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House of Commons

Monday 10 October 2011

The House met at half-past Two o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

Security Relationships (South Asia)

1. Greg Hands (Chelsea and Fulham) (Con): What steps he is taking to establish security relationships in South Asia. [72899]

6. Paul Uppal (Wolverhampton South West) (Con): What steps he is taking to establish security relationships in South Asia. [72904]

The Secretary of State for Defence (Dr Liam Fox): First, I am sure the House will wish to join me in paying tribute to Lance Corporal Jonathan McKinlay of 1st Battalion the Rifles and Marine David Fairbrother of Kilo Company, 42 Commando Royal Marines, who were killed in Afghanistan on 14 and 19 September respectively. Our thoughts, as ever, are with their families and friends, for whom this will be an immense personal tragedy.

The south Asia region is one of the United Kingdom’s highest engagement priorities, and the Ministry of Defence enjoys strong historic relationships with most countries in the region. We have developed a broad range of positive initiatives to enhance co-operation between Ministers, senior officials and military officers, and continue to work to broaden and deepen those links in support of the Government's strategic objectives.

Greg Hands: I join the Secretary of State in his tribute to the dead. May I also tell him that he has our full support, not least in deepening our security ties with south Asia? Will he use this opportunity to explain to the House his involvement in Sri Lanka?

Dr Fox: I shall be delighted to do that, especially in front of so many Members with a new interest in defence.

In 1996, when I was a Minister in the Foreign Office, I worked on what became known as the Fox agreement, which was part of the early peace talks in Sri Lanka. In recent years I have been attempting to work again for reconciliation in that country, and to encourage investment in it. As I said when I spoke there recently, there will be no future for Sri Lanka unless all citizens, whatever their gender, religion or ethnic origin, are treated in the same way and allowed to realise their full potential.

Paul Uppal: I thank my right hon. Friend for the sterling work he has done in respect of Sri Lanka. Will he elaborate on the work that he has done in relation to the Sri Lanka Development Trust, and specifically on the work that Ministers have done in that regard?

Dr Fox: As I have said, the point of involvement in Sri Lanka is to create greater stability which will contribute to stability in the region. I was particularly keen to see a mechanism for investment that could reduce some of the regulatory restrictions imposed by the Sri Lankan Government, on the basis that a proportion of the profits would go into social projects that would benefit ethnic minorities. I still hope that that project will succeed, and give it my full support.

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Mr Denis MacShane (Rotherham) (Lab): Is not the general problem in south Asia as a whole the massive growth, modernisation and aggressive posturing of the Chinese military? As the Chinese launch a blue water aircraft carrier battle fleet, thanks to the Secretary of State’s handling of our affairs we will have no aircraft carriers from which planes can fly for the next 10 years.

Dr Fox: For some 17 of the last 20 centuries China has been the world’s biggest economy, but our thoughts tend to be forged in the period when it was not. China will emerge as a global superpower, and as an Asian superpower it has a right to a blue water capability. What we must try to keep in check is what China’s intent may be, as well as the capability. Looking at the two together will give us an idea of the sort of threat that we may have to counter in the future.

Emma Reynolds (Wolverhampton North East) (Lab): I know that the Defence Secretary has a long-standing interest in Sri Lanka. Can he tell us how many times he has visited that country since becoming Defence Secretary, and how many of those visits were on official Government business?

Dr Fox: I have been there twice; I am not sure whether it was three times. One of those visits was on official Government business, when I met a number of politicians. I also took the opportunity to deliver a lecture on behalf of my friend Mrs Kadirgamar—widow of the late Lakshman Kadirgamar, who was a Tamil Foreign Minister—in which I set out what I thought was a vision that should cut across Sri Lankan politics. I believe there is a widespread view in the House that Sri Lanka needs reconciliation and an understanding of what happened at the end of the war, and that there must be transparency about who was responsible so that the country can move on to a proper process of reconciliation.

Mr James Arbuthnot (North East Hampshire) (Con): May I return my right hon. Friend to the subject of his current responsibilities? Given that Afghanistan is in south Asia, can he tell us whether he agrees or disagrees with General McChrystal’s assessment of how we are doing in that country?

Dr Fox: General McChrystal’s assessment was, in my view, a touch pessimistic; I think we have come a long way. He was referring to the period from 2001 onwards, and we did not make sufficient progress for a large proportion of that time. However, I would argue that since 2006, and particularly since the American surge, we have had the correct force densities to achieve what we wanted. We are now increasingly able to hold the military territory and are increasingly tactically successful, but there must be greater progress in the political and economic spaces.

Levene Review

2. Matthew Hancock (West Suffolk) (Con): What progress he is making in implementing the recommendations of the Levene review of defence reform. [72900]

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The Secretary of State for Defence (Dr Liam Fox): Since entering office, we have made significant progress in transforming defence. The new Defence Board and the Major Projects Review Board are up and running. The Defence Infrastructure Organisation and the Defence Business Services organisation have both been established. We have appointed the first commander of the new Joint Forces Command. In addition to the specific recommendations in Lord Levene’s report, we have completed the basing and reserves reviews, and, even more importantly, established a broadly affordable future defence programme. This ambitious, but achievable, programme of work is part of transformation across defence, the likes of which has not been seen in a generation.

