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House of Commons

Tuesday 16 November 2010

The House met at half-past Two o'clock


[Mr Speaker in the Chair]

Business Before Questions

Redfern Inquiry


Mr Speaker: I should like to make a short statement following the announcement from Clarence house today of the engagement of Prince William to Miss Catherine Middleton. I am sure that Members from both sides of the House will join me in congratulating the couple on this most happy occasion, and wishing them all the very best for their future together.

Oral Answers to Questions


The Chancellor of the Exchequer was asked-

Office of Tax Simplification

1. Michael Ellis (Northampton North) (Con): What recent assessment he has made of the effectiveness of the Office of Tax Simplification. [23963]

The Chancellor of the Exchequer (Mr George Osborne): May I add my congratulations to the couple and say that we wish them every happiness? I am not sure that they will be particularly interested in this answer, but I hope that the House will be.

The Office of Tax Simplification was created by the coalition Government in July to reduce the complexity of a tax code that has doubled in size over the past decade. Last week, the office produced a comprehensive list of the 1,042 reliefs that now exist in the tax system. By the time of next year's Budget, we will have received its advice on which reliefs can be simplified or abolished to be consistent with the Government's wider objectives.

Michael Ellis: I congratulate my right hon. Friend on establishing the Office of Tax Simplification. He will be aware that the tax system in this country is labyrinthine in its complexity, and small businesses in my constituency of Northampton North have been adversely affected by
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it. Can my right hon. Friend assure me that the new Office of Tax Simplification will sort out this complexity sooner rather than later?

Mr Osborne: I can give my hon. Friend that assurance. A few months ago, he and I visited some small businesses in his constituency, many of which were suffering under the burden of a tax code that has grown from 4,900-odd pages in 1997 to 11,500 pages today. The Office of Tax Simplification is specifically looking at the taxation of small businesses as well as at the issue of tax reliefs. The small business report will be coming out later next year, but we will get an interim report in time for the Budget.

Alan Johnson (Kingston upon Hull West and Hessle) (Lab): I add the congratulations of this side of the House to Prince William and Catherine Middleton on their engagement. If they need a photographer, I understand that there is one available now. There has been a nice juxtaposition of announcements this morning. Does the Chancellor think that he is aiding tax simplification by raising VAT to a nice round 20%, and does he agree with his Cabinet colleague, the Business Secretary, who once described an increase in VAT as

Mr Osborne: I have to say to the shadow Chancellor that his position on VAT is completely incoherent. It is well known that my predecessor, the right hon. Member for Edinburgh South West (Mr Darling), was planning a VAT increase, had pressed the Prime Minister at the time for a VAT increase, and-he is in the Chamber so perhaps he can confirm this-when asked about it on "The Andrew Marr Show" after the election, said that of course he would have gone ahead with one.

Alan Johnson: That was not the question. The fact that one looks at every available tax before reaching a conclusion is nothing new. The conclusion we reached is that VAT should not be increased and that national insurance should be. The Liberal Democrats have been very fair in the way that they have betrayed the electorate. They have broken promises across the age divide-children, students and pensioners-so there is no age discrimination there. The Conservatives specifically said that they would not increase VAT. During the election campaign, we said that if they did not increase national insurance, they would increase VAT. The Prime Minister denied that and said that they had no plans to increase VAT. He said that VAT was

I can promise Members that it does. We are now in the unique situation in which we face a tax rise that our Prime Minister has promised will affect "the poorest the hardest". At the time, the Conservatives said that an increase in national insurance would be "a tax on jobs". The Chartered Institute of Personnel and Development said that it would lead to 75,000 jobs being lost while an increase in VAT would cost 250,000 jobs.

Mr Speaker: Can we have a question from the shadow Chancellor?

Alan Johnson: Why is the Chancellor proceeding with this tax on jobs that hits the poorest the hardest?

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Mr Osborne: This is what the former Chancellor said on "The Andrew Marr Show". Andrew Marr said:

remember, he was in the Cabinet with the shadow Chancellor-

Alistair Darling replied, "Well yeah, obviously".

We have taken the decisions necessary to restore some fiscal credibility to this country. We have a leaked memo from the shadow Chancellor's office. It states:

That is from the shadow Chancellor's office, but the truth is that he cannot tell us where a penny of his £44 billion spending cuts would come from. He had two tax policies until the weekend-on graduates and 50p-and announced that he did not agree with them. Frankly, until he gets his act together and comes forward with a credible economic policy, he will not be heard.

Several hon. Members rose -

Mr Speaker: Order. From now on, first of all, exchanges must be shorter. Secondly, let it be clear beyond doubt that Ministers answer for the policies of the Government, not for those of the Opposition. That is the end of the matter.

Pensioners (Fiscal Assistance)

2. Nigel Adams (Selby and Ainsty) (Con): What fiscal measures he has introduced to provide assistance for pensioners since his appointment. [23964]

The Chancellor of the Exchequer (Mr George Osborne): With your permission, Mr Speaker, if I dare ask for it, I should like to answer this question with questions 6 and 7.

6. Mrs Helen Grant (Maidstone and The Weald) (Con): What fiscal measures he has introduced to provide assistance for pensioners since his appointment. [23969]

7. Nick de Bois (Enfield North) (Con): What fiscal measures he has introduced to provide assistance for pensioners since his appointment. [23970]

Mr Osborne: Even in these constrained times, the coalition Government have been able to find additional assistance for pensioners. We have re-linked the basic state pension to earnings and provided a triple guarantee that the basic state pension will be raised by the higher of earnings, prices or 2.5% from next April. We have also protected other key pensioner benefits and made the previous Government's temporary pre-election increase in cold weather payments permanent, because this Government treat pensioners with the dignity and respect that they deserve.

Nigel Adams: I am grateful to the Chancellor for that reply. Many pensioners and those approaching pension age in my constituency of Selby and Ainsty will welcome his words, but will he tell me what will be the impact in future years of the link to earnings in respect of the basic state pension?

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Mr Osborne: First, next year, the pension will be linked to the retail prices index number for September-4.6%. That will be a welcome support for pensioners from April. However, I should make the broader point that of course, re-linking pensions and guaranteeing through our commitment that they will go up either in line with earnings or prices, or by 2.5%, is a really substantial boost for pensioners. That reflects the fact that many pensioners have worked hard and saved hard all their lives. I am glad that that was one of the first policy announcements of this coalition Government.

Mrs Grant: What fiscal action will the Chancellor take to assist voluntary sector organisations, which do so much to help our pensioners?

Mr Osborne: The spending review set out a £470 million package of support for the voluntary sector, including an endowment fund and a transition fund. In addition, the big society bank, which will be funded by dormant bank accounts, will provide a new source of finance for the sector. The Government completely understand the incredible role that such organisations play in supporting elderly people in our community, and we want to help them to do so.

Nick de Bois: Many pensioners in my constituency have made representations to me because they are fed up with having to buy annuities at 75. What plans does the Chancellor have to change the flexibility of that policy?

Mr Osborne: We will remove the requirement to purchase an annuity by the age of 75. Draft legislation will be published in December, and we want the new rules in place by 2011, although we have also introduced transitional arrangements to help those who have reached the age of 75 since I made the announcement in the Budget. We think that people who have been responsible enough to save through their working lives are responsible enough to handle their savings in retirement.

Kate Green (Stretford and Urmston) (Lab): Will the Chancellor commit to working closely with the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb) to introduce the universal, flat-rate, minimum pension for all citizens as quickly as possible?

Mr Osborne: Yes, absolutely. The Treasury is working with the Department for Work and Pensions on potential pension reform that could simplify pensions and provide a boost to pensioners for many years to come.

Tony Lloyd (Manchester Central) (Lab): Pensioners, including many of those on low incomes, spend a disproportionate amount of their income on fuel. The Chancellor made the point about the winter fuel allowance, which was very welcome, but will he make it clear to the gas and electricity suppliers that, when they raise fuel costs above anything justified by wholesale prices, as they always do, the Government will take action, hopefully by threatening them with fiscal measures, including taxing them?

Mr Osborne: I agree with part of what the hon. Gentleman said. It is important that the utility companies-the gas companies-are as quick to pass on to their customers the cuts in the wholesale price of
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gas as they seem to be in passing on increases. We are looking at the whole electricity market-because, of course, many pensioners receive their heating through electricity-and considering what we can do to better insulate people from price fluctuations that can cause havoc to family budgets.

Child Trust Funds

3. Bill Esterson (Sefton Central) (Lab): How many child trust funds have been set up in respect of looked-after children since such funds were introduced. [23965]

The Economic Secretary to the Treasury (Justine Greening): Local authorities report to Her Majesty's Revenue and Customs all children coming into their care, and if a child does not already have a child trust fund, one is opened for them. Between April 2005 and April 2009, HMRC opened child trust fund accounts for 16,676 children.

Bill Esterson: Does the Minister agree that improving the life chances of all looked-after children should be an absolute priority for the Government, and will she consider supporting the amendments tabled to the Savings Accounts and Health in Pregnancy Grant Bill that address the issue of child trust funds for looked-after children?

Justine Greening: As the hon. Gentleman is aware, we are taking legislation through the House to get rid of the child trust funds. We think it is vital to support looked-after children, but the question is how best to do that while also tackling our fiscal deficit. We have come to the conclusion that what looked-after children need is support today, and that is what we will provide. Over the spending review period, £7 billion will go to supporting the most disadvantaged children in our country, including looked-after children. He will be aware that in the Department for Education, Eileen Munro is leading an inquiry into how social care can work better, including the support of looked-after children, and finally he will be aware that my hon. Friend the Financial Secretary will be considering proposals to bring forward a junior individual savings account, from which we will specifically ensure that looked-after children can benefit.

George Freeman (Mid Norfolk) (Con): Does the Minister agree that it is appallingly disingenuous of Labour Members to posture as the friends of child savings, having left every man, woman and child in this country with debts of more than £22,000 each?

Mr Speaker: Order. The Minister, who is a dexterous Minister, will relate her answer to the policy of the Government, not that of the Opposition.

Justine Greening: I think it is a shame. The best thing we can do for all our children, including looked-after children, is to build a stronger country in which they can grow up and enter the workplace. I am afraid that it simply is not good enough to duck the serious questions of the day, which include sorting out not only our economy, but our broken welfare system, which does those looked-after children no service either.

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Mr David Hanson (Delyn) (Lab): Will the Minister take time to remind the House of the Government's manifesto commitment in the May general election to retain the child trust fund for the poorest third of children in society? Does she accept that looked-after children predominantly will fall into that poorest third? Will she therefore consider the amendments to the Savings Accounts and Health in Pregnancy Grant Bill so that she can meet her manifesto commitments, or will it be a case, again, of hitting the poorest hardest?

Justine Greening: I do not accept that we did not follow our manifesto commitment. The House had another difficult debate on Second Reading of the Bill, and yet again the Labour party seemed to want simply to ignore the challenges that our country faces. In doing so, it does the public a disservice.

Tax Evasion and Avoidance

5. Mr David Ward (Bradford East) (LD): What the evidential basis is for his Department's estimate of the additional tax revenue to accrue by 2014-15 from expenditure on measures to address tax evasion and avoidance, and fraud and debt. [23967]

The Exchequer Secretary to the Treasury (Mr David Gauke): Her Majesty's Revenue and Customs routinely measures and monitors various performance matrix, including yield-to-cost ratios and a number of statistical models. These were used as part of the spending review process to estimate the effect of investing resource to support its compliance strategy. On the basis of this analysis, HMRC estimates that the additional expenditure of £900 million over the spending review period will result in an extra £7 billion of yield per year by 2014-15.

