who might not be financially sophisticated investors. The target market was asked whether NEST should offer

“an ethical or socially responsible investment fund”.

As the hon. Gentleman might imagine, the research evidence suggests that there was very strong support for NEST offering such a fund, and the corporation is thinking about how it will do that. At the moment, about 40% of defined contribution schemes offer an ethical fund. I appreciate that there is a difference between an ethical fund and transparency in pensions, but there are links between the two.

Back in 2007, my Department looked at the NEST target group, and more than a quarter said that they would invest in an ethical fund regardless of the return. So they thought that they were interested in that idea even if sacrificing a bit of their return was involved. Also, a whisker under half of those surveyed said that they would invest ethically if the returns were equal to other investment types. Perhaps that reinforces the hon. Gentleman’s point that there is a big market out there for such investment funds, and that people are concerned about such things. They might not understand every detail of what is happening to their money or what is going on in the financial markets, but they want to know that their money is, as it were, doing good wherever possible. Some are willing to make a financial sacrifice to achieve that, and many more would rather be in that position than not. That suggests that the issues that the hon. Gentleman has raised are important and mainstream, as he said.

One of the challenges in dealing with this issue is that there are many links in the chain. We have the individual investor who puts money into a pension fund, along with their employer. Then we have the pension fund trustees, the investment managers and the businesses in which the money is invested. At each stage there are issues of transparency and reporting that need to be addressed, as the hon. Gentleman rightly says.

The present legislation on occupational pension schemes is contained in the investment regulations of 2000. It will not be entirely helpful to my case to do so, but I am going to quote exactly what they say. They require a scheme’s statement of investment principles to

“disclose the extent (if at all) to which social, environmental, or ethical considerations are taken into account in the selection, retention, and realisation of investments.”

The regulations also require schemes to disclose

“their policy (if any) in relation to the exercise of the rights (including voting rights) attached to the investments.”

As the hon. Gentleman has pointed out, however, that is a requirement to disclose a policy, but not necessarily individual votes on individual issues. I know that many shareholders do not just want information on a boilerplate policy that might be cut and pasted from somewhere else; they want more specific information on how the scheme approaches its position.

The figures change from month to month, but latest figure that I have seen shows that British pension funds own about £1 in every £7 or £8 of the UK stock market, so they are powerful players. Obviously, they do not often speak with a single voice, so they are perhaps more fragmented than that single figure suggests, but the idea that vast numbers of billions of pounds are not having an influence on company behaviour seems implausible. We therefore have an incentive to have a proportionate regime that maximises the beneficial impact of that activity.

There is a lot going on in relation to corporate reporting. In looking into this in preparation for the debate, I identified at least three different Government consultations and calls for evidence that are now going on, and that are relevant to this area. I shall update the House on where we are with those, starting with the Department for Business, Innovation and Skills, which has been consulting on the future of narrative reporting in order to address the coalition commitment to reinstating an operating and financial review. That policy was dropped a while ago, and the intention is to reinstate it. That consultation has closed and our BIS colleagues will shortly publish a summary of responses with a view to outlining the next steps in the new year.

The three key objectives, with which I think the hon. Gentleman would agree, were as follows. The first was to improve the quality of company reporting to shareholders, the second was to empower shareholders to hold directors to account on their performance, and the third was to ensure that any measures we as the Government introduce will improve the quality and relevance of disclosures; that relates to the point that the hon. Gentleman made.

Our colleagues at BIS are, as they say, exploring all the options—regulatory and non-regulatory—to make sure that companies report on matters that are material to their business and their shareholders, including consideration, where relevant, of social and environmental issues. What our BIS colleagues say is that where existing regulation is not meeting its aims, they will be looking at options to facilitate better and more relevant reporting and to empower shareholders to hold companies to account where the needed information is not provided. There is a welcome and ongoing commitment to empowerment of shareholders and to relevant reporting, not just box-ticking exercises.

That is the first exercise, which in a sense is more mature, within the few months for which the coalition has been in power. The second relates to the point that the hon. Gentleman made in his speech about short-termism. The Department for Business, Innovation and Skills published in October a call for evidence on the extent of short-termism and market failures in UK equity markets, looking at issues and causes and whether the current law is suitable. A whole range of issues is covered by that, including whether investors are increasingly short term and whether—to use a bit of economic jargon—there are principal agent problems in the investment chain.

