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Mr. Mark Hendrick (Preston): Does not the right hon. Gentleman accept that the fall in the share prices of many of the telecommunications and high-tech companies is due to falling profit figures in the United States and a lack of confidence in the sector as a whole? Those reductions were not caused by the sale of third generation licences, which occurred because band width is a limited resource that should not be given away free.

Mr. Redwood: No, I do not agree with that view. British Telecom makes practically no profit in the United States of America and is largely a UK profit-derived operation. It is the pressure on that profit and the huge borrowings that the company has had to make to pay for licences that has caused the damage to our lead company in the sector. Ask the companies; they will explain that the sums that they had to borrow were extremely large, especially at the very time when they needed huge amounts to invest in future technology, including the broad band revolution that the Government want them to introduce, the internet revolution sought by the education establishment and the mobile phone revolution that the public are keen for companies to carry out. It was the height of folly to take that money away.

There has been similar insistence on creating boom and bust in rural areas, which was first evident in a little flurry at the beginning of the Government's time in office. An obvious bust occurred in rural areas, led by their bad handling of common agricultural policy and common fisheries policy negotiations. That was followed by their lamentable performance on foot and mouth, when they did too much too late and caused terrible carnage in associated rural industries, in addition to causing terrible damage to our livestock. They were responsible for all sorts of beastly scenes that we had to witness on our televisions as they mishandled that crisis.

The message from the electorate is very sombre for those of us who believe passionately in parliamentary democracy. Too many people out there do not believe in very much of what is said and done in this House and by

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this Government. Too many people believed that the Labour Government would at least improve their schools and hospitals. They feel deeply let down.

The challenge for my party is to devise, with our new leader, ideas for persuading people that we will give them better schools and hospitals, provide a choice, allow them to spend their private money when that makes sense and guarantee access to the good, free care that they need, but do not get under the Labour Government, when that is important. Of course, we need to provide a better answer for the difficulties of getting around the country, and tackle the problems in the economy that the Government have made worse.

The Government do not say that they want more regulation, more tax and more boom and bust, but that is what they have provided in the telecommunications industry and the rural economy. The Government are on probation; they are not about to experience their coronation. It would be wrong of them to believe that because we may be small in number, we lack stomach for the fight. We have much to do in drawing attention to the extent to which they are out of touch. The public are angry about the state of their services and they wish their money to be considerably better spent.

5.5 pm

Mr. Peter Mandelson (Hartlepool): Chief among the many penetrating and acerbic insights that my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) offered was his observation that, during the general election campaign, the Conservative party comprehensively failed to set out clearly what it stands for. After listening to the rather long application of the right hon. Member for Wokingham (Mr. Redwood) for readmission to the shadow Cabinet, we are none the wiser. I shall not weep too many crocodile tears about that, although I believe that a good Government need a half decent party to oppose them. On the basis of this afternoon's performance, I fear that that will take some years.

I shall concentrate on Northern Ireland and the part of the Queen's Speech that refers to it. First, I want to express my strong support for the measures in the Queen's Speech. Measures to boost school standards, especially in secondary schools, to reform health services and to strengthen the fight against crime will be particularly welcomed by my constituents. People in Hartlepool did not sit by their television sets and fail to come to the front door during the election campaign. They came with open arms to find out what the Labour Government would do in the next four years. I am sorry that the right hon. Member for Wokingham had such a disappointing experience; he should have come to Hartlepool.

I also welcome the measures for enterprise, not least because they bear more than a passing resemblance to those that I tried to promote when I was Secretary of State for Trade and Industry in 1998. I am glad that the Government now propose to implement them. However, I want to make a further point about the information revolution. Away from popular concerns and the measures in the Gracious Speech, I am worried that the Government propose to publish only a draft Bill to create the much-needed order, clarity and support that the rapidly changing and growing media and communications industries need.

