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Mr. Philip Dunne (Ludlow) (Con): How much have the Government pencilled in from sales of leisure centres owned by local authorities, and how many of those leisure centres are currently facing financial ruin because of Her Majesty's Revenue and Customs's claims to recover retrospective VAT?

Mr. Byrne: The figures on local authority asset sales that have been put before the House this afternoon are projections based on the pattern of local authority asset sales for the past 20 years. Over the last 20 years, local authorities have sold something like £3.7 billion of assets a year. As the recovery sets in and as market values return, we have no reason to think that those values will be any different in future.

Ms Katy Clark (North Ayrshire and Arran) (Lab): Does my right hon. Friend agree that a lot of people listening to this debate will think that it is a bit rich that the market got us into this situation, but the market will now be able to buy our assets on the cheap?

Mr. Byrne: As I said in my statement, the Government must not only lock in the recovery, but lay the foundations for growth in the years to come. As growth sets in, our ambition is to halve the deficit over four years. That is going to require a number of difficult decisions. If we want to invest in creating new industries and new jobs in the years to come, as well as to put public finance on a sustainable footing for the medium term, there will be difficult decisions on tax and difficult decisions on spending. However, if we can create new investment in the infrastructure that we need in the years to come and if that can be financed through selling off assets that we no longer need, it is the right decision to take.

Bob Russell (Colchester) (LD): Will the Minister confirm that his brief fails to alert him to the common sense of hon. Members on both sides of the Chamber relating to the funding and history of the building of the two tunnels under the Thames and the Thames bridge? It was intended that they would be paid for and then made free. In a spirit of joined-up government, will he confirm that the Department for Transport is at this very moment looking at proposals that could lead to the removal of the tolls altogether?

Mr. Byrne: The Department for Transport has to look at a whole range of scenarios for the years to come, not least whether another crossing is put over the Thames. That is why I said that the ambition over the next couple of years-the next two financial years-is to raise something of the order of £3 billion from the disposal of central Government businesses. We think that the assets listed could make a big contribution, but there will not be a fire sale. We will seek to extract the most value for taxpayers from the sale of the assets. That is why the Chancellor will return to the House with a portfolio of assets that we think it is right to sell over the next couple of years-the assets to which the hon. Gentleman referred will, I think, be among them.

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Jim Cousins (Newcastle upon Tyne, Central) (Lab): Does the programme of disposals include all or part of the business of Northern Rock?

Mr. Byrne: The programme that we are putting before the House now, and which we will put before the House in more detail in the months to come, does not include disposal of the Government's interests in financial institutions.

Mr. Andrew Tyrie (Chichester) (Con): What is the Minister's definition of a fire sale?

Mr. Byrne: I would define a fire sale as selling things for substantially less than we think we could secure for taxpayers. However, this Government have a good record of selling assets in order to pay down debt, not least regarding the money that was raised from 3G licences in years gone by. Those decisions allowed us to go into this recession with debt at something like 36 per cent. of gross domestic product, which is much lower than other countries in the G7. Those decisions have helped us to ensure that help is available for businesses and families to get through this recession-help that the Conservatives opposed.

Mr. David Winnick (Walsall, North) (Lab): With all these public assets due to be sold off, may we be reasonably satisfied that at least the Palace of Westminster will not be flogged off to some land speculator or property company in the near future?

Mr. Byrne: There are some limits that even I must observe.

Hywel Williams (Caernarfon) (PC): On 29 June, the Prime Minister said that the £16 billion would be redirected to public investment. Will the money go to investment or to pay off debts? Even the Prime Minister cannot spend the same money twice.

Mr. Byrne: As I tried to say in my reply to the hon. Member for Twickenham (Dr. Cable), we think that local authorities will be able to secure some £11 billion of asset sales and central Government will achieve some £2 billion of asset sales. That money will be available for re-investment in infrastructure and other capital investment priorities. There are some businesses that can raise some £3 billion over the next two financial years, and those proceeds can be used to pay down debt.

