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Madam Deputy Speaker: Order. May I once again ask all hon. Members to reduce the level of conversation while the Paymaster General is responding to the debate?

Dawn Primarolo: Thank you, Madam Deputy Speaker.

The procedures for civil action against employers are proportionate to the small number who seek not to fulfil their obligations under the legislation—[Hon. Members: "Hear, hear."] Substantial penalties, none the less, can be imposed, although I am not sure whether my hon. Friends were cheering that. The point is to remove inappropriate criminal penalties that have not been working successfully and, by the use of civil penalties, to try to ensure that all employers comply with the legislation from the start.

The hon. Member for Hertford and Stortford (Mr. Prisk) again made a point about why things have taken so long. In the year since transfer, a great deal has been done to align the rules on tax and national insurance. Much has been achieved. The Revenue now operates joint employer compliance reviews covering tax and national insurance; new teams have been introduced for the joint handling of expatriates' tax and national insurance affairs; and we have made changes to regulations—for example, to align the national insurance treatment of foreign travel and foreign travel expenses for overseas employees with that of tax.

The Bill brings those changes together. That required primary legislation. As the hon. Gentleman knows, all Governments have to prioritise the measures that go into their legislative programme. We have been able to deliver those legislative changes at this point.

The hon. Gentleman and the hon. Member for North Norfolk (Norman Lamb)—[Interruption.]

Madam Deputy Speaker: Order. Once again, may I make a plea to hon. Members to reduce the level of conversation in the Chamber while the Paymaster General is replying to an important debate?

Dawn Primarolo: The hon. Members for Hertford and Stortford and for North Norfolk raised various

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queries about the regulations. If the hon. Member for Hertford and Stortford looks again at the regulations, he will see that four sets regarding statutory payment inspection powers are identical, as is required to cover the various jurisdictions. The hon. Member for North Norfolk—

Hon. Members: Hear, hear.

Madam Deputy Speaker: Order.

Dawn Primarolo: I sense that the House would like me to conclude. Therefore, I say to the hon. Member for North Norfolk that I will reply in writing on the points that he has raised about the regulations and ensure that the letter is placed in the Library—those Members who are interested will be able to scrutinise it.

The Bill takes forward the Government's commitments. It makes useful improvements to the administration of national insurance contributions; takes forward the Chancellor's commitment that the Inland Revenue would work with employers' representatives and others on reducing technical differences between the administration of tax and national insurance; builds on the Government's work to promote productivity by encouraging employers to give their employees a financial stake in the company through extending employers' options for meeting national insurance liabilities when paying earnings in the form of shares; and helps to protect employees' rights to statutory sick and maternity pay by improving and tackling employers who fail to meet their obligations.

Clauses 1 and 2 give employers flexibility as to how they recoup employee national insurance liability when employers must pay that liability on behalf of their employees. Clauses 3 and 4 extend the range of securities-based earnings for which employers and employees can agree to transfer unpredictable employer national insurance liability to employees. On both those measures, the Bill contributes to the Government's drive to increase employee share ownership by removing disincentives. Clauses 5 and 6 align the procedures for the collection of national insurance debt owed by the self-employed with those on tax. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

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Lord Hutton's Report

2.1 pm

The Prime Minister (Mr. Tony Blair): With permission, Mr. Speaker, I will make a statement following Lord Hutton's report into the circumstances surrounding the death of Dr. David Kelly.

I am immensely grateful to Lord Hutton, his team and inquiry staff for the work that they have carried out. The report itself is an extraordinarily thorough, detailed and clear document. It leaves no room for doubt or interpretation. We accept it in full.

Lord Hutton has just finished reading the summary of his findings. Before coming to those, I want to echo one thing that Lord Hutton said about Dr. Kelly himself. Lord Hutton makes his findings about Dr. Kelly's conduct in respect of the matters at issue here, but as he says, nothing should detract from Dr. Kelly's fine record of public service to this country. He was respected here and abroad. I am sorry that as a result of the gravity of the allegations made it was necessary to have this inquiry and that the Kelly family have had to go through reliving this tragedy over the past months. I hope now that it is over, they will be allowed to grieve in peace.

Lord Hutton has given a most comprehensive account of the facts. It is unnecessary for me to repeat them. But let me emphasise why I believed it right to establish such an inquiry. Over the past six or more months, allegations have been made that go to the heart of the integrity of government, our intelligence services and me personally as Prime Minister. There are issues, of course, as to how the case of Dr. Kelly was handled in personnel terms, and I shall come to those.