Mr Ward: I thank the Minister for his answer. I guess that Members from both sides of the House would welcome the £900 million sprat that is being used to catch a £7 billion mackerel. However, I understand that the £42 billion gap caused by avoidance, evasion and fraud still exists. Are the Government doing enough, and do we need to do more?

Mr Gauke: The hon. Gentleman is absolutely right to highlight that issue. We think that the number is very high and that it is possible to find savings in HMRC's budget. However, there have been specific proposals for where HMRC has identified that it could recover large levels of yield, and this Government have been happy to provide the funding to do that.

Kerry McCarthy (Bristol East) (Lab): I am sure that the Government will be aware of the growing public outrage at the fact that a company such as Vodafone seems to have been able more or less to decide the size of its own tax bill, and, in doing so, is rumoured to have avoided a sum as high as £6 billion. Do the Government agree that we need far more transparency and accountability when it comes to such backroom deals with large companies, or are we now entering a world where only the little people pay their taxes?

Mr Gauke: This Government are determined to crack down on tax evasion and tax avoidance, but the Vodafone deal was a matter for HMRC, and it is right that the
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Government are not involved in such negotiations. I hope that the hon. Lady will not be aligning herself with those involved in campaigns to close down Vodafone shops. The fact is that companies should pay the correct amount of tax, but she should not believe everything she reads.

Mr David Ruffley (Bury St Edmunds) (Con): Tax avoidance and tax evasion would be less prevalent if we had a simpler and fairer tax system. I wonder whether my hon. Friend would consider following the policy of the noble Lord Lawson, which was to abolish complicated tax breaks in order to finance lower marginal rates.

Mr Gauke: My hon. Friend makes an excellent point. As a Government, we are cutting the rate of corporation tax, from 28% to 24%, which is the lowest rate that we have ever had in this country.

Credit Rating Agencies

8. Mr Chuka Umunna (Streatham) (Lab): What steps he is taking to review the regulation of credit rating agencies. [23971]

The Financial Secretary to the Treasury (Mr Mark Hoban): The coalition Government support greater regulation of credit rating agencies. The credit rating agency regulation came into force in the EU, including in the UK, on 7 December 2009. The UK authorities continue to be active in both the EU and G20 processes, including in negotiations on amending the credit rating agency regulation and in examining ways to reduce our reliance on credit ratings for regulatory and official purposes.

Mr Umunna: These obviously follow on from the proposals of Jacques de Larosière. One problem that has been identified with the rating agencies is the conflict of interest issue. I think that we should move to a "buyer pays" model. The other issue is a lack of competition in the credit ratings market. Michel Barnier, the EU Commissioner, has floated the idea of having an EU credit rating agency, which I think is a thoroughly good idea. Does the Minister agree?

Mr Hoban: Of course there are areas where more work needs to be done, and the hon. Gentleman is right that Michel Barnier has made further proposals, in a consultation paper that he published earlier this year. They included looking at the business models for credit rating agencies. However, I question whether taxpayers in Europe would feel it right that their money should be going to fund credit rating agencies.

Andrew Bridgen (North West Leicestershire) (Con): Is it not a cause for cautious optimism that agencies such as Fitch, Moody's and Standard & Poor's have now given the UK such an excellent credit rating?

Mr Hoban: My hon. Friend is absolutely right, and it just goes to show that credit rating agencies do not get it wrong all the time. In May, Standard & Poor's put the UK's credit rating on a "negative outlook", as a consequence of the previous Government's policies. However, in October it said that

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We welcome those comments.

Comprehensive Spending Review

9. Philip Davies (Shipley) (Con): What recent assessment he has made of the effectiveness of the outcome of the comprehensive spending review in reducing the budget deficit. [23972]

The Chief Secretary to the Treasury (Danny Alexander): The Office for Budget Responsibility will update its forecast of the deficit on 29 November, taking into account the spending review. Other assessments have backed the Government's plans, with the International Monetary Fund, for example, stating that our consolidation plan

That backs our view that the spending review was fair and supports growth.

Philip Davies: One of the big winners from the comprehensive spending review was, of course, the European Union. The EU has not had its accounts signed off by auditors for 16 years running, so if the Government are looking for a popular way to reduce the deficit, may I suggest that they go to the EU and say that it will not get another penny-piece out of the UK until it has had its accounts signed off?

Danny Alexander: Of course, the European Court of Auditors report, which fails to qualify the accounts for the 16th year in succession, is disappointing, as my hon. Friend observes. We will continue to champion reform through engagement with European institutions and other member states. It is worth him bearing in mind that the Government's most important priority for the forthcoming budget negotiations is to reduce and to keep under control the EU budget, not just next year, but in subsequent years, in recognition of the fact that many EU countries are facing tough financial circumstances, as we are.

Ms Angela Eagle (Wallasey) (Lab): The Chancellor's reckless choice to cut deep and fast at home means that UK jobs and growth are now reliant on achieving booming exports on a scale not seen for more than 60 years. We know that Europe is our single largest export market. Will the Minister share with the House the latest evidence of the growth of demand in that market?

Danny Alexander: There is evidence of export growth in many sectors of the economy, and the Government have played a significant role in promoting exports, as the recent trade delegation to China showed. The hon. Lady has a poor record of predicting the economy. In April 2008, she was engaged in a debate that observed that there was an extreme bubble in the housing market. She described that as a "colourful and lurid fiction" that

I would rather take the forecast of the Office for Budget Responsibility than hers.

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Mr Andrew Tyrie (Chichester) (Con): The CSR is virtually silent on privatisation's contribution to reducing the deficit. Will the Chief Secretary confirm that those receipts, which normally score in the accounts as negative spending, as he knows, will, when they come, be additional to and not a substitute for the spending reductions already announced in the CSR?

Danny Alexander: I can confirm that.

Mr Andrew Love (Edmonton) (Lab/Co-op): The Chartered Institute of Personnel and Development has revised upwards its forecast of the number of jobs lost in the public sector. It also suggests that the VAT increase will raise unemployment in the private sector. Reputable forecasting organisations, including the CBI, suggest that there will be an increase in unemployment overall in the next year. Does the Chief Secretary now accept that unemployment will increase as a result of the CSR, and is that why the Government have bumped off the autumn forecast of the OBR to the end of this month?

Danny Alexander: I am content to rely on the forecast of the independent Office for Budget Responsibility, which forecasts a reduction of 490,000 over the next four years in the head count in the public sector, but a net increase of jobs in the private sector of 1.6 million, leading to additional jobs being created in the economy. Of course, the hon. Gentleman will look forward, as I do, to its forecast on 29 November.

Bank Lending (Businesses)

10. Mr Brian Binley (Northampton South) (Con): What recent steps he has taken to increase levels of bank lending to small and medium-sized businesses. [23973]

The Chancellor of the Exchequer (Mr George Osborne): The Government have increased and extended the enterprise finance guarantee to support lending to small businesses. We have increased our share of the enterprise capital fund to enable extra investment in start up for small businesses, and we have encouraged the new business growth fund set up by the banks. But more needs to be done to ensure that the banks are lending to small and medium-sized businesses. It is a complex issue with no single answer, but it is crucial to our recovery, and my hon. Friend has my assurance that this is a key priority.

Mr Binley: I thank the Chancellor for that answer. Lionverge, a Northampton company employing 80 people, had an overdraft with Barclays of £70,000, backed by security of £130,000. A new manager was recently appointed, and in August he wrote to the company doubling the security, and cutting the overdraft by £20,000 with further cuts of £10,000 a month to end the facility. The company had not defaulted, no warning was given, and no other options were offered. What can the Chancellor do to stop such unacceptable bank practices that undermine the Government's growth strategy?

Mr Osborne: I recently met the leading chief executives of our largest banks, and they have come forward with proposals to improve the way they treat their customers, and to increase their lending to small businesses. We
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welcome the fund that they have set up. As I said, there is still more to do. The issue is complex, and one complexity has been the uncertainty of international regulation and how much capital and liquidity banks need. At the G20 that took place recently in South Korea, there was at last agreement on the new international rules, and a very lengthy transition period to them. I hope that British banks will take heed of that, and as a result, be able to increase their lending to small businesses.

Chris Leslie (Nottingham East) (Lab/Co-op): Why is the Chancellor so afraid to make the banks play their full part in picking up the mess that they created? He has refused to do anything about the excessive bonuses, and we read in the paper that he is about to U-turn on the publication of remuneration. We also read that he is climbing down on the bank levy and, in his answer to the hon. Member for Northampton South (Mr Binley), he is now suggesting that it is too complex to make the banks lend to small businesses. The Government are not afraid to hit children and families with cutbacks, but if we are all in this together, why is the Chancellor letting the banks off the hook?

Mr Osborne: One does wonder where the hon. Gentleman has been for the past couple of years. We are picking up the pieces of the biggest banking crash of our lifetimes, caused by the poor regulation of the previous Government. Since coming to office, we have announced major changes in regulation, putting the Bank of England in charge-which we still do not know whether the Opposition support-and a permanent bank levy, which was opposed by every single Labour Member during the general election. We are determined to sort out the problems left to us by the previous Government.

John Thurso (Caithness, Sutherland and Easter Ross) (LD): The enterprise finance guarantee scheme was specifically designed to help small businesses to get bank finance. It has not worked, and many companies feel that it has not assisted them. What is my right hon. Friend doing to ensure that the scheme plays a full part in helping companies to get finance?

Mr Osborne: The first thing that I would say to my hon. Friend is that, of all the schemes that we inherited, this was the one that we thought had the most chance of improvement and was worth investing in. The other schemes had almost no take-up, but this one did. We were able to provide some additional money for it in the Budget, in the form of £200 million to support additional lending. We are also introducing changes to the way the schemes work, so that there will be a limit of 20 business days that all major lenders taking part in the enterprise finance guarantee scheme will have to comply with, so that people are not left on the hook waiting for an answer.

Personal Saving

11. Stephen Mosley (City of Chester) (Con): What steps he has taken to encourage saving since the June 2010 Budget; and if he will make a statement. [23974]

The Financial Secretary to the Treasury (Mr Mark Hoban): The Government want to build a savings culture based on the principles of freedom, fairness and
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responsibility, and we are committed to creating conditions for higher saving. We have already announced a number of measures, including the annual financial health check and an end to the effective requirement to purchase an annuity with tax relief pension savings at the age of 75. We will also increase the amount that can be paid into ISAs each year in line with inflation from April 2011.

Stephen Mosley: Recent research from Which? has highlighted the fact that savers are missing out on £12 billion a year by keeping their money in accounts that pay extremely low rates of interest. Would my hon. Friend consider encouraging banks to print the interest rate on bank statements in the same way that credit card companies have to print the rate that they charge on their statements, in order to help savers to identify whether they are getting a good deal from their bank account?

Mr Hoban: My hon. Friend makes an important point. We need to ensure that savers have the information that they need to enable them to shop around and find the best possible deal. ISA providers have already agreed to disclose interest rates on their statements, and the Financial Services Authority is consulting on extending that duty to other savings accounts.

Stewart Hosie (Dundee East) (SNP): The Minister will be aware that the savings ratio is forecast to fall in every single year until 2015. Does this not make the decision to abolish the child trust fund-a savings plan with a 74% voluntary take-up rate-all the more short-sighted?

Mr Hoban: The problem with the child trust fund is that there was no evidence to demonstrate that it increased savings across the economy. We are faced with a difficult decision: we need to find savings to tackle the budget deficit that we inherited, and we believe that the best thing to do is to give help to families now rather than locking that money away until the children are 18.