In a sense, that is how I started my remarks, by saying that we do have a chain: there are concerned citizens, perhaps pension funds, financial intermediaries, and then the companies in which they invest. At each stage, as the hon. Gentleman said, the danger is that each thinks it is the other’s job to do what is necessary: “Is it my job to report or your job to ask?” There is certainly scope for greater clarity on that subject.

One reason why I mentioned the consultations across government and the calls for evidence is that there may be more openness on such issues early in a new Parliament or new Government than when a Government have been in power for a long time and have a settled and rigid position. Clearly, the present Administration has a strong emphasis, where possible, on deregulation, so it would be fair to say that there is not an appetite for net additional regulation. That much is true, but where goals can be achieved proportionately by non-regulatory measures or by a mix of regulation and deregulation so that there is no overall increase, there would be much more openness. I would therefore encourage the hon. Gentleman and, through him, Fair Pensions and others, by saying that if they can suggest measures that have no regulatory burden or minimal regulatory burden, or identify other regulations that could be repealed because they are not effective, their ideas would find more favour, particularly with my colleagues in BIS who have overall responsibility for regulatory policy. I hope that that provides a helpful steer.

Continuing the theme of Departments listening and consulting, the Department for Work and Pensions and I have recently published consultation on guidance on default funds. Once we are in a world of auto-enrolment, people who do not make an active fund choice will end up in a default fund, so it is pretty important to see what such a fund looks like. The guidance that we put out for consultation sets out the standards by which default investment options should operate. The hon. Gentleman will be reassured to know that the key standards are about robust governance, review of the default investment option, transparency of charges and providing appropriate information to members about investment decisions. Those things will help.

In connection with the hon. Gentleman’s comments about the parliamentary scheme, I can tell him that another scheme of which I have been a member is the universities scheme. I recall speaking at a recent conference where a representative of that scheme was present. I raised the issue of scheme members wanting to know what was being done with their money. I mentioned that as a member of that scheme, I did not recall ever getting any very useful information. His answer was, “It’s on the website.” I feel that there is occasionally a need to remind those who manage our money that it is our money. That should make them proactive in communicating with scheme members: asking them what they want would be a positive factor in that respect.

The hon. Gentleman mentioned the Financial Reporting Council and its stewardship code. As he said, it has taken a step in the right direction. Fair Pensions’ own report “Stewardship in the Spotlight” found that the UK stewardship code had already helped to encourage voting disclosure. Examples are provided of several asset management firms that have improved their practices. I think that that is progress, but I take the hon. Gentleman’s point that although it is another link in the chain where things are perhaps improving, we need to look at the whole system. A stewardship code should, in the view of the Financial Reporting Council, be based on the idea of “comply or explain”; in other words, investors should either get on with it and comply, or at the very least explain why they have not done that, so that people can form a judgment on that.

The Financial Services Authority has expressed its belief that the principles of the stewardship code are as applicable to occupational pension schemes as to other types of pension and that, ultimately, occupational pension scheme managers will still be answerable to the scheme’s trustees. The FSA does not consider it unreasonable to require scheme managers to disclose their commitment or otherwise to the code, given the nature of the disclosure requirement.

Finally, the hon. Gentleman asked whether I would raise these issues with the new chair of the pensions regulator. I will be very happy to do that—although obviously, the new chair and the regulator itself are operationally independent of the Department and will form their own judgment. I know that they take a risk-based approach to what they do, so one of their top priorities is ensuring that funds are adequate and deficits are dealt with. They prioritise some pretty basic things like making sure that schemes have proper records of who is in them and how much money they have put in. There is a lot on their plate, but the issues that the hon. Gentleman has raised are important as well. I will certainly flag up his and the House’s interests in such matters when I meet—as I hope I will before too long—the new chairman whom we announced last week.

In conclusion, I reiterate my thanks to the hon. Gentleman, to Fair Pensions and to other campaigners on these important issues. The Government are doing a lot of listening, consulting and calling for evidence. I hope that the hon. Gentleman and others will feed into those consultations so that the feedback that we get will help to shape the way in which we take forward this important agenda. I am very grateful to him for placing it before the House this evening.

Question put and agreed to.

19:56

House adjourned.