Matthew Hancock: I commend the Secretary of State on the substantial work that he has done so far in implementing the Levene report and ask him to stick to his guns in dealing with the £38 billion hole in the budget. Has he had any word of apology from the Opposition?

Dr Fox: I think it is unreasonable for my hon. Friend to expect an apology from the Opposition as they do not yet understand what they did. They are still deficit deniers who not only fail to recognise what they did to the MOD budget, but do not yet understand what they did to the broader British economy.

Nick Smith (Blaenau Gwent) (Lab): Levene recommended strengthening financial and performance management to ensure affordability and accountability. However, the National Audit Office rated the MOD’s response to the major projects report as weak, and criticised the Department for not submitting the multi-million pound costs for contract cancellations. When will Parliament receive the necessary details to be able to scrutinise these big ticket decisions?

Dr Fox: The Department will be fully audited on its equipment programme, and let me tell the hon. Gentleman one of the big differences we have made. The Defence Board is the primary decision-making body of the MOD, and we inherited a board that had 24 members and was not chaired by the Secretary of State, which in my view was an utterly absurd position to be in. We now have a Defence Board of nine, chaired by the Secretary of State and with far more vertical management structures, accountability and responsibility.

Defence Exports

3. Caroline Nokes (Romsey and Southampton North) (Con): What steps he is taking to promote defence exports. [72901]

The Parliamentary Under-Secretary of State for Defence (Mr Gerald Howarth): Ministers and officials from across the Government continue actively to promote British defence exports overseas, led by the Prime Minister and my right hon. Friend the Secretary of State for Defence. Last month the UK hosted the defence and security equipment exhibition, which served to showcase the best of the UK’s defence and security industries, and was attended by me and my ministerial colleagues. The

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Hold it. The exhibition afforded us the valuable opportunity of meeting overseas delegations and British and overseas companies.

Caroline Nokes: I thank the Minister for that response, and particularly for drawing attention to an exhibition at which companies from my constituency were exhibiting. Will he join me in congratulating Britain’s defence industry, which remains the second largest exporter in the world and employs more than 300,000 people in the UK, and can he confirm whether the coalition’s policies on defence exports have seen any change compared with those of the previous Government?

Mr Howarth: I thank my hon. Friend for that very challenging question, because this Government have a great deal to be proud of, and one thing we have brought to the business of promoting defence exports is enthusiasm for helping our friends and allies to protect themselves in what is a very dangerous world. I am delighted to be able to tell my hon. Friend that in the past year the UK’s share of the defence export market has increased by 4%, which is no mean feat.

John Woodcock (Barrow and Furness) (Lab/Co-op): If the Minister is being so enthusiastic and it is all going so well, can he tell the House why British Aerospace has been forced to cut 3,000 jobs across the north-west and Yorkshire, citing the failure of exports as one of the principal reasons for its decision?

Mr Howarth: BAE Systems did not actually cite exports as being one of the problems. What it cited was the fact that it is a multinational company operating in a number of markets where there is pressure on the budgets—its principal market is the United States of America. It may have escaped the hon. Gentleman’s attention, but the US is looking to make defence cuts of $1,000 billion over the next 10 years, and that is affecting us all. However, the good news is that the fact that the US has to make savings means that it may well be more receptive to the sort of products made in his constituency and in others across the United Kingdom.

Mr David Davis (Haltemprice and Howden) (Con): The Minister is doing an excellent job of promoting British defence exports. The purpose of a defence export Minister is to promote exports so that our industry will be reinforced and strengthened, thereby helping to defend the country. He will know that, as part of its strategy, BAE Systems intends to sell 350 to 500 Hawks to the USA, not one of which will be built in Britain, and that the company is, at the same time, closing a factory in my constituency, costing 900 jobs. Does he think that that is consistent with the Government’s strategy of trying to defend the British defence industry?

Mr Howarth: I was very grateful to my right hon. Friend for bringing the trade unionists representing workers at both Brough and Warton to see me at the Conservative party conference in Manchester the other day. I will tell the House what I told them, which is that we believe that the Hawk is a fantastic, proven training aircraft—I have had the privilege of flying it recently. As he knows, the new T2 has the most sophisticated onboard air-combat simulator. The company and I are working very hard, along with my ministerial colleagues,

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to impress on the United States that it already operates the T-45 Goshawk, much of which came from Brough, and I hope that it will be able to buy the Hawk. Although the aircraft is unlikely, in serial numbers, to be built in the United Kingdom, the company hopes that there will be real prospects along the whole supply chain for British industry.

Mr Russell Brown (Dumfries and Galloway) (Lab): I am sure the Minister recognises that one of our best engineering manufacturing sectors, which is world-leading as well as cutting edge, is the defence sector. Obviously, that brings with it the potential rewards of defence exports. Will he give a commitment that ongoing investment in research and technology will be linked closely to the scope to promote exports?