Private Sector Growth Trends

12. Julian Smith (Skipton and Ripon) (Con): What assessment he has made of the effect on the economy of recent trends in growth in the private sector. [23975]

The Economic Secretary to the Treasury (Justine Greening): This Government have been determined to show that Britain is back open for business, and gross domestic product growth has been strong over the past two quarters. That growth has been driven largely by the private sector. The Office for Budget Responsibility, which this Government established, is responsible for producing independent economic and fiscal forecasts, and the Chancellor has asked the OBR to publish a new forecast on 29 November. That forecast will incorporate the OBR's assessment of the effect on the economy of recent trends of growth in the private sector.

Julian Smith: Does my hon. Friend agree that the hundreds and thousands of new jobs that have been created by the private sector in recent months make the outlook pretty positive? What encouragement would
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she give to budding young entrepreneurs in Yorkshire in existing businesses who are thinking of taking on a new employee?

Justine Greening: My hon. Friend is right. In quarter two alone, private sector employment grew by 308,000. I believe that many people in the country want not just to take jobs, but to create them. I would encourage them to get on with it, and to pursue their dreams and aspirations. They will have a Government behind them who are giving them a national insurance holiday for the jobs that they will create, and who are determined to support them by keeping corporation tax rates low when they are successful.

Geraint Davies (Swansea West) (Lab/Co-op): Given that Government plans to cut half a million public sector jobs are expected to lead to the cutting of a further 1 million private sector jobs, does the Minister accept that it would be more effective to reduce the deficit in three ways-through progressive taxation, through economic growth and through savings-than simply to throw millions of people on to the dole and whole communities into poverty?

Justine Greening: The hon. Gentleman seems to have managed to get from a reduction of half a million in the public sector head count to millions on the dole. The number that he cited is in the independent report from the Office for Budget Responsibility, which was published after our emergency Budget. Although the report showed that there would be a reduction in the public sector head count of about 490,000, it also showed-and I assume that the hon. Gentleman accepts all of it-that there would be an increase in employment of 1.6 million, and that, year on year, there would be reductions in unemployment and increases in employment. If he accepts the figure of half a million, does he also accept those figures?

Margot James (Stourbridge) (Con): I congratulate the Government on extending the enterprise finance guarantee scheme, but I note that it is closed to companies that export because of our over-zealous application of European Union state aid rules. Can my hon. Friend update the House on any plans that the Government have to overcome that obstacle to the achievement of our exporters' growth potential?

Justine Greening: We are examining ways in which we can help our UK companies to export more easily. The Prime Minister and the Chancellor have already led delegations to two key markets, China and India, where we hope that we can export more. That is critical if we are to put our economy back on its feet and it stands alongside the measures that we are taking to support companies creating jobs here, and the measures that we are taking to encourage investment in our country.

HMRC Tax Inquiry Services

13. Katy Clark (North Ayrshire and Arran) (Lab): What assessment has been made of the likely effects on Her Majesty's Revenue and Customs' tax inquiry services for the public of the outcome of the comprehensive spending review. [23976]

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The Exchequer Secretary to the Treasury (Mr David Gauke): Her Majesty's Revenue and Customs is currently reviewing options for delivery of the tax inquiry services that it provides through its network of inquiry centres, contact centres and online services over the next spending review period. HMRC is committed to providing services that are cost-effective and also meet the needs of its customers.

Katy Clark: We have already seen a reduction of 25,000 staff and 200 collection offices, which must result in a worse service to the public. We are also seeing cuts in the amount of money spent on dealing with tax avoidance and evasion. The Minister's colleague mentioned an extra £900 million, but we have been told that that is not additional money, and that less money is actually being spent on dealing with tax collection. Is it not time that we prioritised not only giving a better service, but collecting more tax?

Mr Gauke: That money is new investment to tackle tax avoidance and evasion. It is specific, targeted funding. As for the service that is provided, it is right for HMRC's service to adapt to the way in which customers change their behaviour. We have seen a 40% reduction in the number of people using inquiry centres over the last four years, and HMRC should of course adapt to that.

Andrea Leadsom (South Northamptonshire) (Con): Recent press reports have suggested that there are many so-called zombie households in the United Kingdom, in which families have got themselves into so much debt that they rely on interest rates remaining low to stay afloat. Does my hon. Friend agree that our policies to keep interest rates low, and to enable the Bank of England and the Monetary Policy Committee to keep them low, are key as we go through a critical period in our recession?

Mr Speaker: A sentence from the Minister in reply will suffice, as the question is about tax inquiry services. We are grateful to him.

Mr Gauke: Let me put it this way: we would have a lot more inquiries if taxes were going up, which is the policy the Opposition advocate.

EU Budgetary Rebate

14. Mr Peter Bone (Wellingborough) (Con): What assessment he has made of the effects on his Department's ability to reduce the deficit of the reduction in the UK's EU budgetary rebate; and if he will make a statement. [23977]

The Economic Secretary to the Treasury (Justine Greening): The latest forecast of the UK contribution to the EU budget shows that the UK abatement will decline from £5.6 billion in financial year 2008-09 to £2.8 billion in financial year 2010-11. The Office for Budget Responsibility will publish new projections of the UK contribution to the EU budget, including the abatement, in its autumn forecast.

Mr Bone: Under the previous Labour Government our total net contribution to the EU was £19.8 billion; under the coalition Government it will be £41 billion.
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Will the British people not think it bizarre, bewildering and a betrayal that over half the money saved by cuts will go not to reduce the deficit, but to subsidise other western European countries?

Justine Greening: My hon. Friend is right that alongside the domestic economic mess we inherited, we also inherited an EU budget deal that was completely out of touch with the situation faced by many European countries. The fall in our abatement is largely due to the give-away agreed by the previous Government in 2005, which will be fully phased in from 2011. It is expected to cost the UK about £2 billion per annum. That is £2 billion that was needlessly given away for absolutely nothing in return-yet another failing of the British people by the Labour party.

Child Benefit

15. Nic Dakin (Scunthorpe) (Lab): What mechanism he plans to use to ensure that households which include one or more higher rate taxpayer cease to receive child benefit payments. [23978]

The Exchequer Secretary to the Treasury (Mr David Gauke): From January 2013 Her Majesty's Revenue and Customs will withdraw child benefit from higher rate taxpayers using PAYE and self-assessment systems. The vast majority of claimants will continue to receive child benefit, and will not be affected by this change.

Nic Dakin: Earlier this year, the Prime Minister said he wanted this Government to be the most family-friendly Government we have ever had in this country. How does this proposal support a family where one partner stays at home to look after the children while the other partner earns over £45,000 a year?

Mr Gauke: It does families and everyone else in this country no good if we do not get to grips with the fiscal crisis. If the Opposition are saying households paying higher rate income tax should continue to receive child benefit while those who do not earn so much contribute towards that, it once again shows that they are not getting to grips with the scale of the crisis.

Richard Graham (Gloucester) (Con): Does the Minister agree that the logic of the policy outlined by Opposition Members is that any child from Prince William and Catherine Middleton would benefit from child tax benefit, whereas the poorest of my constituents would not?

Mr Speaker: Members really should not refer to members of the royal family in questions. That is strongly to be deprecated, and it certainly should not happen again. I ask the Minister to give a very brief reply.

Mr Gauke: My hon. Friend is perhaps getting a little ahead of himself. I think all we should say is that should that happy eventuality occur, I am sure he or she will get by without child benefit.

Redundancy and Retraining Costs

16. Diana Johnson (Kingston upon Hull North) (Lab): What estimate he has made of the cost to the Exchequer of redundancy and retraining requirements
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arising from implementation of proposals contained in the comprehensive spending review. [23979]

The Chief Secretary to the Treasury (Danny Alexander): The total cost of work force reforms will depend on the decisions of hundreds, if not thousands, of employers up and down the country. Detailed decisions regarding the number of redundancies and the associated costs that may be required have yet to be finalised in most cases, so it would not be appropriate for the Treasury to speculate on any aggregate numbers at this stage.

Diana Johnson: In the police service alone, major job losses are already being announced, such as in the west midlands, Greater Manchester and Lincolnshire, so not only will there be up-front redundancy costs, but there will be the loss of skills and experience. Does the Chief Secretary agree that the cost of redundancies could be as high as £8 billion?

Danny Alexander: I have to say that that sounds like rather an overestimate, but the hon. Lady is right to say that employers are spelling out their own plans for redundancies and for managing their work force in an appropriate way. I recognise that many staff will be very concerned about that, but I believe that it is right that they hear about specific plans from their own management, rather than draw conclusions from higher level aggregate numbers.

Government Deficits

17. Glyn Davies (Montgomeryshire) (Con): What recent discussions he has had with his international counterparts on the co-ordination of efforts to reduce Government deficits. [23980]

The Economic Secretary to the Treasury (Justine Greening): The UK has been actively engaged in G20 discussions. The Prime Minister and the Chancellor attended the G20 summit on 11 and 12 November, which delivered the Seoul action plan and pledged to continue co-ordinated efforts to generate strong, sustainable and balanced growth. In this action plan, the advanced economies committed to

of course-

Glyn Davies: Bearing in mind reports of continuing threats to some of our EU partners, does the Minister agree that the International Monetary Fund's recent growth forecasts underline the need for an ambitious and credible strategy for dealing with the budget deficit?

Justine Greening: My hon. Friend is right about that. The IMF clearly supported the efforts that the coalition Government have been making both in the emergency Budget and the spending review to get to grips with the terrible fiscal deficit handed over by the previous Government. The OECD also welcomed the balance that we struck in the spending review between not only protecting growth, but tackling debt.

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David Simpson (Upper Bann) (DUP): Can the Minister confirm that the international counterparts discussed the subject of the Republic of Ireland, its deficit and the possible EU bail-out for it? Will that cost the United Kingdom money?

Justine Greening: At this stage, we cannot speculate about other countries' finances. Obviously, the Irish are taking very difficult decisions and actions to try to get the situation under control. I do not think that we should pre-empt actions that Ireland or any other country takes and the impact that such actions may ultimately have on the UK taxpayer.

Topical Questions

T1. [23988] Mrs Mary Glindon (North Tyneside) (Lab): If he will make a statement on his departmental responsibilities.

The Chancellor of the Exchequer (Mr George Osborne): The purpose of the Treasury is to ensure economic stability, restore sanity to the public finances, ensure employment growth, make sure our banking system is properly regulated and get this country back on its feet.

Mrs Glindon: During the past five years, North Tyneside council has made year-on-year transformation savings without affecting front-line posts, but I fear that because of the comprehensive spending review, front-line jobs will now be lost. What message, other than fictitiously blaming the previous Labour Government for what has been a global recession, does the Chancellor have for North Tyneside?

Mr Osborne: First, the Government have given all councils, including North Tyneside, greater freedom about how to spend their resources by removing a lot of ring-fencing. Secondly, of course, as I said in the spending statement, this was a difficult local government settlement-I completely accept that. But even the Labour party was signed up to £44 billion of spending cuts. If Labour Members are telling us that those would not have included local government, that is not really credible. We have had to take difficult decisions and we should be supported for that.

T2. [23989] Claire Perry (Devizes) (Con): The Chancellor is heading to an ECOFIN meeting tomorrow and I hope he will continue to press our colleagues in the European Union for some restoration of fiscal sanity in their economic policies. The flag that will be fluttering so merrily over the proceedings will be the blue and yellow one-those are colours that we rather enjoy. Does he agree that unless we see some return to fiscal sanity and some abandonment of the policy of fiscal recklessness, perhaps the colour of the flag should be changed from blue and yellow to brown?