Jeff Ennis (Barnsley, East and Mexborough) (Lab): Can the Minister confirm that the onward sale of the Tote will be on the basis of the seven-year exclusive licence that was in the original sale? Will the Treasury be willing to consider a revised bid put forward by a racing consortium?

Mr. Byrne: The answer to the second question is yes. The answer to the first question is, as I said to my right hon. Friend the Member for Makerfield (Mr. McCartney), that the current policy position on the sale of the Tote is undisturbed by the announcements made today.

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3.52 pm

The Secretary of State for Foreign and Commonwealth Affairs (David Miliband): Mr. Speaker, with your permission, I will make a statement on the circumstances surrounding the decision of the Scottish Justice Minister on 20 August to release on compassionate grounds the man convicted of the Lockerbie bombing, Abdelbaset al-Megrahi.

As the Prime Minister has said, Lockerbie was a terrorist act of the gravest brutality. It was the largest peacetime loss of life on British territory. It was a major tragedy, with the killing of 43 Britons in the sky and in Lockerbie, 190 Americans and people of 19 other nations. It was an act, by people and a state, that breached all norms of humanity. That is why the reception for Megrahi on his return in August at Tripoli airport was so unacceptable.

My statement today sets out the events leading up to the Scottish Justice Minister's decision to release Megrahi. I will set out the changes in Libya's relations with the international community since 1988 and address the three central issues raised in respect of the UK Government at the time of his release: first, the decision by the Government to sign a prisoner transfer agreement with Libya that did not exclude Megrahi; secondly, the relationship between the British Government and Scottish Executive in the decision-making process; and thirdly, the separate questions of the investigation into the murder of WPC Yvonne Fletcher and the compensation for victims of Libyan-supported IRA terrorism.

The House will know that today is the 25th anniversary of the Brighton bombing, when the IRA attempted to murder a British Prime Minister and her Cabinet, and did kill five people, including one Member of this House, and injured many others. Throughout the 1980s and 1990s, the Libyan Government were linked to a number of terrorist organisations, including the Provisional IRA. Libya's support for international terrorism defined its relations with the western world.

As right hon. and hon. Members will recall, WPC Yvonne Fletcher's murder in April 1984 led us to cut off diplomatic relations. The bombing of a nightclub in West Berlin in 1986 was followed by US air-strikes on Tripoli and Benghazi. When evidence emerged supporting allegations that Libyan intelligence officers had been involved in the bombing of Pan Am flight 103 over Lockerbie in December 1988, the United Nations Security Council demanded that Libya hand over the accused and imposed sanctions when it failed to comply.

During the 1990s there was evidence from a range of sources that the Libyans were also actively pursuing a range of nuclear, chemical and biological weapons programmes, as well as the development of ballistic missiles. Libya was a pariah state whose activities posed a clear and unambiguous threat to international peace and stability, and to our security in this country. The story of the past decade has been very different. Libya has abandoned its support for international terrorism and stopped its pursuit of weapons of mass destruction, in a series of events that merit the term "unforeseeable".

In 1998, the US and UK Governments put forward a detailed joint proposal for the trial of the two accused of the Lockerbie atrocity. Our joint commitment to close and transparent working in all matters has continued throughout this case. We reported our proposal to the
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UN Security Council and the UN Secretary-General and, with the support of the Security Council, in 1999 persuaded the Libyans to surrender the two accused to a specially constituted court in the Netherlands where a Scottish panel of judges, without a jury, would try the accused under Scots law. Libya also agreed to pay $10 million compensation to each of the families of the victims, whatever their nationality, if the defendants were convicted. Megrahi was found guilty under Scottish law by the court in 2001 and his conviction was upheld on appeal in 2002.

Against that background and, as I will explain later, in particular after the Libyan admission of responsibility for WPC Fletcher's murder, the UK restored diplomatic relations in July 1999. The long-term aim was clear: the normalisation of relations with Libya.