Mr Howarth: Exportability is a key component of all our procurement decisions; we are trying to build in exportability, not only to generate revenue, but to reduce the unit costs of the equipment to our armed forces. I can also tell the hon. Gentleman that we would not be having to make some of the difficult decisions that we are having to make had it not been for the destruction of the public finances by the previous Prime Minister and the shadow Secretary of State for Defence. If they had not destroyed the public finances of the United Kingdom, my right hon. Friend the Secretary of State would not have had to make the difficult decisions that he has had to make.

Defence Contracts (SMEs)

4. Andrew Stephenson (Pendle) (Con): What progress he has made on increasing the number of small and medium-sized enterprises bidding for defence contracts. [72902]

The Parliamentary Under-Secretary of State for Defence (Peter Luff): This Government value the flexibility, responsiveness and innovation that SMEs bring to defence, which is why we are taking a number of actions to make it easier for them to participate in defence programmes, both as direct suppliers and as subcontractors. We are simplifying our bidding and contracting processes to make them easier for SMEs. I now chair an SME forum for representatives of small businesses, so that they can better understand and respond to the particular issues they face in doing business with the defence community. We will also set out a number of more specific measures in the White Paper that we will publish later in the year on equipment, security and technology.

Andrew Stephenson: I thank the Minister for that answer. I recently met Stephen Shepherd of S Dawes Weaving and Chris Blackadder of Howorths Textiles—both are manufacturers in Nelson, in my constituency. Those SMEs are interested in bidding for more work from the MOD. I would be grateful if the Minister could offer them and other SMEs in my area any advice on bidding for and winning more contracts.

Peter Luff: I am happy to reassure my hon. Friend, and Mr Shepherd and Mr Blackadder, that we have a cunning plan to help SMEs, as I hope my original answer suggested. For example, we are revising our internal guidance to ensure that SMEs are not rejected

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at the pre-qualification stage on the basis of rigid turnover-to-contract value ratios. I would be very happy to arrange for Mr Shepherd and Mr Blackadder to meet departmental officials to ensure that they are fully informed of the opportunities they now have.

Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): In answer to a question I tabled in June, the Minister suggested that only about 50 of some 6,000 new contracts placed directly by the MOD in 2010-11 across the UK are known to have been awarded to Scottish-based SMEs. Given that that is based on an estimate, does he not agree that it is unacceptable that the MOD does not have the actual figures so that we can scrutinise the amount of work going to SMEs and, at the same time, end some of the myths promoted by the separatists?

Peter Luff: I sort of agree with that question and I sort of do not. I do not think that it is our job to keep careful records of exactly which SMEs get which business, but it is part of our job to ensure that Scotland shares fully in the benefits of defence expenditure. I get very surprised when the Scottish nationalists frequently represent Scotland as in some sense losing out, which the hon. Gentleman alluded to in his question. That is simply not the case. I have visited Scotland on many occasions over the past few months and seen the massive footprint of defence in Scotland and the massive contribution made to employment and jobs, all of which will be at risk in an independent Scotland.

Gordon Birtwistle (Burnley) (LD): Westland helicopters has a licensing agreement with Boeing to build Chinook helicopters. Why was the order for 14 new Chinooks worth £1 billion given direct to Boeing rather than the licensing agreement being used to give the order to Westland so that it could take on half the work?

Peter Luff: I think it is stretching a point a bit to define AgustaWestland as an SME, but nevertheless I am happy to confirm that I happen to have in front of me the previous Government’s defence industrial strategy, which says of AgustaWestland that it is important to understand that AgustaWestland’s role is

“neither predefined nor guaranteed, but dependent on their performance and the value for money of their propositions.”

Our position is very similar and I am happy to be able to confirm to my hon. Friend that the contract we have for the construction of the new Chinook helicopters will lead to some £350 million-worth of work flowing to the British supply chain, which—

Mr Speaker: Order. We are extremely grateful to the Minister, but we need to move on.

Angus Robertson (Moray) (SNP): Last week, in a written answer, the Minister confirmed that the MOD’s estimate for the number of contracts issued in the last financial year was 2,370 in England but only 50 in Scotland. Does he believe that that is fair and equitable?

Peter Luff: I do not know about you, Mr Speaker, but I am a half-full man, and the Scottish nationalists seem to be talking about half-empty glasses. I think the hon. Gentleman is quoting extremely selectively from the answer I gave him and, for what it is worth, I share his disappointment about the SME performance. I do not

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believe the figures or trust them, because they are extraordinarily low. I have seen the vibrancy of the Scottish defence sector for myself on a number of visits and I believe that the share of business is much higher. I invite the hon. Gentleman to abandon his ludicrous plans for an independent Scotland and join me in building a still more robust defence industrial base in Scotland rather than talking it down all the time.