Mr Osborne: Of course we are urging fiscal restraint on the European Union. I should pay tribute to my colleague, the Economic Secretary, who has been out to Brussels twice in the past few days to argue vigorously for restraint in the European Union budget with considerable success. One of the problems we are dealing
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with is that the previous Government gave up half the rebate and that is one of the reasons why the budget is increasing.

T5. [23993] Diana Johnson (Kingston upon Hull North) (Lab): The unemployment rate in my constituency was 10.7% in September. After the announcement in the comprehensive spending review of the slashing of jobs, services and skills, what does the Chancellor think will be the unemployment rate in my constituency in 12 months' time?

Mr Osborne: The whole point is that we have given these forecasts to an independent body, rather than just relying on the forecasts given by the Chancellor of the Exchequer at this Dispatch Box, so that people can believe in their independence and credibility. The Office for Budget Responsibility will produce its autumn forecast on 29 November. But of course the OBR figure that all Labour Members seem to use is the one for the public sector head count, but they seem to forget that this same body made a forecast of an increase in net employment, which sadly they never use.

Mr Speaker: David Tredinnick, not here.

Mr Marcus Jones (Nuneaton) (Con): What steps can the Chancellor take to ensure that the Financial Services Authority's mortgage market review proposals do not have a disproportionate effect on home buyers and the housing market, particularly at a time when we are trying to encourage growth through the private sector?

The Financial Secretary to the Treasury (Mr Mark Hoban): My hon. Friend makes an important point and the FSA's mortgage market review is seeking to learn some of the lessons from how the mortgage market was regulated before the financial crisis and some of the problems that that regulation created. What I think is important is that the FSA should consider very carefully the impact on home ownership and particularly on those people who are looking to move shortly.

T8. [23997] Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab): May I give those on the Treasury Front Bench the opportunity to answer the question on child benefit that they failed to answer earlier? How do they justify taking child benefit off a single-earning family on £45,000 and allowing a family that earns £80,000 to retain child benefit? An answer this time would be appreciated.

The Chief Secretary to the Treasury (Danny Alexander): As the hon. Gentleman knows-and as the whole House knows-the justification for the measure that we took was to ensure that the cost of the spending review fell equally across the population so that those with the broadest shoulders would bear a greater share of the burden. In those circumstances, it is right that child benefit should be taken away from families with higher rate taxpayers. I would have thought that the Opposition would support that, not oppose it.

T4. [23992] Mrs Helen Grant (Maidstone and The Weald) (Con): What fiscal action will be taken to increase social mobility and to stimulate it in our country?

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Danny Alexander: In the spending review, we took a number of spending decisions that will support social mobility. We chose to invest in early-years education for disadvantaged two-year-olds-a new investment-and to maintain the 15-hours entitlement for three and four-year-olds, something that was introduced under this Government. We chose to invest in a pupil premium that will give additional support to the most disadvantaged children. In tough financial times, that is the strongest investment in social mobility made by any Government in this country for many a long year.

Stephen Timms (East Ham) (Lab): The White Paper last week stated that HMRC will be taking on new responsibilities in collecting and processing real-time pay data for the calculation of universal credit. How much has been allocated for the IT to deliver that change?

The Exchequer Secretary to the Treasury (Mr David Gauke): The response to the consultation on real-time information-the next stage of it-will be published shortly. We will outline the details in that, but additional sums have been identified as part of the spending review process to pay for the real-time information project.

T6. [23994] Mr Aidan Burley (Cannock Chase) (Con): More than 20% of my constituents in Cannock Chase are employed by manufacturing centred small businesses. Will the Chancellor assure them that the small business tax review will simplify and reduce taxes for small businesses rather than complicate and increase them?

Mr Osborne: Yes, I can give that assurance. I also note that the actions that the Government have taken have kept the small companies rate down, avoiding the rise in the rate that we inherited.

Miss Anne Begg (Aberdeen South) (Lab): The comprehensive spending review contained a proposal to cut the mobility element of the disability living allowance for those in residential care. Why did the Government make that decision-because it was fair or to reduce the fiscal deficit?

Mr Osborne: In the spending review we took a number of difficult decisions, including decisions on welfare. We sought to identify the savings that we thought were most justified. As far as I understand it-although I am happy to be corrected-the DLA changes have been supported by the Opposition.

T7. [23996] Mark Menzies (Fylde) (Con): Fiscal discipline is, if anything, more essential in opposition than in government. Will the Chancellor tell us whether he has received any support or advice from the Opposition on how to achieve that fiscal discipline?

Mr Osborne: I am told that they have plans to cut £44 billion from public expenditure, but they have not told me what those plans are.

Hywel Williams (Arfon) (PC): What is the economic case for HMRC's sacking professional tax collectors and hiring novice private sector debt collectors to collect liabilities of tax below £10,000?

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Mr Gauke: The intention is to strengthen HMRC's capability to collect taxes. If that involves making use of private sector expertise to collect additional debt, which is the intention, that is surely a good thing that should be welcomed by all parties.

Mr John Redwood (Wokingham) (Con): Given that the Irish Government have said that they neither want nor need a bail-out, will the Chancellor support them at ECOFIN and put off those people in the EU who seem to want to make a crisis out of a problem?

Mr Osborne: There is an enormous amount of speculation about Ireland at the moment to which I do not propose to add. The Irish Government have said clearly that they have not sought assistance and that they are taking difficult steps to deal with their fiscal situation. They will make further announcements about their Budget situation in the next few weeks. I make the general observation that what is going on at the moment highlights the fact that concerns about sovereign debt issues have not disappeared and we should be grateful that, thanks to the actions of this Government, we have moved Britain out of the financial danger zone.

Mr Russell Brown (Dumfries and Galloway) (Lab): What does the Chancellor say to fixed-income pensioner households in my constituency and his who will be faced with the additional VAT burden in just over 50 days?

Mr Osborne: I would say to them what I would say to everyone in this country: that we inherited the largest fiscal- [ Interruption. ] Well, I do not know how many times Opposition Members have to hear this but it is the truth. They left us the largest Budget deficit in the G20 and the European Union at a time of heightened sovereign debt concern. They can either be part of the debate that the rest of world is taking part in on how to deal with the deficits or they can completely ignore that debate and become irrelevant.

Alec Shelbrooke (Elmet and Rothwell) (Con): Does the Chancellor agree that he should ignore the advice of the Opposition on all matters fiscal relating to the European Union, because it is still their policy to join the euro and because their MEPs voted to double our contribution this year?

Mr Osborne: As you will remind me, Mr Speaker, I cannot speak for the policy of the Opposition or say whether they have changed their official position which is to support joining the euro, but I make it clear to my hon. Friends and others that we certainly will not join the euro while this Chancellor and this Prime Minister are in place.

John Cryer (Leyton and Wanstead) (Lab): It was this Chancellor who agreed a 2.9% increase in contributions to the EU and to cede certain powers to Brussels-that is in the papers he signed-so has he not joined that glorious list of British politicians who go to Brussels, lose their wallets and their trousers and then come back and tell us what a great deal they have got?

Mr Osborne: I think that the hon. Gentleman is thinking of Tony Blair rather than of this Government. We voted against the increase in the European budget,
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but we were outvoted because it was a qualified majority vote. We are dealing with the fact that the previous Government gave up half the budget rebate, which is why British contributions are going up, and we are very clear that, although we want fiscal rectitude across Europe, we do not propose to hand over substantive new powers to the European Union.

Stephen Williams (Bristol West) (LD): There is much support around the country and in the House for the broad principles of the Robin Hood tax campaign. The coalition Government have made a good start with the permanent bank levy. Will the Chancellor confirm that he expects the Independent Commission on Banking to consider the taxation of bankers' bonuses and bank profits so that the banks pay their fair share in this country?

Mr Osborne: The commission that we have set up is looking principally at the structure of the banking sector, which is another very important issue. We have said that we want the banks to make a contribution, which is why we introduced the permanent banking levy; we did not agree with the previous Government that that should not happen. We followed the best practice set out by the International Monetary Fund, which outlined two taxes that could be pursued-one was a bank levy and the other was a financial activities tax, which we also said that we would consider in the Budget. On the broader point of the Robin Hood tax, or the financial transactions tax, which is sometimes discussed at ECOFIN, I think that everyone accepts that it would have to be introduced internationally or else it would be almost impossible to collect any revenue.

Mr Speaker: I think we have got the drift.

Jim McGovern (Dundee West) (Lab): Can the Chancellor or another Minister tell us what assessment has been made regarding potential job losses due to changes in the benefit system? Much concern has been expressed in my constituency, particularly yesterday in the local press, that up to 700 jobs might be lost in the HMRC office in Dundee as a result of such changes. What assurances can Ministers give me and my constituents that that will not be allowed to happen?

Danny Alexander: The welfare reforms that we are proposing are designed to support people off benefit and into work. That is the whole point of the reforms that the Secretary of State for Work and Pensions outlined last week. The reforms that will create a universal credit and some of the changes that we announced in the spending review are all there to help people off benefit and into work, and to help people get jobs, which is what the hon. Gentleman should support.

Penny Mordaunt (Portsmouth North) (Con): Can the Chancellor confirm that, unlike the shadow Chancellor, he is not an instinctive cutter?

Mr Osborne: I did see that rather remarkable comment from the shadow Chancellor over the weekend. We are doing what we are doing because we have to-because of the size of the Budget deficit.

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Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): The Federation of Small Businesses North East and the insolvency trade body R3 have wound up one in 10 businesses that were unprepared for the 2.5% increase in VAT next year. Kingston university also recently showed that small businesses in the north-east intend to shed staff. Is not VAT the real jobs tax?

Mr Osborne: As I say, we are doing that because we need to deal with the Budget deficit. I thought it was the policy of the hon. Gentleman's party that a greater share of the consolidation should be borne by tax rises; I thought that that was now the official policy. It is also clear that the previous Government were planning a VAT rise. Businesses have had plenty of notice of the increase that is coming in in January, and I am sure they will be able to cope in the same way as they coped with the VAT rise at the beginning of this January.

Bob Blackman (Harrow East) (Con): All of us are all too aware of the record deficit and debt that we inherited from the Opposition. Will my right hon. Friend agree to publish a regular scorecard showing how that deficit and the debt are reducing, so that taxpayers and the public sector can see the benefit of the Government's policies?

Mr Osborne: We have created the independent Office for Budget Responsibility so that the fiscal forecasts for the United Kingdom are no longer produced by the Chancellor of the Exchequer and sometimes influenced by the political judgments of the Chancellor of the Exchequer, but instead are done independently.

Toby Perkins (Chesterfield) (Lab): On child benefit, can the Chief Secretary explain why he believes that families earning £45,000 have broader shoulders than those earning £80,000?

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Danny Alexander: It should be obvious to the hon. Gentleman that higher rate taxpayers have greater means than those at the bottom of the income spectrum. It is a basic principle of fairness that underlies the spending review that we need to ensure that those with the broadest shoulders bear a greater share of the burden. As I said in response to the question earlier, asking higher rate taxpayers not to collect child benefit seems to be one of the decisions in the spending review that the Opposition should find it easiest to support.

Jo Swinson (East Dunbartonshire) (LD): As my right hon. Friend says, it is right that in reducing the deficit, those with the broadest shoulders should bear the greatest burden, but do the Government understand the genuine anger that the public feel when it seems as though wealthy individuals and large companies can get away without paying their tax bills? What reassurance can the Minister give my constituents that the richest in society will pay their fair share?