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Big issues are at stake for the United Kingdom's economy and culture in the convergence of the technologies. We need to improve broad band roll-out and increase the take-up of digital television to increase access to information services. The Government need quickly to make clear what exactly they will do to help the United Kingdom to sustain or regain its lead in those industries. In that fast-changing world, it may be preferable to wait and get legislation absolutely right rather than introduce a Bill that is faulty or in danger of being rapidly overtaken by technological developments and thus quickly become out of date.

There are five existing regulators in those industries. If the Government are proposing, as has been suggested in some quarters, to create a shadow office of communications, a shadow Ofcom--which would be a shadow strategic body with no teeth--to take over the powers of the existing regulators, my fear is that those regulators would be emasculated without being put out of existence, and without the real problems effectively being gripped. If there are any lessons to be learned from the rail industry, its shadow Strategic Rail Authority--and even its Strategic Rail Authority--should be sufficient warning for us.

I come now to Northern Ireland. Without any doubt, the peace process is in a very serious condition, although not, in my view, a hopeless one. Its condition has been highlighted most notably by the resignation offer made by Northern Ireland's First Minister. His offer to resign at the beginning of July is as regrettable as it is probably inevitable in the circumstances. Seemingly irreconcilable pressures abound in the peace process at the moment, but in my judgment there is a way through, and I shall refer to that presently.

There is no doubt about what is at the heart of the present crisis in the peace process. It is that the Unionists are irretrievably hooked on their demand for a start to decommissioning by the republicans of their arms, and that the republicans are using that demand for decommissioning effectively to hold the peace process to ransom, to get their way on everything else that is of concern to them. That includes issues of security normalisation, or demilitarisation as they would call it in Northern Ireland; the amnesty that the republicans want for former terrorists who are fugitives from justice or from imprisonment; and the reform of policing, only six or seven months after the Police (Northern Ireland) Act 2000 received its Royal Assent.

We have finally reached the impasse on arms decommissioning that everyone has seen coming for a very long time--indeed, probably since the early days of the Belfast agreement. Many of us have tried repeatedly to head off this impasse, using different permutations and formulations in relation to arms decommissioning. One of the first things that I did when I went to Northern Ireland was to join Senator Mitchell in his review. We produced a way forward on decommissioning from that; we then produced another permutation to head off the threatened collapse of the new Government and institutions early in 2000; we then came forward with another formulation after the suspension had taken place; and we came back with a further permutation in the talks that gave rise to the Hillsborough agreement in May last year.

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Frankly, I think that we have run out of ways of postponing the issue of decommissioning, of parking it, of sidetracking it or of disguising it. It is sitting there, right in the middle of the road, and there is no way of getting round it. It is going to have to be addressed. Some people say--they argue this with me and I am sure that those voices are being raised now--that we should simply ignore the issue of arms in Northern Ireland. They suggest that we forget about decommissioning and find another road. After all, if the ceasefire is holding, which by and large it is, and if the peace in Northern Ireland is secure, which by and large it is, if arms are not in the main actually being used, why make such a fuss about them? Why not just let them lie there?

That is a tempting thought, but also a profoundly wrong thought. We stand no chance of stabilising democracy in Northern Ireland while armed paramilitary organisations are running around threatening to second guess the democratically elected politicians so that they can then take over and start calling the shots again. We simply cannot live and flourish as a democracy and a decent civic society in Northern Ireland in those circumstances.

It is true that decommissioning did not have the same status as the other heads of the Good Friday agreement. None the less, decommissioning was accepted by all the parties--all the signatories--as an essential part of the peace process. Sinn Fein remains committed to making its best efforts to bring about decommissioning by the Provisional IRA. The IRA itself has said that it will engage properly with General de Chastelain's decommissioning body, but has so far failed to do so. If the Northern Ireland peace process depends on anything, it depends on everyone living up to their word. It is when people step back or fall short that confidence fails and trouble ensues.