Mark Lancaster (Milton Keynes North) (Con): I congratulate the Minister on the steps he is taking to encourage more SMEs to bid. One criticism we often hear from SMEs is that they are lured into bidding for contracts, only to lose out to much larger firms at the last round with little or no feedback from the MOD. May I encourage the Minister to ensure that in such cases SMEs get full feedback on why their bids have failed?

Peter Luff: I absolutely agree with my hon. Friend, who makes a very powerful point. If any hon. Member has an example of an SME receiving inadequate feedback from my Department, I want to hear about it. SMEs deserve full feedback. They have an awful lot that they can bring to defence; their innovation and the cost savings they can offer are extremely important and they must be told why they have failed when they do fail.

Comprehensive Spending Review

5. Ian Austin (Dudley North) (Lab): What assessment he has made of the adequacy of his Department’s budget during the comprehensive spending review period; and if he will make a statement. [72903]

The Secretary of State for Defence (Dr Liam Fox): On 18 July 2011, I announced that the defence budget is now broadly in balance over the decade and adequate to enable the Department to fulfil its objectives, including success in Afghanistan and Libya, delivery of the Future Force 2020 and the major process of transformation that follows the strategic defence and security review.

Ian Austin: Men and women in the west midlands have always made a huge contribution to the armed forces, not least at MOD Donnington, which provides a first-class logistics service, ensuring that forces get the right kit in the right place at the right time. Will the Secretary of State assure the House that he will use those resources to ensure that the logistics commodity services site at Donnington is retained as the main logistics site for the MOD, safeguarding the 2,000 jobs that depend on it, and will he meet representatives of the work force to discuss this issue?

Dr Fox: I and any of my ministerial colleagues will be very happy to meet the hon. Gentleman to discuss the issue. We are keen to retain as much of the defence infrastructure, naturally, as possible within the constraints we are set given the budgetary position in which the Department finds itself. First, may I pay tribute to the excellent logistics the hon. Gentleman has described? We will do what we can to retain what we can.

Mr Julian Brazier (Canterbury) (Con): One of the really excellent initiatives that my right hon. Friend has pressed for to make capacity in defence affordable is the

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decision to move various elements towards the reserves. May I ask when we can expect a full response to the reserves review? He has already given a very positive preliminary response.

Dr Fox: I would like to be able to do it before Christmas, but, as my hon. Friend will understand, there is a lot of very detailed work to be undertaken. Perhaps the biggest challenge is the fact that we are pouring £400 million into the reserves over this Parliament—an unprecedented amount to put into that organisation, which was very badly run down by the previous Government. There will be challenges in absorbing that amount of money and, of course, the rate at which we are able to build up the reserves will determine the rate at which we are able to change the ratio with the regulars.

Gemma Doyle (West Dunbartonshire) (Lab/Co-op): The Government have used the issue of cost as the main reason they are scrapping the office of the chief coroner. This is a Justice lead, but it affects fallen servicemen and women and their bereaved families. The Royal British Legion has submitted a compromise proposal in which it outlines reforms that could be made to the coronial system at a much lower cost than the Government estimate. Has the Secretary of State reviewed this proposal and does he support it?

Dr Fox: I have had conversations with ministerial colleagues over this and although I am broadly sympathetic to some of the changes outlined, the hon. Lady is right that this is a Justice lead. For her to say that the Government simply use cost as a means of having to make reductions is, again, not to understand what it is to inherit a budget with a £38 billion black hole. Of course we have to learn to live within our means, and we do not yet know from the Opposition what their budget would be and which parts of the SDSR they accept and do not accept. In fact, we hear very little from them except negative criticism. It seems they have nothing constructive at all to say on the matter.

Medical Care

7. Derek Twigg (Halton) (Lab): What recent discussions he has had on the medical care of wounded service personnel and veterans. [72905]

The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan): Given the importance that the whole Government, and especially my right hon. Friend the Secretary of State for Defence, place on this issue, both he and I have numerous discussions with ministerial colleagues and others across the Department, Government and the community and voluntary sector on a regular basis.

Derek Twigg: I thank the Minister for his answer. He will be aware of the concerns expressed by families recently about the care for seriously wounded and injured service personnel who will have to be discharged from the armed forces because of their injuries—including about their care in the NHS thereafter. What mechanisms have he and his colleagues put in place to ensure that those service personnel get the same standard of care as that provided currently by Defence Medical Services?

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Mr Robathan: I think the hon. Gentleman and I would agree a great deal about this. We are extremely concerned about the future of many badly injured service personnel when they leave the armed forces, and that is why we have put in place a transition protocol. It is also why I often have meetings with Ministers in the Department of Health—indeed my next one is on Wednesday—to discuss how, going forward, we can better serve those who are badly injured. I beg your indulgence, Mr Speaker, but the hon. Gentleman will know of the Army recovery capability that was put in place by the previous Administration, which is similarly helping very badly injured people to go forward with their lives in future.

Bob Stewart (Beckenham) (Con): The question I was about to ask was properly asked by the hon. Member for Halton (Derek Twigg), so I shall sit down.