Mr Osborne: We have taken a number of decisions to make sure that the burden is fairly shared. We have introduced the bank levy, and we are taking child benefit away from higher rate taxpayers, although that is clearly opposed by Labour. We are also seeking to conclude a number of deals with countries that have a reputation for attracting tax avoidance and tax evasion, such as the deal that we are negotiating with Switzerland. That will ensure that there are further revenues coming into the Exchequer from those who can afford it.

Several hon. Members rose -

Mr Speaker: Order. We must move on.

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Redfern Inquiry

3.33 pm

The Secretary of State for Energy and Climate Change (Chris Huhne): Today I am publishing the report of the Redfern inquiry, which was established in 2007 to investigate the processes and practices surrounding the analysis of human tissue that was carried out in UK nuclear facilities from 1955 to 1992. The inquiry examined the circumstances in which organs or tissue were removed from individuals at NHS or other facilities, and sent to be analysed at nuclear laboratory establishments.

To lose a family member is tragic. To find out-sometimes decades later-that tissue had been taken without consent is an unimaginable distress. That knowledge is a burden that no one should have to bear. There is no time limit on grief; nor is there on apologies. I would like to take this opportunity to express my heartfelt regret, and to apologise to the families and relatives of those involved. I hope that the publication of today's report goes some way toward providing the closure that they deserve. The events described in the inquiry should never have happened in the first place. We have learned the lessons of the past. The law on human tissue has been reviewed, and a rigorous regulatory system is now in place, in which both the public and professionals have confidence.

I would like to thank the chairman of the inquiry, Mr Michael Redfern QC, for conducting the investigation. The inquiry has also benefited from the support of the nuclear industry and other key stakeholders, who have co-operated fully. The inquiry was established to investigate the circumstances in which organs were removed from individuals, and were sent to and analysed at Sellafield. However, as evidence came to light of similar work carried out at other sites and of studies involving non-nuclear workers, Michael Redfern QC was asked to make those additional cases part of his inquiry.

The inquiry was initially sponsored by the Department of Trade and Industry, which at that time had responsibility for energy policy. The Department of Health became a co-sponsor when the terms of reference were expanded to allow the inquiry to access relevant NHS information, and to investigate the part played by hospitals in which the post-mortem examinations had been conducted. Although not a sponsor of the inquiry, the Ministry of Justice also has an interest in the inquiry's findings and recommendations in respect of the coroner's role.

The report highlights unacceptable working practices within the nuclear industry, NHS pathology services and the coronial service, and concludes that families' views were not always obtained as required under the Human Tissue Act 1961. It acknowledges that these events occurred a number of decades ago, and puts them within the context of the times and current practice. Many of the issues raised by the inquiry have since been addressed by changes to the law, including the introduction of the Human Tissue Act 2004.

The inquiry found that organs from 64 former Sellafield workers were removed by pathologists and taken for analysis at Sellafield between 1960 and 1991. In addition, organs taken from 12 workers at other nuclear sites were analysed at, or at the request of, Sellafield, giving a total cohort of 76. The inquiry also found evidence of other individuals whose organs were analysed at Sellafield. The report finds that there was a lack of ethical
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consideration of the implications of the research work that the industry was doing; that limited supervision was undertaken; and that relationships between pathologists, coroners and the Sellafield medical officers became too close.

The inquiry has found that organs from a small number of former Ministry of Defence employees were removed for analysis. It has been difficult to establish the legality of a minority of these removals. Also, during the 1950s and 1960s the Medical Research Council oversaw research measuring levels of strontium 90 in human bone obtained at post-mortem. It was a national survey, involving more than 6,000 people, mostly children, and was not linked to former nuclear workers.

The inquiry also considered work undertaken by the National Radiological Protection Board. Across its entire remit, the inquiry found that families' views about organ retention were not always sought, and that very few families knew that organs were taken for analysis. Research using human tissue at that time was carried out under different legislation, and within a culture that took a very different approach to these matters than we do today. That is not to diminish the distress and suffering caused to families by the events of the past. However, we have learned from the mistakes of the past, and we now have in place the legislative and regulatory framework that makes consent the fundamental principle underpinning the lawful retention and use of body parts, organs and tissue from the living or the deceased for such purposes.

My right hon. Friend the Secretary of State for Health and I welcome the inquiry's recognition of the changes in the law and the associated regulatory framework relating to the taking, use and storage of human tissue, which have been put in place since the events leading up to the inquiry. Since the Human Tissue Act 2004 came into force, we have seen the development of robust regulation that focuses on compliance through the provision of expert advice and guidance-and where regulatory action is taken if standards are not met.

My right hon. and learned Friend the Secretary of State for Justice has the principal interest in the inquiry's findings relating to the role of coroners. His Department is responsible for coronial law and policy, but as coroners are independent judicial office holders, it does not monitor how they carry out their functions in individual cases unless specific complaints are made. Communication between families, coroners and pathologists was, and still is, vital.

Changes to the 1984 coroners rules, which were introduced alongside the human tissue legislation, are aimed at ensuring that families' wishes about what happens to organs and tissue retained after a post-mortem examination can be properly established and acted upon. My right hon. and learned Friend also intends to take forward several provisions in the Coroners and Justice Act 2009 which address other problems that Mr Redfern identifies and aim to prevent any recurrence of the events that led to the establishment of his inquiry.

Although the Government are not proceeding with the role of a chief coroner, we intend to transfer many of the intended leadership functions of the post to the Lord Chancellor, or possibly to the senior judiciary. There will be higher standards when commissioning post-mortem examinations, and in the way that coroners communicate with bereaved families. There will be more
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effective operational delivery, with an end to rigid, geographic boundary restrictions. Training for coroners and their staff will be maintained and improved, and coroners' work will be more transparent so that unacceptable practices can be avoided or challenged and deficiencies can be tackled. We are also considering introducing the new, more accountable system for appointing coroners and their deputies that the 2009 Act enabled.

The inquiry has sought and received assurances from all the key nuclear industry stakeholders that the practice of retaining organs or tissue at autopsy has ceased. I hope that the families of those involved can take some comfort from the knowledge that the practices that the inquiry examined simply would not be permissible today. I commend this statement to the House.

Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op): I thank the Secretary of State and his office for early sight of his statement on this very important matter.

Our first sympathies must be for the families. They have lived through an ordeal and had to relive or, in some cases, discover what happened to their loved ones after death. It cannot have been easy, and their forbearance has been great. I very much welcome the Secretary of State's heartfelt apology. I, like other Members, have had only a short time to look at the report, but it is clear that it is thorough, clearly written and a credit to the hard work of Michael Redfern QC and his team. My hon. Friend the Member for Copeland (Mr Reed) has ably represented many of the families over a long period, and today the families must come first.

The events in question took place some time ago, and it has been challenging to piece together the history. The issues are complex, and Michael Redfern has produced a report that not only explains what happens, but provides reassurance that such practices are no longer used. The events, let us remember, took place in a different era when there was much debate about the safety of the nuclear industry, and the GMB at the time campaigned hard for a compensation scheme for nuclear workers who had been exposed to excess radiation. Today, a compensation scheme is in place.

The report is clear that the law at the time was in place to prevent the removal of human tissue without proper consent from those who had died. Unfortunately, that did not prevent these events from happening. It is an important and salutary reminder to all of us in this House, and elsewhere, that we need to remain vigilant in our scrutiny of professional practice and of the work of scientists. Science is vital to the UK, and we have a worldwide reputation to protect. It is in all our interests to get it right.

I have some questions for the Secretary of State. Is he able to reassure the public that the events outlined in the Redfern inquiry report are historical and are not taking place today? We have the 2004 Act; we now need to be vigilant about it.

The inquiry looked into the issue of removal of organs from 76 people. Is the Secretary of State satisfied that that was the extent of the case? I am sure that he will agree that any families who are concerned should have an easy route to information about their loved ones; perhaps he could explain how they can find out more.

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The Secretary of State rightly talks about the new rigorous regulatory system, but it is the Government's intention to abolish the Human Tissue Authority and transfer its functions to other bodies. What guarantee can he give that such important functions will not be lost as a result of the Government's proposed changes?

The Secretary of State is clear that such acts would not be permissible today, as they were not then. It is therefore particularly important that procedures are in place to uncover any practices of this nature in future. Can he further explain what contact the Government have had or are planning to have with the professions concerned, particularly pathologists and coroners, to ensure that robust procedures are in place so that this could not happen again?

This report does not stop the heartache for the families, but it lays out the facts, and I hope that that gives them some comfort.

Chris Huhne: I thank the hon. Lady. I think that this is an issue on which we can all unite, in all parts of the House, in our frank shock at the events that took place, albeit many decades ago in many cases. I am able to give the reassurance that the hon. Lady seeks, and the reassurance to the public, that these events are historical and, as far as we can tell, are not taking place today; they would clearly be illegal. The Redfern inquiry sought assurances from all the key players-and indeed received those assurances-that there was nothing taking place today that would be similar.

In the course of the inquiry, as the report makes clear, it became obvious that the removal of organs from a limited number of people in fact related to only a part of the total. The right hon. Member for Edinburgh South West (Mr Darling), as the then Secretary of State for Trade and Industry, knew about that when the inquiry was commissioned. The inquiry points out that once we take account of other cases, the total is nearly 6,000 across the country. That is a very much greater figure than we thought at the time.

The hon. Lady is right to say that the Human Tissue Authority is to be abolished by the Government and its functions transferred to other bodies. I have spoken with my colleagues from the Department of Health on this point. Those functions will be transferred to other organisations and dealt with by the Department of Health. There will be no question of any relenting on the key functions that were set out for the Human Tissue Authority.

The professions have been engaged in conversations with both the Department of Health and the Ministry of Justice. I am confident that the lessons of the report will be learned and that robust procedures will be put in place to ensure that such questionable practices do not recur.

The hon. Lady asked about current safety levels in the nuclear industry. I can assure her that we have a rigorous safety and inspection regime which is kept under constant review in order to make sure that safety levels are absolutely at the highest.

Mr Alistair Darling (Edinburgh South West) (Lab): I add my thanks to Michael Redfern for his very substantial report, which is far weightier and far more extensive than we anticipated when I commissioned his work three and a half years ago.

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It is difficult to judge what happened over a period of 50 years-of course, standards, ethics and the law have changed very substantially-but does the Secretary of State accept two things? First, many people would acknowledge that there will be occasions when more investigation and research is necessary, but the key thing is that they should be involved in those decisions, they should know about the work, and they should be in a position to give or withhold their consent.

Secondly, although things have changed dramatically in the nuclear industry over the past few years, it does have a history of being less open than it should be. By being more open, it will build more confidence in what it does-an objective in which I believe, and in which I think the Secretary of State now believes as well.

Chris Huhne: I totally agree with both the right hon. Gentleman's points. The key principle introduced in the Human Tissue Act 2004 was consent ahead of time. The legal situation before that allowed researchers to access human tissue without consent if they had made reasonable efforts to obtain it. That was a fundamental change, and I entirely agree that it was important for us as a society to move with the times and reflect the key family sensitivities involved. I also agree entirely with his point about the nuclear industry. Openness is usually the best disinfectant, and transparency is thoroughly desirable.

Mr Jamie Reed (Copeland) (Lab): I am grateful to the right hon. Gentleman for advance sight of his statement, to the shadow Secretary of State for her warm wards and to the former Secretary of State for Trade and Industry, my right hon. Friend the Member for Edinburgh South West (Mr Darling), for instigating the report in the first instance. I declare two interests, as both a former Sellafield worker and the grandson of Thompson Reed, one of the trade union officials mentioned in the report.