But those have not sustained the media, public and parliamentary interest over all this time. What has sustained and fuelled that interest has been, to put it bluntly, a claim of lying, of deceit, of duplicity on my part personally and that of the Government. That claim consists of two allegations: first, that I lied over the intelligence that formed part of the Government's case in respect of Iraq and weapons of mass destruction published on 24 September 2002; and secondly, that I lied or was duplicitous in respect of the naming of Dr. Kelly, leaking his name to the press when it should have remained confidential.

In summary, Lord Hutton finds the following. First, contrary to the claim by the BBC that intelligence was put in the dossier against the wishes of the intelligence services, the dossier of 24 September was published with the full approval of the Joint Intelligence Committee, including intelligence about Saddam's readiness to use some weapons of mass destruction within 45 minutes of an order to do so. Secondly, the allegation by the BBC that the Government deliberately inserted this 45-minute claim probably knowing that it was wrong was, to quote Lord Hutton, "unfounded". Thirdly, the allegation by the BBC that the reason for it not being in the original draft of the dossier was that the intelligence agencies did not believe it to be true was also, to quote Lord Hutton, "unfounded". Fourthly, no one, either in the JIC or Downing street, acted improperly in relation to the dossier. Fifthly, the BBC claim that it was "sexed up" in the sense of being embellished with intelligence known or believed to be false was also, to quote Lord Hutton, "unfounded".

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Sixthly, Mr. Gilligan's key allegations repeated by the BBC were never in fact said, even by Dr. Kelly himself. Seventhly, there was

Eighthly, on the contrary, it was reasonable for the Government to conclude that there was no practical possibility of keeping his name secret and that the Government behaved properly in relation to naming him. Ninthly, the suggestion that either I or Sir Kevin Tebbit in our evidence were in conflict with each other or that one of us was lying was, to quote Lord Hutton,

Tenthly, and for good measure, he also dismisses the allegations surrounding what I said on a plane to journalists in these terms:

Let me now return to the two central allegations. On 29 May 2003, following the end of the conflict in Iraq, the BBC "Today" programme broadcast a story by its defence correspondent, Andrew Gilligan. It dominated the morning bulletins and reverberates to this day. It alleged that part of the September 2002 dossier—that Saddam could use weapons of mass destruction within 45 minutes of an order to do so—had been inserted into the dossier by Downing Street, contrary to the wishes of the intelligence services, and that moreover we

There could not be a more serious charge. The source for this extraordinary allegation was said by the BBC to be

and an "intelligence service source", implying a member of the JIC or assessments staff who would be in a position to know. If true, it would have meant that I had indeed misled the House on 24 September and the country, that I had done so deliberately, and that I had behaved wholly improperly in respect of the intelligence services.

From that day, 29 May, onwards, that story in one form or another has been replayed many times in the UK, and around the world. It dominated my press conference the next day in Poland, and Prime Minister's questions when I returned. It led that week to the Foreign Affairs Committee deciding to conduct an inquiry into the issue. In particular, on the Sunday following the story, Mr. Gilligan wrote an article in The Mail on Sunday, not merely standing by the story but naming Alistair Campbell as the person responsible in Downing street. The headline read:

That, again, was completely untrue, and not merely stood up but further inflamed the original allegation of deceit.

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The BBC has never clearly and visibly withdrawn this allegation. This has allowed others to say repeatedly that I lied and misled Parliament over the 24 September dossier. Let me make one thing plain: it is absolutely right that people can question whether the intelligence received was right, and why we have not yet found weapons of mass destruction. There is an entirely legitimate argument about the wisdom of the conflict. I happen to believe now, as I did in March, that removing Saddam has made the world a safer and better place. But others are entirely entitled to disagree.

However, all of this is of a completely different order from a charge of deception, of duplicity, of deceit—a charge that I or anyone else deliberately falsified intelligence. The truth about that charge is now found. No intelligence was inserted into the dossier by Downing street; nothing was put in it against the wishes of the intelligence services; no one, either in Downing street or in the Joint Intelligence Committee, put any intelligence into it,

and no such claim to the BBC was made by anyone

Indeed, Lord Hutton's findings go further. He finds that the claim was not even made by Dr. Kelly himself.

The allegation that I or anyone else lied to this House or deliberately misled the country by falsifying intelligence on WMD is itself the real lie. I simply ask that those who have made it and repeated it over all these months now withdraw it fully, openly and clearly. [Interruption.]

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