Mr Speaker: The hon. Gentleman is setting an example that others could usefully follow.

Dan Byles (North Warwickshire) (Con): Effective medical support is essential to any operation, so will the Minister join me in wishing 22 Field Hospital a successful forthcoming tour of Afghanistan, particularly as some 30 servicemen and women from 22 Field Hospital are in the Public Gallery watching these proceedings?

Mr Robathan: I certainly join my hon. Friend in wishing 22 Field Hospital a good tour. May I say to any Member of the House on either side who has seen the excellent work done by our medical personnel—both regular and reservist—out in Bastion and elsewhere that we should be very grateful to them for the hard work they do? Many reservists give up several months of their time to help our armed forces.

Mr Kevan Jones (North Durham) (Lab): The right hon. Gentleman has said that the Government are committed to the Army recovery capability introduced by the last Labour Government. A key element of that was the tracking of personnel in the health service once they had left the armed forces. Is that still part of the programme, and if so, when will the deadlines for implementation be met?

Mr Robathan: The hon. Gentleman rightly says that we are pursuing the policy of the last Government, because on this occasion it was quite right. We are indeed tracking personnel. I am afraid that this is a work in progress, but I will ensure that he receives an update when there is something to update him on.

Bob Russell (Colchester) (LD): The right hon. Gentleman will be aware of the close collaboration between the Ministry of Defence and the NHS in dealing with traumatic injuries through the joint unit. Bearing in mind that the NHS does not provide the same level of care for our wounded military personnel, is there not a case for the NHS and the MOD setting up a joint unit to deal with ongoing treatment?

Mr Robathan: The hon. Gentleman is quite right. The question of how the transition protocol works is very important, particularly when it comes to health issues. We already have a national centre in Birmingham—

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the Queen Elizabeth hospital—and I was at the opening in January; it deals with trauma in particular. We are going forward with the Department of Health to ensure that proper treatment is available. We will announce a report on prosthetics shortly, because we must make proper treatment available for people who are injured in the service of their country, and who suffer throughout their lives as a result.

Training and Support (Armed Forces)

8. Kevin Brennan (Cardiff West) (Lab): What assessment he has made of the co-operation on training and support of British armed forces with armed forces in the middle east and north Africa; and if he will make a statement. [72906]

The Minister for the Armed Forces (Nick Harvey): Defence engagement has a long and continuing role in contributing to wider UK regional objectives through programmes of world-class training and education. Our relationship with many countries includes work on counter-terrorism that is important to the security of the United Kingdom. That engagement creates lasting relationships with our armed forces and enhances our ability to work together towards regional security and stability.

Kevin Brennan: Have British armed forces played any role in the training of forces involved in repression in Saudi Arabia or Bahrain?

Nick Harvey: We do not believe so, but we have trained staff over a period of years in those countries, and it is impossible to say with any certainty what they have subsequently gone on to do. When engaging in training programmes, we do our utmost to spread British principles and approaches to military activity, and have done so for many years, in the hope that that will rub off on the countries we are training.

Patrick Mercer (Newark) (Con): Having been involved in a very similar training team, albeit some time ago, I can confirm the value of such training teams, but the weight and burden of those teams falls heavily on the combat arms. Can the Minister reassure the House that cuts in personnel will take into account the need to maintain our combat power for training roles such as those under discussion?

Nick Harvey: My hon. Friend makes a good point. Obviously, as numbers contract, the demands put on all our personnel are difficult to balance, but the work to which he alludes, and to which he has given his time in the past, is very important for all the reasons that I have specified, and we will ensure that that is taken into account in deciding force numbers.

Mr Jim Murphy (East Renfrewshire) (Lab): I join in the Secretary of State’s earlier condolences to the relatives of those who have lost their lives in Afghanistan. The whole House will be in awe of the remarkable professionalism of our forces, and all that they have achieved in Libya as part of a wider coalition, so will the Minister for the Armed Forces update the House on progress in persuading other allies who are less involved in the fighting to bear more of the burden in helping to train and stabilise the country?

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Nick Harvey: The shadow Secretary of State makes a very good point, and that is certainly something we would want to see as we go forward. There are countries that we hoped would have played a more active part in the engagement in Libya, and we very much hope that they will bear more of the responsibility. It is too early yet to have any particular international agreements in place, but he can rest assured that work is in progress towards the objective that he identified.

Eurofighter Typhoon

9. Margot James (Stourbridge) (Con): What recent assessment he has made of the export prospects for the Eurofighter Typhoon. [72907]

The Parliamentary Under-Secretary of State for Defence (Peter Luff): Typhoon has already been exported to Saudi Arabia and Austria, where it is in operational service. It is also competing in a number of other important markets. Oman has announced its intention to buy Typhoon, and India has selected it for the final phase of its medium multi-role combat aircraft competition. It is also competing in a number of other countries, including Japan, Malaysia and Qatar.

I confidently expect an increase in interest in Typhoon, following its highly successful air defence and ground attack roles over Libya, in which it has consistently demonstrated exceptional levels of reliability, performance, accuracy, and overall cost-effectiveness over and above our very high expectations.