My second point about decommissioning is that every party--every shade of political opinion--was represented properly and fairly in the devolved Government in Northern Ireland. It was the first time that that had happened since Northern Ireland was created. That was predicated on a belief that democracy could take over because the war was over. That has never been said in so many words. The IRA has never said that the war is over--it has nearly said; it has sort of said it; it has been implored and encouraged to say it; but it has never actually said it. If it is too difficult to say--if the words are too difficult to express--it is essential in Northern Ireland to rely on actions rather than words. The actions that demonstrate that the war is over must include a preparedness to put arms permanently beyond use.

The Provisional IRA is, after all, an army that continues to be organised: recruited, supplied and disciplined. For all I know, it continues to set targets--I do not know enough about the Provisional IRA to say. That being so, it is difficult to stand by as that army continues in existence. It would be easier to live with it if there were tangible signs of those arms being put beyond use in a way, within the existing legislation, that would persuade people--even if it cannot be said--that the war is, indeed, over.

Furthermore, like everything else about the peace process, decommissioning is important because it is about building up mutual confidence among people who are sectarian and who, after decades of strife, have an enormous amount on which not to trust each other. Therefore, confidence-building measures have an

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enormous premium in Northern Ireland. Opening certain of its arms dumps to international inspection was a major confidence-building measure by the Provisional IRA. I do not think that it would now be a huge step for it to make those dumps that have been opened to inspection and reinspection by the two international inspectors permanently inaccessible. People have speculated that the IRA might do so and I certainly would not discount such a move. It would be a significant step to all reasonably minded people if the Provisional IRA did so. It would be the start of the decommissioning process for which everyone has been waiting and which the peace process so desperately needs. Indeed, it would do an enormous amount to help to restore confidence and trust.

What else is needed in Northern Ireland to rebuild the trust that has faltered in recent months? The republican movement is under a clear obligation to make the start in decommissioning that I have described. None the less, the movement is entitled to expect others to continue to help to create the best context in which it can make that start in actual decommissioning. After all, trust is not simply a two-way street in Northern Ireland--it is multi-directional and has to come and go from all quarters in all directions to be effective.

The British Government have a particular role and responsibility to inject trust into the peace process from their direction in relation to known republican concerns. Those include security normalisation--lowering the profile and dealing with the bases and military installations that are still present in Northern Ireland. That means tackling the problem of on-the-runs, or OTRs, who are the people who have become fugitives from justice or have escaped from prison some time in the past 20 or 30 years--I do not know how long--and are in an anomalous position given the early prisoner release scheme that has been operating under the Good Friday agreement.

Republican concerns also relate to police and criminal justice reforms. In May last year at the Hillsborough talks, when we put the inclusive, all-party, devolved Government in Northern Ireland back on the road following the three-month suspension, the British Government committed themselves to taking steps in all those areas by now--by June, this year. The Government have done so faithfully and conscientiously. It is worth pointing out that if the Government had waited for the republican movement to make a start on arms decommissioning so that progress was made in implementing the Good Friday agreement across the board, we would not have made a start on anything. We did not wait--we acted and we went ahead in the belief and expectation that a start with arms decommissioning would be made following a serious engagement not only by the Provisional IRA, but by other paramilitary organisations, with the de Chastelain commission.

We are in June, the criminal justice reforms are going ahead and security normalisation in Northern Ireland has made sustained progress throughout the past 12 months--not merely sustained, but quite dramatic progress in many parts of Northern Ireland. Within the constraints of the existing law, the Government have shown considerable flexibility in their treatment of OTRs--former terrorists who are fugitives from justice. In relation to the reform of policing, the Patten recommendations have been implemented in full, except for minor practical modifications.

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In other words, the Government have kept their side of the bargain during the past year, but they have done so and made serious progress in ways that have been sensitive and designed to maintain the confidence by and large of all sections of the community in Northern Ireland. The Government have struck a balance that has provided a proper and adequate context for the republican movement to move, without ultimately sacrificing the good will of the Unionists or the effectiveness of the security forces.