I hope that there will now be a dialogue between the affected families and the Government on the subject of restitution. The nuclear industry and Sellafield are extremely popularly supported in my part of the world, not least by me. One telling point in the report is the constant churn and change that the West Cumberland hospital and NHS management structures have experienced, which may have led to less than ideal practices. Will the Secretary of State commit to working with me and those in my community, with a view to seeing how we can fund the hospital outside the routine, ordinary funding systems that exist for other hospitals, given the unique nature of the work undertaken at Sellafield?

Chris Huhne: I am grateful to the hon. Gentleman for his question. As he knows, I am very committed to continued employment in the nuclear industry and the importance of his area to it, and I visited Sellafield shortly after I became Secretary of State. We very much want to maintain that dialogue. I am keen to take up any issues of concern to his constituents and employees in the industry about their health care or anything else. He can rely on my support on that.

The funding streams are obviously an issue for the Department of Health, but I do not think the hon. Gentleman would want us to go down the route of
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allying particular health funding streams to their causes-that, for instance, road accident matters should be funded by the Department for Transport or that nuclear health streams should be funded by the Department of Energy and Climate Change. However, he can be assured of my support in ensuring that the care available is outstanding.

Caroline Lucas (Brighton, Pavilion) (Green): One of the most disturbing elements is the culture of secrecy that allowed body parts not only to be taken without permission but later to be disposed of as waste in the low-level waste depository at Drigg. Many living relatives will be deeply distressed to think of their loved ones being treated in such a callous way. Does the Secretary of State agree that that culture of secrecy still surrounds the nuclear industry and can be a barrier to proper scrutiny and accountability? What measures will he take to challenge it?

Chris Huhne: The hon. Lady recognises-I hope-that there have been improvements in recent years in the openness of the industry. I believe it understands the importance of public confidence, because it is a very different industry from the one that existed during the decades in which these practices were undertaken. One way of securing and retaining public confidence is to be as open and transparent about practices as possible, and as the Secretary of State responsible for the industry, I am extremely keen that that should be the case. I want the industry's practices-particularly its safety practices, but respect for those who work in the industry too-to be maintained at the highest possible level. If the hon. Lady has particular concerns, I would be very happy to deal with them either in correspondence or in the normal way through parliamentary answers.

Tony Cunningham (Workington) (Lab): Anyone who reads this report will be absolutely horrified, as I am. I dread to think what the families will be feeling at this time; our thoughts and prayers are very much with them as they go through this very difficult period. Is the Secretary of State prepared to meet my hon. Friend the Member for Copeland (Mr Reed) and me as soon as possible to see what help and support we can give both to the families and the wider community of west Cumbria?

Chris Huhne: I would be very happy to meet the hon. Gentleman and his neighbour on this and any other issue. The industry is important to their part of the world, and I hope that the relationships can improve and that we can provide some reassurance to the families that such events will never happen again. We extend our condolences to those in distress.

Paul Flynn (Newport West) (Lab): Will the Secretary of State congratulate Dr David Lowry on publishing evidence from the 1962 report of the Medical Research Council's National Radiological Protection Board to show that there was an experiment in which people, including pregnant women, young people under 18 and those without fatal diseases, were exposed to doses of radiation of the most long-lived type, including strontium, plutonium and caesium? Is this not a sad story of the nuclear industry being far more interested in public relations than in public health?

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Chris Huhne: The hon. Gentleman is absolutely right to identify Dr Lowry as one of the important characters in opening up this whole saga. I am happy to join him in his congratulations on that score. The key issue that we have to keep repeating to anyone who doubts it in the nuclear industry is that openness is absolutely crucial. We have an enormous continuing nuclear clean-up legacy in Sellafield and elsewhere that will require great effort for many years to come. That arises, in part, from the fact that the industry-here I agree with the hon. Member for Hackney South and Shoreditch (Meg Hillier)-was too secretive for far too long.

Thomas Docherty (Dunfermline and West Fife) (Lab): I should declare an interest having been brought up in west Cumbria and having worked for many years in the nuclear industry. I add my congratulations to my hon. Friends the Members for Copeland (Mr Reed) and for Workington (Tony Cunningham) on championing their communities on this issue for many years. The Secretary of State said that these are historical events. None the less, the practices continued until less than two decades ago, and personnel may be still in the NHS or the nuclear industry who were part of that decision-making process. Will the Secretary of State undertake to ensure that no one is working today in the NHS or in the industry who was responsible for those terrible decisions?

Chris Huhne: Michael Redfern QC identifies and names a number of people in his extensive report. The criticisms that are made of those individuals are quite a rebuke to anyone who is in a professional job and who values their standing. The key figures have now retired, and would certainly not be responsible for a continuation of such practices. However, that would be true even if they had not retired, because the law has now changed. The report, none the less, is thorough, extensive and identifies those individuals who were involved but who have now retired.

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Guantanamo Civil Litigation Settlement

3.59 pm

The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke): With permission Mr Speaker, I would like to make a statement. On 6 July, the Prime Minister told the House that the legacy issues the Government had inherited around the treatment of detainees held by other countries needed to be addressed. Our reputation as a country that believes in human rights, justice, fairness and the rule of law otherwise risked being tarnished. There was also the risk of public confidence being eroded, with people doubting the ability of our security and intelligence agencies to protect us and questioning the rules under which they operate.

The Government are absolutely clear that national security and the protection of the rule of law go hand in hand. The Prime Minister has repeatedly made it clear that this coalition Government are unswerving in their opposition to torture or the ill-treatment of prisoners or detainees. We do not condone it, nor do we ask others to do it on our behalf.

We recognise that our longer-term security interests require that we defend our values and the rule of law, and that any allegations that threaten those must be treated seriously. In tackling the challenges posed by those serious allegations, the Government's overriding objective is to ensure that the security and intelligence agencies can focus on their vital task of protecting the security and interests of the UK, and that the serious allegations that threaten their reputation and that of our country are examined properly. The security of this nation is the first concern of any Government. The security and intelligence agencies play an invaluable part in ensuring our security, and the Government are determined that they are free to do the vital job that we need them to do.

In his statement, the Prime Minister said that a single, authoritative inquiry was required to investigate the serious allegations of the Government's complicity in the mistreatment of detainees held by other countries. The right honourable Sir Peter Gibson was appointed to head that independent inquiry. However, the Prime Minister also made it clear that the inquiry could not begin while related police investigations were ongoing and while so many of the Guantanamo civil law suits brought against the Government remained unresolved. To help to pave the way for the inquiry to begin, the Government committed to entering into a process of mediation with those held by the United States in detention in Guantanamo Bay who had brought civil actions against the Government.

I can today inform the House that the Government have now agreed a mediated settlement of the civil damages claims brought by detainees held at Guantanamo Bay. The details of that settlement have been made subject to a legally binding confidentiality agreement. They have been reported in confidence to the Chairman of the Intelligence and Security Committee of the House, to the National Audit Office, and, I think, to the Chair of the Public Accounts Committee.

Margaret Hodge (Barking) (Lab) indicated dissent.

Mr Clarke: Ah. No.

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No admissions of culpability have been made in settling those cases and nor have any of the claimants withdrawn their allegations. This is a mediated settlement. Confidentiality is a very common feature of mediation processes, as in this case. Confidentiality was agreed by both parties, subject to the necessary parliamentary accountability and legal requirements. I hope that the House will understand that I am unable to comment further on the details of the settlement without breaching that confidentiality with the claimants.

The alternative to any payments made was protracted and extremely expensive litigation in an uncertain legal environment in which the Government could not be certain that we would be able to defend Departments and the security and intelligence agencies without compromising national security. The cost was estimated at approximately £30 million to £50 million over three to five years of litigation. In our view, there could have been no Gibson inquiry until that ligation was resolved.

The Government will make a further statement to the House when the relevant police processes have been completed and the inquiry is in a position to begin its work. The mediated settlement actually represents a significant step forward in delivering the Government's plan for a resolution of those issues in the interests of both justice and national security. The settlement has the support of the heads of the Security Service, the Secret Intelligence Service and the Whitehall Departments involved. The Security Service and the SIS are issuing a public statement to that effect today.

In his statement, the Prime Minister also announced plans for a Green Paper on the use of intelligence in judicial proceedings, which we hope to publish in the summer of 2011. It will examine mechanisms for the protection and disclosure of sensitive information in the full range of civil proceedings, inquests and inquiries. We will also consider complementary options to modernise and reform existing standing intelligence oversight mechanisms. The Government are engaging with relevant parliamentary bodies, key stakeholders and our international partners in developing these proposals further. Today's announcement is a very important step forward, and we are closer now to getting the important Gibson inquiry into all these allegations finally under way.

Sadiq Khan (Tooting) (Lab): I thank the Justice Secretary for advance sight of his statement and for our meeting earlier today. I welcome his decision this morning to make this an oral statement to the House, rather than the written statement originally planned. I would also like to put it on the record at the outset that up until November 2004, I was a senior partner at a law firm that acted for a number of the Guantanamo Bay detainees.

Does the Secretary of State agree that statements as significant as this should be made first to the House before they appear in the media? Will he therefore join me in raising concern that this extremely important announcement was leaked to ITN's "News at Ten" programme last night?

On the substance of the right hon. and learned Gentleman's statement, the House is united in its complete rejection of torture and mistreatment. That goes for the practice of and collusion or complicity in torture. It is
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illegal, it is internationally banned, and no Government should have anything to do with it. The Labour party has been, and will remain, completely opposed to Guantanamo Bay. We took action in government to remove all the British citizens and all but one resident from Guantanamo Bay, and my right hon. Friend the Member for South Shields (David Miliband) ensured that Britain's Government were the first to get all their citizens out of there. What steps are this Government taking to secure the release of the one remaining resident still in Guantanamo Bay, Shaker Aamer? I note that the hon. Member for Battersea (Jane Ellison), who represents his family, is in her place.

Britain's security services, under all Governments, are required to live up to the highest standards, while protecting our national security. They do an incredible job. Their work is rarely ever recognised, for obvious reasons of secrecy, but they save lives, and we should always remind ourselves of that. We should also place firmly on the record the human rights policy of our security services, and be proud of their stance. As John Sawers, the head of the Secret Intelligence Service, said last month:

To sustain the excellent work of the intelligence agencies, and to ensure that these standards are met in practice, it is vital that whenever allegations are made they are fully investigated.

You will know, Mr Speaker, that the previous Government began the process of publishing the consolidated guidance given to our intelligence officers, which was a process finished by the current Government earlier this year. It was and remains our view that all measures possible should be taken to satisfy ourselves, the public and our allies that if any wrongdoing is alleged, it is fully investigated, that any evidence is gathered and passed on, and that it is dealt with to conclusion. That is why the previous Attorney-General referred two cases where concerns had been raised to the police for investigation, and that is why we look forward to the judge-led inquiry into allegations of complicity in torture now that the civil cases are settled.

Can the right hon. and learned Gentleman confirm that the police will be able to conclude their investigations before the judge-led inquiry begins? Obviously, the House has not been privy to the detail of the settlements and the negotiations, but he will know that there are legitimate questions about the settlements that the Government have come to that mean that these 16 cases will no longer be resolved individually in the courts. We understand that the Government have had to consider this in the light of the ruling by the Court of Appeal in May. Can he confirm to the House that the settlements reached will not pre-judge the inquiry or pass judgement on the actions of our security services in advance of a full investigation?