Margot James: I thank my hon. Friend for his answer. Does he agree that Typhoon’s success is down to UK leadership in the design and manufacture of world-class aircraft and that Government support is needed, not just to maximise export potential but to defend this vital national interest?

Peter Luff: On the question of supporting exports, I know the close interest that my hon. Friend takes in Japan, particularly through her role in the UK-Japan 21st( )century group. I am happy to reassure her of the close interest that I personally have taken in the export campaign to Japan, which I visited in April, where I discussed Typhoon with many Japanese interlocutors. I am hopeful of a successful outcome. She is absolutely right, too, to emphasise the importance of the underlying design skills and technology—for example, our strong support for Europe’s first second-generation active electronically scanned radar will be key to our success in these export campaigns.

Alison Seabeck (Plymouth, Moor View) (Lab): Ministers talk rather too often about buying off the peg from our international partners, including the USA which, we understand, is struggling at the moment, too. Should Ministers not seek to enhance sales, encourage value for money from British companies and ensure that we retain jobs and skills in the UK? Perhaps the Minister can tell the House whether, given the fall in international demand for top-quality British goods such as the Typhoon and subsequent job losses, he intends to ensure that such phrases are not used in future and that orders go to the UK first.

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Peter Luff: I welcome the hon. Lady to her new position and, as it is her first outing, I will be relatively kind in my response to her. [ Interruption. ] I have to say that I have read with considerable interest her party’s defence review procurement document, which advocates a similar policy in relation to off-the-shelf and modified off-the-shelf, so she should read what her own party is suggesting before criticising us. As for her comment that demand for Typhoon is falling, it is true that the four partner nations are stretching out production, but demand is rising fast around the globe, and I am confident that Ministers have a strong commitment to their export diaries, which will lead—

Mr Speaker: Order. We need to move on; I am grateful to the Minister. [ Interruption. ] Order. The Minister’s answers are simply too long—we need to make progress.

Mr Ben Wallace (Wyre and Preston North) (Con): I am grateful for the efforts that the Defence Secretary and his team have made to try to export Typhoon and secure jobs for my constituents in Lancashire at Samlesbury and Warton. However, should the British Government be successful in helping to win those orders abroad, what guarantees can we try to secure from BAE that this is good news for work in Lancashire, and not just good news for BAE shareholders?

Peter Luff: I think that it is guaranteed that it will be good news for Lancashire. Of course, the precise composition of the bids is a matter for the company, but I think that it understands the importance of protecting its design skills in my hon. Friend’s constituency, for which he speaks up vigorously and effectively in the House.

Military Equipment

11. Steve McCabe (Birmingham, Selly Oak) (Lab): What procedures exist to ensure that British military equipment used in operations abroad does not fall into the hands of others. [72909]

The Minister for the Armed Forces (Nick Harvey): Robust accounting and security measures exist to prevent the loss of equipment through theft. In the rare event that equipment is damaged and cannot be recovered because of a risk to life or likely loss of further equipment, it is destroyed to prevent it from being used by others.

Steve McCabe: I thank the Minister. In the light of his response, can he say anything more about the announcement at the weekend of a £1 million fund to stop weapons proliferation in Libya? Does that fall within his domain, and exactly what is that money going to be used for?

Nick Harvey: The concerns that we have in Libya do not relate to our own equipment that our troops have used, but relate to a proliferation of equipment that we believe may now be at large in Libya, much of it having been previously held by the Gaddafi regime. It is in the interests of everyone around the globe that that situation is contained and controlled as quickly as possible, and we have sent personnel out to assist the new Government in Libya in getting those munitions under control.

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Andrew Bridgen (North West Leicestershire) (Con): Does my right hon. Friend agree that the report by the Select Committee on Defence on the handling of assets by the Ministry of Defence in 2009-10 is another damning indictment of the mismanagement of the MOD under the previous Government?

Nick Harvey: It is true that there has been a problem with inventories and accounting for equipment. Audit processes have identified that, on occasions, that has been a matter of misclassification of items. The situation in practice is probably less gloomy than it sometimes looks in reports.

Mr Speaker: Mr Michael Connarty—not here.

Defence Exports

13. Tom Brake (Carshalton and Wallington) (LD): What steps he is taking to ensure that any increase in the level of defence exports is transparent. [72911]

19. Dr Julian Huppert (Cambridge) (LD): What steps he is taking to ensure that any increase in the level of defence exports is transparent. [72917]

The Minister for the Armed Forces (Nick Harvey): The UK has one of the most rigorous and transparent export control systems in the world. All applications to export controlled military goods are assessed against the consolidated EU and national arms export licensing criteria, and decisions are published in the quarterly reports on strategic export controls. Following the Arab spring, the Foreign Secretary undertook a review of export licensing for equipment that might be used for internal repression. That concluded

“that there was no evidence of any misuse of controlled military goods exported from the United Kingdom.” —[Official Report, 18 July 2011; Vol. 531, c. 79WS.]