On 19 December 2003, following months of secret discussions with the UK and US, the Libyans announced that they would eliminate their weapons of mass destruction and nuclear weapons programmes, and restrict the range of their missiles. They also agreed to immediate international inspections and to be bound by all the relevant international agreements, which they now are. Today, we share information and co-operate in our efforts to disrupt and dismantle terrorist groups in Europe and north Africa, in particular al-Qaeda in the Maghreb, which was responsible for the kidnap and murder of Edwin Dyer in May. We also try to find common ground in the UN and elsewhere on matters of common concern.

There is also an entirely legitimate commercial dimension to our ties. With the largest proven oil reserves in Africa and extensive gas reserves, Libya is potentially a major energy source for the future. We work hard to support British business in Libya, as we do worldwide.

We continue to have serious concerns about human rights in Libya, including about freedom of expression, arbitrary detention, political prisoners and the mistreatment of migrants. There are a number of important outstanding issues, in particular concerning the investigation into the murder of WPC Fletcher and the campaign for compensation by the victims of IRA terrorism.

In May 2007, Prime Minister Tony Blair made his second visit to Libya. His summit with Colonel Gaddafi at Sirte covered the full range of our interests with Libya. Mr. Blair signed a defence accord and witnessed the public signature of a major BP exploration contract. Also agreed was a memorandum of understanding on negotiations for a judicial co-operation package, including a prisoner transfer agreement and agreements on mutual legal assistance, extradition, and civil and commercial law.

The UK had a model agreement, based on Council of Europe arrangements, that was the starting point for negotiation on our prisoner transfer agreements with any country and that provided the starting point for negotiations with the Libyans. Four points are relevant. First, a PTA provides for prisoner transfer, not prisoner release. Secondly, it provides a framework for transfer, not a right to transfer. Thirdly, a PTA cannot be used when appeals, including by the prosecuting authority, are outstanding, as in this case. Fourthly, Ministers in the sentencing jurisdiction-in this case Scotland-have an absolute right to veto any transfer.

This standard draft had no provision for any carve-out for any named prisoner. However, the Scottish Executive made strong representations for us to seek to alter the
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standard PTA so as specifically to exclude Mr. Megrahi. The UK negotiation team, led by the Ministry of Justice, sought in good faith to achieve this goal.

The Libyans insisted that the only PTA that they would sign was a PTA without any exclusions. So the Government had a clear choice. We could agree to a standard PTA with no exclusions, retaining for Scottish Ministers an absolute veto over any request for prisoner transfer in the case of Megrahi-a veto which they used in August this year-or we could have ended the negotiations to prevent an application for prisoner transfer. This would have set back our wider national and commercial interests that flowed from normalised relations, as the Justice Secretary has made clear. Since the PTA involved no prejudice to the rights of the Scottish Executive, nor pressure on the Scottish Executive, the Government decided it was right to go ahead. The PTA finally took effect in April 2009.

In September 2008, a new factor came into play. Megrahi was diagnosed with terminal cancer. The Libyans became increasingly concerned at the prospect of Mr. Megrahi dying in a Scottish prison. They communicated this to the Government and to the Scottish Executive. It was repeatedly made clear in reply, including in the Prime Minister's meeting with Colonel Gaddafi on 10 July this year, that the decision on Mr. Megrahi's fate was exclusively for Scottish Ministers and the Scottish judicial system.

Notwithstanding that any decision on release was for Scottish Ministers and the Scottish judicial system, the UK Government had a responsibility to consider the consequences of any Scottish decision. We assessed that although the decision was not one for the UK Government, British interests, including those of UK nationals, British businesses and possibly security co-operation, would be damaged-perhaps badly-if Megrahi were to die in a Scottish prison rather than in Libya. Given the risk of Libyan adverse reaction, we made it clear to them that as a matter of law and practice it was not a decision for the UK Government and that as a matter of policy we were not seeking Megrahi's death in Scottish custody.