Will the confidentiality agreement prevent the Secretary of State from telling the House and the public the sums of money involved in these settlements? If so, will he reconsider and agree with us that there is a public interest in knowing the total sum involved in this settlement? Will he commit to scrutiny of the settlements by both the Intelligence and Security Committee and the Public
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Accounts Committee? He said that the claimants would be able to give evidence to the Gibson inquiry. Can he tell the House what investigations within the scope of the inquiry will take place into the allegations in those specific cases? Will the inquiry pass judgment on each individual case? Can the right hon. and learned Gentleman say whether the scope of that inquiry has changed since the Prime Minister's statement to the House in July?

Finally, can the right hon. and learned Gentleman also tell the House whether any other cases remain unsettled, and if so, what decision has been taken on their effect on the inquiry? It is important that the inquiry can be thorough and that its access to documents held by the Government should be as full as that enjoyed by the courts. Can he therefore confirm that the Gibson inquiry will have access to all the same information that has been or would be available to the courts? Everyone will appreciate the need to ensure that Britain's security is not compromised, and that must be reflected in the way that the inquiry operates. However, as the allegations are comprehensively addressed, it is important that the public should have confidence in the process and its outcome. We say again: there is no place for the torture or mistreatment of detainees.

Mr Clarke: I, too, regret the leak. I am having a bad week for leaks. I made a statement yesterday that had been leaked by somebody at the weekend, and last night I was at dinner when I was told that ITV had details of this statement. It is early days in government to have them so frequently-but 'twas ever thus. I will do my best to ensure that there are no leaks of this kind in future.

We continue to press the Americans for Shaker Aamer's release. We are trying to ensure his release, and we are in constant contact with them.

So far as the other questions are concerned, the determination of this Government, as soon as we took office, has been to try to draw a line under these cases and move on, in the light of the policy that the right hon. Gentleman supported, and on which all parts of the House agreed. This country is against torture. This country has a good, high-quality security and intelligence service. We wish to make it quite clear that it is not complicit-and must not be complicit-in the torture or ill-treatment of detainees, so the sooner we resolve these doubts and enable it to get on with its proper job of intelligence, the better. We were bogged down in litigation and complaints which were slowly going not exactly nowhere but could have taken years to resolve, because of all the difficulties with the admissibility of the evidence and the hearing of evidence in public.

For that reason, we have sought to draw a line under things. We published the guidance on treatment of detainees, as the right hon. Gentleman said, which is the first step that we took. We have now resolved these issues in a way that enables us to move on. We still have to wait for the police inquiry, to which he also referred. That is entirely a matter for the police, and no one-no Minister or anybody else-can intervene and start instructing the police on how to conduct such inquiries. We cannot get the Gibson inquiry under way until the police inquiries have been resolved. I do not know how long they will take-I hope that they will not take too long-but that is a matter for the police. If those inquiries lead to prosecutions, we will have to wait for
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the resolution of those prosecutions. If they lead to no prosecutions, we really will be clear to get on to the inquiry that lies beyond.

The settlement, which involves no concession of liability or withdrawal of allegations, does not prejudge the Gibson inquiry in any way. It will be entirely for Sir Peter and his colleagues to decide on the inquiry once its terms of reference have finally been settled. We see the inquiry as looking at the problem in general-that is, looking at the history and deciding whether there were problems and whether there are any lessons to learn, as well as making inquiries about how we might ensure that the standards that the whole House would want to uphold are put beyond doubt for the future. We have not altered the scope of the inquiry since the Prime Minister made his statement, and we expect it to have access to a wide range of information-indeed, all the information that it could reasonably expect. The problem with the courts is either that they cannot have access to a lot of the information because of all the security problems, or that they cannot share it with the complainants and the public. So far as I am aware, the settlements cover all the British residents and citizens from Guantanamo Bay who are making complaints. We are not aware of any other cases that could be raised on all fours with those.

The settlement has saved us money and, most importantly, time. It has stopped the intelligence service spending man-hours on sifting through evidence and coping with litigation, but it must remain confidential. It is legally confidential and could be reopened if either side broke that confidentiality, so I am afraid that I am unable to tell the right hon. Gentleman the precise sums involved, but the gain that has been achieved by mediating the claims is considerable and in the national interest.

Several hon. Members rose -

Mr Speaker: Order. There is much interest in this subject, and immediately afterwards we have a ten-minute rule motion followed by the first day in Committee of a very important constitutional Bill, so there is a premium on brevity from Back-Bench and Front-Bench Members alike.

Richard Ottaway (Croydon South) (Con): Having been a member of the Intelligence and Security Committee for the past five years, I have reached the uncomfortable conclusion that if there is not to be a total breakdown in the intelligence-sharing relationship with the United States, my right hon. and learned Friend has reached the right conclusion. However, does he agree that he must now find a way of conducting such litigation without compromising national security? Has he considered expanding the scope of the Green Paper from civil cases to criminal cases?

Mr Clarke: I am grateful to my hon. Friend for his sensible proposition. The same issues arise, and I will certainly bear his suggestion in mind. The problem crops up over and over again. We currently have an inquest into the highly important matter of the explosions on 7 July, which has decided to extend itself into an inquiry into the activities of the intelligence services in informing themselves about possible risks to security throughout the country. Wholly foreseeably, it has run
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crash into the problem of exactly what evidence is supposed to be adduced about that in public. I have no idea-it is for Lady Justice Hallett to resolve-how we move on in that particular case. The Green Paper will be difficult. It will be difficult to reach clear conclusions, but we wish to do so as quickly as possible and the purpose of the Green Paper is to address that problem so that we can be sure that justice is done without compromising national security. At the moment, there is a tendency for claimants, the security service and everyone else to get bogged down in interminable litigation and judicial review. That has to be resolved.

Mr Jack Straw (Blackburn) (Lab): I welcome the right hon. and learned Gentleman's statement and the comments of my right hon. Friend the Member for Tooting (Sadiq Khan). Picking up on the remarks of the Chair of the Foreign Affairs Committee, the hon. Member for Croydon South (Richard Ottaway), may I ask the right hon. and learned Gentleman whether it will be possible for Sir Peter Gibson, who has great judicial experience, to feed into the important work on the Green Paper on the use of intelligence in judicial proceedings?

Mr Clarke: Sir Peter Gibson has indeed been the Intelligence Services Commissioner, and still is, although he will probably have to give that up when he takes on this inquiry. If he wishes to give his views on this difficult question, I am sure that they will be welcome, because, as the right hon. Gentleman knows, he is a considerable expert on the subject.

Tom Brake (Carshalton and Wallington) (LD): Is it a reasonable assumption that the UK Government would not agree to a mediated settlement if there were no evidence whatever of UK involvement in any illegal act?

Mr Clarke: The settlement is not to be taken as an admission of liability, as it were. It was not in the interests of either party to get stuck into civil litigation with a wholly unforeseeable outcome. As I have said, it could have taken years and cost tens of millions of pounds. Its resolution was holding up the wish of the Prime Minister and the Government to get on with sorting out the allegations and having a proper inquiry into them. It has cost us quite a bit of money to mediate them, because the complainants were pressing their claims. The situation is obviously difficult and unusual, but it was right, in the public interest, to pay the money. The idea that we should carry on arguing for the next five or six years-it could have taken that long-and find ourselves in a pale reflection of the Saville inquiry running on and on would not have done anyone any good at all, so we paid the money so that we can move on. I think we have saved public money by not continuing to contest the claims.

David Miliband (South Shields) (Lab): I think there will be natural concern on both sides of the House about Government payments of compensation when culpability has not been admitted. It is, however, important to welcome the right hon. and learned Gentleman's statement today. I also welcome his repetition-word for word, if my memory serves me right-of the previous
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Government's position on torture and other cruel and inhuman treatment. May I bring him back to the subject of the police inquiries and the Gibson inquiry? Like him, I hope for a speedy conclusion to the police inquiries so that the Gibson inquiry can get on with its work and bring some facts to a debate that often sadly lacks them. Would it be possible for Sir Peter Gibson and his team to start work now, even if their public and other work cannot get going yet? It would be a pity if the police inquiries were to drag on for many more months, delaying bringing clarity to this area.

Mr Clarke: I share the right hon. Gentleman's statement of this country's values as far as torture and ill-treatment are concerned. I also share his impatience to see the Gibson inquiry get under way. The Government cannot, however, have the inquiry proceeding in parallel with either civil or criminal proceedings on part of the same subject. For that reason, we must make it clear straight away that both will have to be resolved before we can proceed. If Sir Peter were to start, and if there were a prosecution arising from the police inquiries, a criminal trial might be running in parallel to his inquiry. That would not be possible. We shall wait to see what the police decide, and the moment those matters are resolved, Sir Peter will be able to begin his work.

Tony Baldry (Banbury) (Con): Without prejudicing any of the facts of this case, can my right hon. and learned Friend confirm that any act of torture, or conspiracy to commit acts of torture, by any UK citizen anywhere in the world will be a criminal offence, and that, as a matter of public policy, any evidence obtained by torture will always be inadmissible in UK courts?

Mr Clarke: Yes, I can give a straightforward, positive answer to both those questions. Yes, that is undoubtedly the case, and my hon. Friend has accurately stated the position.

Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC): I thank the Justice Secretary for giving me advance notice of his statement. Given the need to preserve confidentiality in relation to the settlement, how long does he think that that confidentiality will be preserved, bearing in mind the two serious leaks from his Department this week?

Mr Clarke: Exactly the same thoughts have crossed my mind, but I am bound by the confidentiality agreement and I must hope that everyone will abide by their legal obligations. However, I share the hon. Gentleman's uncertainty.

Kris Hopkins (Keighley) (Con): Might it be appropriate for us to seek to recover the costs of the compensation payments from those individuals who are responsible, in particular the former Labour Prime Minister, Tony Blair, who has made tens of millions of pounds since leaving this House?

Mr Clarke: The costs have been incurred in civil litigation between the detainees and the Government, and we have settled the matter. I do not think that that would be proper-I do not agree with my hon. Friend's suggestion, and I do not think that there is really the slightest claim against the previous Prime Minister.

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Mr George Howarth (Knowsley) (Lab): Does the Secretary of State accept that many people will find this settlement a bitter pill to swallow? Will he confirm that, if our intelligence relationship with the United States were to break down, which was a real possibility, it would imperil the lives of many, many citizens of this country?

Mr Clarke: I agree that the Government's relationship with the United States and the close relationship between our intelligence services and those of the United States make a vital contribution to our protection of the security of this country and the lives of individuals here. That must not be jeopardised.

Dr Julian Lewis (New Forest East) (Con): Does the Secretary of State agree that it would be wrong to infer from the fact that there is a confidentiality agreement about the substantial sums paid to these individuals that that confidentiality agreement was imposed at the behest of one side rather than the other?

Mr Clarke: The other side wanted confidentiality as well, I am assured. It is not at all unusual, when mediating an action of this kind, for both sides to agree that they wish to have confidentiality. My hon. Friend is quite right: there is no point in trying to read into this that either side has resiled. Anyone who has been involved in any kind of civil litigation on a less serious matter will know that, often, a party that has been busily protesting its side of the argument can be quite well advised to stop running up costs, to stop wasting management time, to make a reasonable offer and to get out of it. In this case, the considerations were much more important for the public interest. How much longer did we want man-hours in the intelligence services to be absorbed, and how many tens of millions were we prepared to spend on interminable litigation?