Tom Brake: In July the Foreign Secretary said that more work needed to be done between the Foreign and Commonwealth Office and the Department for Business, Innovation and Skills to strengthen certain aspects of UK arms control. There is an even greater urgency for this work to be done following reports today of an investigation into a EADS Saudi defence contract. Can the Minister set out what work has been done on transparency and UK arms control and how, with a policy of providing weapons to any willing country, he will ensure that those weapons do not fall into the wrong hands?

Nick Harvey: Every export licensing application is considered on a case-by-case basis against our strict export controls. In terms of transparency, detailed information on our export policy is on the Foreign Office website. Information on decisions by destination is listed on the BIS website, and the licensing criteria are also published. My right hon. Friend is right to say that further work is ongoing between the Department for Business, Innovation and Skills and the Foreign Office, and they are at present working out how that will be taken forward.

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Dr Huppert: The Minister is, I am sure, aware of the number of cases in which there have been allegations that defence exports have ended up with people whom we would not want to have them and used for purposes that we would not want to see. He will also be aware that there are a number of cases of defence lobbyists acting in a shady and disreputable manner. Will he consider taking further steps to ensure transparency in who gets the weapons, what checks there are and how lobbyists operate?

Nick Harvey: The Government are committed to a thriving British defence and security industry because it is vital for our economy. It is worth more than £6 billion a year to the economy, but we will maintain strict export controls. We promote defence exports that are consistent with the criteria, because that strengthens British influence and helps support British industry and jobs.

Chris Bryant (Rhondda) (Lab): We all want a strong defence industry, but we also want a responsible one, which is why I am proud of the fact that it was a Labour Government who abolished the manufacture, use and sale of cluster munitions in this country. The protocol also places an obligation on us to try to make sure that other countries, including our allies, are no longer using cluster munitions, because all too often such use means that many civilians are killed or maimed many years afterwards. What are the Government doing now to make sure that the Americans stop using cluster munitions?

Nick Harvey: I very much agree with the hon. Gentleman’s comments; I, too, was a campaigner on that issue. I am very pleased that the UK duly signed up to that, but clearly our ability to control the US is no greater now than it was at the time of the convention. We will continue to apply pressure on the Americans, but we need to be realistic about the likelihood of their changing their policy.

Ian Lucas (Wrexham) (Lab): What discussions has the Minister had with our European partners to ensure that when a licence is refused by the United Kingdom, similar steps are taken by our European partners and they do not take advantage of our progressive approach to export licensing abroad?

Nick Harvey: That is a good question. I will check what sharing of information we have with our EU allies when we turn down an application, and I will write to the hon. Gentleman in due course.


14. Simon Hughes (Bermondsey and Old Southwark) (LD): What meetings he has had with his ministerial colleagues on the stabilisation of Libya. [72912]

17. Mr Philip Hollobone (Kettering) (Con): What discussions he has had with his ministerial colleagues on recovering from the national transitional council in Libya any of the costs to his Department of the deployment of armed forces to that country. [72915]

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The Secretary of State for Defence (Dr Liam Fox): The National Security Council, chaired by the Prime Minister and attended by myself and other ministerial colleagues, meets regularly to discuss the ongoing operations in Libya, including stabilisation. In terms of recovering the costs of operations in Libya from the national transitional council, NATO’s intervention in Libya under a clear UN mandate has saved countless lives and is helping to bring new hope to a country that has suffered tyrannical rule for 42 years, but the UK did not play a leading role in this action for financial return.

Simon Hughes: Given the extended nature of the Libyan conflict, the tribal nature of the country and the experience in Iraq, will the Defence Secretary assure me that maximum attention will be given to conflict prevention and conflict resolution issues from now onwards, so that we do not have a recurrence of victory followed by great difficulties thereafter?

Dr Fox: That is a key question. I visited Libya at the weekend. The right hon. Gentleman mentioned Iraq, but Libya has three big advantages coming out of this conflict compared with Iraq. First, we were careful not to cause civilian deaths, which has given the impression that we value human life higher; secondly, we did not target civilian infrastructure, so it is likely that the country will be able to move much more quickly to economic recovery; and thirdly we encouraged the NTC not to engage in a process similar to de-Ba’athification. I therefore find Libya in a much better place than Iraq was.

Mr Hollobone: Given that the cost of our involvement in Libya is about £260 million and rising, at the same time as we have the biggest budget deficit in the G20, should we not be asking Libya and/or the Arab League to repay the cost, just as the Kuwaitis did after the first Gulf war?

Dr Fox: As I said, we went into Libya not on the basis of recovering the costs, but because we believed there to be an imminent humanitarian disaster. Mindful of such disasters in previous generations, we can be proud that we averted this one. How costs are apportioned and whether other countries can help with those wider costs can be discussed, but only after the conflict has been concluded, which it has not yet been.

Mr Speaker: On question 14, I call Mr John Spellar.

Mr John Spellar (Warley) (Lab): No. 15, Mr Speaker.