Many Unionists have been concerned, troubled, sometimes angry and occasionally despairing about what has been done in the name of the Good Friday agreement and in the cause of the peace process during the past year, but I believe that the Government have acted in a way that will ultimately secure the good will of the mainstream body of Unionist opinion in Northern Ireland. That is an absolutely essential condition and compass that the Government have to maintain in the coming weeks of negotiation.

There will be no peace process in Northern Ireland that tries to hop ahead on one foot alone. Both sides of the sectarian divide need to buy into, have to be tied into, and have to have a stake in whatever the British Government do if the peace process is not to falter. One cannot proceed with the support of one side alone. We need the good will of all, across the community.

It is against that background that I believe that in relation to security normalisation there is more that the Government can and should consider doing. It is a matter for the professional judgment of the Government security experts at the end of the day. The considered and informed view of the Chief Constable, and the General Officer Commanding in support, must be respected by the Government.

At the beginning of this year, we concluded that it was possible safely to go somewhat further in relation to normalisation, including in that most difficult area of South Armagh. Nothing has happened since January, since I was in office, to my knowledge, to alter the conclusion that we can safely go somewhat further, on the advice of the Chief Constable.

On OTRs, existing legislation might not afford sufficient flexibility to move forward. The existing framework of law might not provide the scope that the Government need to deal with the range of cases that the past 20 or 30 years have thrown up. If that is the case, it would be timely for Parliament to consider appropriate changes in the law to address the thorny question of former terrorists still on the run.

In relation to police reform, however, I have a cautious view. I, probably more than anyone else, was responsible for the legislation. I am acutely aware of the criticisms that were made of it, but people need to bear in mind the fact that the final form of the Police (Northern Ireland) Act 2000 had been extensively amended to meet republican and nationalist concerns. As finally enacted, the measure was different in many respects from the Police (Northern Ireland) Bill originally introduced in the House. However, we cannot proceed simply on the basis of trying to satisfy one side alone; we have to carry mainstream Unionist opinion, as well as the police themselves, if the reforms are to be sustained in practice.

We may not have got everything exactly right in that legislation--however hard we tried. If so, the legislation can, and should be, reviewed in time, but it would be

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better to do that after we have seen how the new police service is able to work in practice, rather than before. At the end of the day, it is not by political correctness that the Police Service of Northern Ireland has to be judged, but by its operational effectiveness and efficiency. So much do we owe to the people of Northern Ireland that they must have a police service that is able to do its job in combating crime and paramilitary violence. I hope that that will continue to be the guiding thought of the Government during the weeks and months to come.

Let me end by saying that the recent election results in Northern Ireland were not wholly encouraging. The extremes have been favoured as a result of what happened. However, we are a long way from the moderate wipe-out that took place after Sunningdale in 1974. Let us bear that in mind before anyone sounds panic stations. Despite their differences and despite the rhetoric and the hyperbole to which we are treated, all the parties in Northern Ireland still have a stake and an interest in preventing collapse of the political institutions. In my view, that goes as much for Sinn Fein as for the Democratic Unionist party represented in the House this afternoon.

I say to those people who claim that they are acting for their principles, "Please do not let your principles get in the way of your interests." The collapse of politics--should it occur as a result of a breakdown in the negotiations and of a failure to agree a way forward--will help absolutely nobody in Northern Ireland in whatever part of the community spectrum they live. To be forced back to the threat of the gun and the prospect of violence on the scale and in the terms of yesteryear would leave everyone in Northern Ireland worse off. Some flexibility and accommodation are needed on all sides to ensure that that does not happen.

No one should assume that if any one side, any one party, or any single individual is pushed beyond breaking point by others' intransigence the process will remain intact, because it will not. It is near--but not at--a potential breaking point, which will happen if individuals are pushed beyond their forbearance and their ability to carry their constituencies in their part of the community. Therefore, an enormous amount is at stake at this 11th hour.

I strongly support the efforts of the British Government, the Irish Government and all the parties committed to the Good Friday agreement to find a way through, because surely, for all our sakes, that is exactly what they must do.

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