Mr David Winnick (Walsall North) (Lab): Leaving aside the cheap political point made by the hon. Member for Keighley (Kris Hopkins) a moment ago, let me tell the Justice Secretary that I find it difficult to understand-as will many people-how compensation could be paid unless there was substantial substance to the allegations made by those who claim that they were transferred illegally and tortured abroad. Surely the clear lesson to be learned is that a state such as ours, based on the rule of law, must ensure that all its officials observe the rule of law, and must not be complicit in any way with agents abroad who carry out torture.

Mr Clarke: It is not unusual in many walks of life for a settlement to be reached with neither party making any concessions on their arguments, but both parties agreeing that the settlement constitutes a sensible way of reaching a compromise in the dispute without going further.

I entirely agree with the statement of principle in the second part of the hon. Gentleman's question. The Government are opposed to torture. Torture is a serious criminal offence. We are opposed to the ill-treatment of detainees and prisoners in any circumstances. We will not condone it, and we will not be complicit in it. Those are the essential values that we must defend, even when we face such dangers as we do now from terrorism in the world.

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Jane Ellison (Battersea) (Con): I welcome my right hon. and learned Friend's statement. Further to his comments about Shaker Aamer, does he agree that if we are to achieve closure gradually over the next few years, it is important that Shaker Aamer is released to this country so that he can give evidence to the torture inquiry in person?

Mr Clarke: Yes, I do agree. I know that there are people who feel very strongly about the release of Shaker Aamer. We continue to be in contact with the United States, and we continue to hope that he will be released and returned to this country. I know that my hon. Friend has been arguing and campaigning for that for some time. I agree with her, and we are doing our best.

Mike Gapes (Ilford South) (Lab/Co-op): Is the Secretary of State comfortable with the fact that millions of pounds are being paid out during the week in which he is announcing big cuts in the legal aid budget? Should we not be ensuring that if those who receive the money themselves breach the confidentiality agreement, or their lawyers do, the money is taken back from them?

Mr Clarke: That might involve reopening the settlement, which I would not be willing to do. We must be careful about the confidentiality because, certainly in principle, the settlement could be reopened. I entirely understand that there are a large number of aspects of this with which everyone is uncomfortable, and which some people will strongly dislike. However, we must keep our eye on the ball, and decide what is truly in the national interest. What is truly in the national interest is allowing the intelligence services to get on with their job, allowing us to put the reputation of this country beyond doubt, and learning lessons that may have to be learned-we do not know yet-from anything that Sir Peter Gibson puts forward.

As for the legal aid proposals, we said that legal aid would still be available, on a means-tested basis, to anyone who wished to challenge the state by way of judicial review. Other claims would have to involve exceptional public interest.

Mr Tobias Ellwood (Bournemouth East) (Con): I welcome the statement. I am sorry that we did not do more to speak out against Guantanamo Bay and everything that it stands for. The creation of the term "enemy combatants" allowed the nation, indeed the world, to ignore the Geneva conventions.

My I ask my right hon. and learned Friend to turn to the issue of compensation for British victims of terrorism overseas? As he will know, those who were caught up in the 7/7 bombings were adequately supported and compensated, but as soon as such an event takes place abroad we see that there is no support whatsoever, whether it be in Bali, Mumbai or Sharm el Sheikh. That is simply wrong, and it needs to change.

Mr Clarke: I know of my hon. Friend's continuing interest in this subject. As part of our policy considerations in the light of the public spending review, we are having to examine the criminal injuries compensation system and the proposed terrorist injury compensation system. We are having to decide how we should judge the
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Government's responsibilities for compensating those who have been injured by crime, either at home-we have always compensated those people-or abroad: I know that my hon. Friend has been campaigning for that.

Keith Vaz (Leicester East) (Lab): A year ago, I wrote on behalf of the Home Affairs Committee to the previous Attorney-General, asking about the police inquiries, and I see that the Secretary of State is surrounded by Law Officers today. While not seeking to influence or instruct the police, which would be totally improper, surely it is in everyone's interests that we know if there is a timetable. What is holding up this inquiry, which has gone on for several years?

Mr Clarke: If the police follow these exchanges, I am sure they will note the right hon. Gentleman's impatience that we move on and get some resolution to inquiries, which I think have been going on for about 15 to 18 months. He knows, because he is as good a lawyer as anybody else involved in these discussions, that it would be quite improper for anyone to approach the police and put pressure on them to put in place a timetable or to press them one way or the other.

Henry Smith (Crawley) (Con): I welcome the Gibson inquiry, and I agree that what has been announced is necessary for the sake of our national security, but will my right hon. and learned Friend acknowledge the concern expressed by many people that a settlement has been paid using British taxpayers' money for foreign nationals-non-British citizens-detained in a foreign country by a foreign Government?

Mr Clarke: The cases involve British nationals or British residents. Although there is one case where that is a slightly doubtful statement, it had already got under way before we came into office, and at some stage the jurisdiction had been accepted. Twelve cases are already before the court, and four would have come before the court if we had not proceeded as we have. We have not started compensating people at large for what happened in Guantanamo Bay. We have only dealt with British residents and British citizens.

Mr Dennis Skinner (Bolsover) (Lab): Have I got this right? Is the Secretary of State paying out large sums of money-he will not tell us how much-to people who are giving no guarantees about not breaking confidentiality? Can it be true that he cannot say to the House that this matter has ended? Is he not buying time? This sounds like money for old rope. The other week, the Conservatives were giving prisoners votes; now they are giving them lottery millions. I think I have already discovered the soft underbelly of this Government.

Mr Clarke: In answer to the hon. Gentleman's question, no, he is not right: the confidentiality is binding on both sides. The people who brought the claims have bound themselves by confidentiality and so have the Government. That is a perfectly usual term of a mediated settlement of what was going to be a hugely expensive problem for the British taxpayer if it had not been resolved.

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Mr Dominic Raab (Esher and Walton) (Con): I welcome the statement. As I understand it, the mediation is designed to address the potential cost of litigation arising from the Guantanamo cases and is estimated to be between £30 million and £50 million. The inquiry is also wider than that, and will deal with non-Guantanamo cases where individuals have been detained in other countries. What is the estimated cost of the potential litigation in those cases?

Mr Clarke: I agree that the Gibson inquiry does have wide terms of reference, although these matters finally have to be settled. It is looking at the whole question of the ill treatment of detainees generally, although, of course, usually in cases where there is some British involvement, such as where our allies have been involved or where we have been engaged in theatre. My hon. Friend the Member for Chichester (Mr Tyrie) takes a great interest in these allegations and as he cannot be present today he has been on the telephone to me, because he is very anxious that rendition should be included.

I cannot give an estimate of the cost, but we are anxious that there should be a reasonable time scale, and so is Sir Peter. We do not want this to go on for ever. The inquiry will take a general look at the position, and it will take such evidence as it feels fit and go as wide as is necessary to guide future British policy. Beyond that I cannot go, however, because in the end this will be a matter for Sir Peter and his two colleagues on the panel.

Kevin Brennan (Cardiff West) (Lab): We know that the settlement was under £30 million because that is what the right hon. and learned Gentleman said was the minimum cost of the alternative. I confess that I am not a lawyer-most British people are not lawyers-but I cannot understand why the Government, in making this settlement, took the view that they wanted to keep the sum of money involved a secret from the British people. Why was that the Government's position in this case?

Mr Clarke: This was negotiated and the other side wanted confidentiality, and it was settled on the basis of confidentiality, subject to parliamentary accountability. I understand the hon. Gentleman, and, with great respect, I anticipated his questions, as they are going to occur to quite a lot of people. We could settle this on the basis of confidentiality and we have done so. We have notified the National Audit Office, I think that we offered a briefing to the Chairman of the Public Accounts Committee and we have briefed the Chairman of the Intelligence and Security Committee, but it would be folly to break the legal confidentiality, which was part of the settlement, if the result is to jeopardise the settlement and put us back where we started.

Ian Austin (Dudley North) (Lab): I am sorry to strike a discordant note, but ordinary decent people out there are going to think that the world has gone mad. People making wild, unsubstantiated and baseless allegations of torture are getting more money than victims of terrorism here in London. If, as the Secretary of State says, it is the law that has forced him to do this, what people out there will want to hear from him are assurances that he will accelerate proposals to change the law and ensure that we never have any of this nonsense again.

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Mr Clarke: It is the rule of law, I am afraid. The hon. Gentleman is prejudging the claims that were being fought out before the courts. The claims were for compensation for serious problems that these detainees had suffered-I have met these people. The argument was about the complicity of the British security services, which was not and is not admitted. The detainees were bringing a legal action. It might be that had this ever been fought to a conclusion, the court might have come to the hon. Gentleman's conclusion that these claims were baseless, but we are never going to discover that now, because we have settled this. We did so as it was not worth discovering, because the bigger public interest was in making sure that we could put a line under all this, get back to having the reputation of our intelligence services restored and get Sir Peter Gibson to advise on how to make sure that that reputation remains intact in future.

Mr Robert Buckland (South Swindon) (Con): Will my right hon. and learned Friend assure me that if these allegations were wild and unsubstantiated, as has just been suggested, the Government would not have been keen to settle these cases?

Mr Clarke: I think that in all forms of litigation it is wrong to start reading whether a settlement made with no admissions on one side and no withdrawal of allegations on the other indicates which side was winning-it does not necessarily do so. The fact is that these two sides were locked in litigation, which was going nowhere fast because of the very difficult legal problem of what evidence can be admitted and whether that evidence should be admitted publicly. If Members want, they can read into this that one side was admitting it or that the other side was producing frivolous claims and got away with murder. The court was entertaining these claims; 12 civil actions were under way. But I think everybody understands from the most extraordinary circumstances of this case that it was better to settle it than just to let it go on to see who eventually won. No one should read into this admissions of liability and no one should read into this that one side packed up its claims; we just agreed to come to a very sensible mediated settlement.

Paul Flynn (Newport West) (Lab): Can we demonstrate that we have learned the lesson of the damage done
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to our reputation by the protracted nature of these investigations by guaranteeing that when fresh allegations are made of bad behaviour, such as the 21 cases cited by The Guardian following freedom of information requests, those present and future allegations will be investigated swiftly and thoroughly?

Mr Clarke: That is why we need the Green Paper, in order to try to establish some rules on the admissibility of intelligence evidence or evidence that may be of relevance to national security. As I believe I said in answer to an earlier question, this issue is cropping up with ever more frequency and we need to resolve it. This is not just something that the Government or Parliament can simply declare we are going to do. We have to resolve this in a way that is compatible with the rule of law, with the judgments that British Courts are likely to come to and with the strong opinions held by the judiciary in this country in their role of defending our fundamental rights, the rule of law and the independence of the courts. We have to consider our international obligations. It will not be easy to produce a Green Paper, but that is the secret to getting back to resolving these matters at a decent pace. I entirely share the hon. Gentleman's wish that we could do that, so that they can be sorted out pretty clearly, fairly and straightforwardly whenever they arise.

Geraint Davies (Swansea West) (Lab/Co-op): You will know, Mr Speaker, that my former constituent Feroz Abbasi was held for many years in Guantanamo Bay in intolerable conditions without charge and was later freed. May I ask the Justice Secretary that if members of MI5 or MI6 are found to be complicit in torture, what penalties will they face?

Mr Clarke: That is speculative. I should make it clear that the allegations in these cases were not, so far as I am aware, that any member of the British security services had directly been involved in torture or ill treatment. They were argued to be complicit-that is, they had known that others were doing that and had somehow been complicit, which is not admitted by the security services. That was the issue. No one, I think, has been accused of torturing. It would be a very serious matter if anybody in the British intelligence services was ever found to have taken part in torture or the deliberate ill treatment of a detainee.

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