In Scotland, compassionate release generally comes into play in the last three months of a prisoner's life. Scottish Justice Secretary MacAskill has set out the process by which he arrived at his decision in August this year to refuse the PTA transfer but to grant Megrahi compassionate release. He also set out the grounds on which he did so. As the Scottish Justice Secretary repeatedly stated in his announcement, this was a decision for him and him alone to take. The Government were clear that any attempt by us to pressure the Scottish Executive would have been wrong. At the press conference announcing his decision, the Scottish Justice Secretary confirmed that there was "no pressure from Westminster".

It is also important to address the unfounded allegation that we ended our search for progress in dealing with the legacy of Libya's past support for terrorism. Admission of responsibility for WPC Fletcher's murder and the payment of compensation were necessary for the restoration of diplomatic relations in 1999. Four years later, we secured Libyan agreement to a joint investigation into the murder. It was clear, including to the family, that anyone prosecuted for the murder would have to be tried in Libya. Since 2007, the Libyans have refused to
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allow the Metropolitan police to return to complete their work. We share the determination of the Fletcher family to find answers, and continue to work on this case.

In 1995, Libya provided critical information on its past links to the IRA. At that time, the then UK Government wrote to the United Nations declaring that they were

in accounting for the extent of their support for the Provisional IRA. Libya has since then considered the issue a closed matter. Nevertheless, in respect of the campaign involving hon. and right hon. Members to secure compensation from Libya in respect of its past support for the Provisional IRA, we have created a dedicated unit in the Foreign Office to facilitate the families' renewed campaign. The unit is currently working with hon. and right hon. Members to secure a visit to Libya soon.

Twenty-one years on, the ongoing pain of the Lockerbie atrocity remains a testament to Libya's past association with international terrorism. Her re-entry into the community of nations does not and cannot absolve her of this responsibility. It does, however, represent a major step forward. The Government make no apology for their part in securing this progress and we reject the charges repeatedly made but not justified. The PTA was not an agreement for Megrahi's release. The Scottish Justice Minister said he was not pressurised to release him. We did not forget the victims of IRA terrorism, or WPC Fletcher. On that basis, I commend this statement to the House.

Mr. William Hague (Richmond, Yorks) (Con): We are grateful to the Foreign Secretary for making a statement and we of course concur with his remarks about the horrors of the Lockerbie bombing and about the 25th anniversary of the Brighton bombing, the memory of which means a great deal to all of us in the House, but particularly to those of us in the Conservative party.

In other respects, we will differ with the Foreign Secretary's statement, because it is our view that the release of Mr. Megrahi by Scottish Ministers was a mistake, that the episode was characterised by obfuscation and confusion on the part of Ministers at Westminster and that it damaged the standing of this country in the United States. The Secretary of State said that the decision was absolutely wrong, and the director of the FBI said that it made

As the Foreign Secretary has pointed out, relations with Libya have improved over the last 10 years, which we all welcome. Since then, as he also pointed out, Libya has voluntarily dismantled its programmes on weapons of mass destruction, surrendered al-Megrahi for trial and co-operated on migration and counter-terrorism. We all want that co-operation to continue for the future. In the opinion of most people of this country and in our opinion, however, the case to release Mr. Megrahi against that background was outweighed by the requirements of justice and the fact that he had been sentenced to life imprisonment for the murder of 270 people-an opinion shared across the parties, including
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by the leader of the Labour party in Scotland, who said that this would not have happened if the Labour party had been in power there.

One of the most bizarre aspects of the decision to release al-Megrahi was the fact that the Scottish Executive, having concluded that they could not transfer him under the prisoner transfer agreement because it would breach assurances given to the United States, then concluded that it was appropriate to release him altogether. Would it not have been more sensible to conclude that if it was inappropriate to return him to Libya as a prisoner, it was even more inappropriate to release him as a free man?

In the time available, let me put a few short questions to the Foreign Secretary about the Government's own conduct. Will he clarify what advice the Foreign Office gave to Scottish Ministers? We know that the Foreign and Commonwealth Office's middle east and north Africa directorate wrote to the Scottish Justice Secretary saying:

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