Mr Speaker: I do not think that the right hon. Gentleman has quite taken my hint, but I am sure that he can ask his question under this one with great dexterity.

Mr Spellar: Is there not great concern in Libya about the future of the surface-to-air missiles? When I asked the Minister for the Armed Forces about this back in June, he said:

“We continue to assess the situation in Libya closely, including the potential proliferation of man-portable anti-aircraft missiles.”—[Official Report, 28 June 2011; Vol. 530, c. 672W.]

From his answer earlier, he does not seem to have been doing a great deal. This is a major threat and we need some evidence of urgency and some results.

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Dr Fox: This is one of the issues that I discussed at the weekend. The right hon. Gentleman is right that it is an urgent matter. We have provided a small team of UK military specialists to work alongside the Libyans and the United States in preventing surface-to-air missile proliferation. We have already disarmed a number of these missiles and identified a large number of sites where further activity will take place.

Topical Questions

T1. [72924] John Robertson (Glasgow North West) (Lab): If he will make a statement on his departmental responsibilities.

The Secretary of State for Defence (Dr Liam Fox): My departmental responsibilities are to ensure that our country is properly defended now and in the future, that our service personnel have the right equipment and training to allow them to succeed in the military tasks and that we honour our armed forces covenant.

John Robertson: Does the Secretary of State agree with his junior Minister, the Under-Secretary of State for Defence, the hon. Member for Aldershot (Mr Howarth), that brave Gurkha veterans should be described as asylum seekers, or does he agree with the Gurkha justice campaign that these comments are shocking and unacceptable—or is the cat out of the bag on immigration and defence cuts?

Dr Fox: I am afraid that the hon. Gentleman has done a grave disservice to my hon. Friend, who never used any such words and has the highest regard for all those sacrifices made in the past.

T2. [72925] Andrew Stephenson (Pendle) (Con): Many small and medium enterprises in Pendle are keen to know when the yellow book review will be completed. Is the Minister in a position to update the House on progress?

The Parliamentary Under-Secretary of State for Defence (Peter Luff): I am delighted to be able to do precisely that; it was published a few hours ago. [Hon. Members: “Read it out!”] It runs to more than 100 pages, so I think that I would be in trouble with the Speaker if I did that. Section 4 is specifically about SMEs. I invite the whole House to pay careful attention to this important document and to take part in the consultation on it.

Mr Jim Murphy (East Renfrewshire) (Lab): May I say how much I agree with the Secretary of State when he says that we cannot allow the unpopularity of the Iraq conflict in many quarters to prevent us from standing up for what we believe in in other countries around the world? That is why there remains consensus across parties about the action in Libya and Afghanistan. However, now that there is a timetable for the drawdown of our combat role in Afghanistan, can he update the House on how much longer he anticipates Her Majesty’s forces remaining engaged in Libya?

Dr Fox: We have set out, in accordance with the plans President Karzai himself has set out, that we do not plan to have a combat role in Afghanistan beyond the end of 2014. The big question now is what we do

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beyond 2014 and what signals we send to Afghanistan and Pakistan about our determination to provide regional stability. We have already said that we will take charge of the officer training academy and are encouraging other countries to do the same. I anticipate that there will be a role for special forces and mentoring and training as well as what I have set out. That is one of the issues we discussed at the NATO summit last week, and we will set out further details at the Chicago summit in May.

T4. [72927] Dr Julian Lewis (New Forest East) (Con): Given the great pressure on MOD finances, has my right hon. Friend considered following the example of the shadow Defence team by accepting very substantial sponsorship from generous British defence companies, such as Cellcrypt?

Dr Fox: No.

T3. [72926] Robert Flello (Stoke-on-Trent South) (Lab): The Royal British Legion has said that the creation of the chief coroner

“is essential to improving bereaved Armed Forces families’ experience of military inquests”

and that Government proposals will

“fail to meet the needs of bereaved Armed Forces families.”

The Secretary of State’s rant about his budget shows that he has not read the Royal British Legion’s proposals, so will he, in the quiet moments that I am sure will follow later this afternoon, take the time to explain to the Cabinet Office and the Ministry of Justice that failing to introduce a chief coroner will be a betrayal of our brave military personnel?

The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan): As I thought had been made pretty plain earlier, this is a matter for the Ministry of Justice, not the Ministry of Defence. However, I hope that everyone in the House would agree that the important thing is that well-trained coroners do a good job in their inquests on deceased service personnel. That is what we are working to achieve, and I know that the Ministry of Justice is determined that that shall happen.

T8. [72931] Anna Soubry (Broxtowe) (Con): Members of the armed forces often have to move very quickly and with short notice, which can affect the education of their children, particular if it happens when school has already started. Will the Minister therefore congratulate the George Spencer academy in my constituency, which intends to change its policy so that priority is given to such children, especially those moving to the Chetwynd barracks, which is also in my constituency?

Mr Robathan: I certainly join my hon. Friend in congratulating that school. She will know that admissions codes can now allow favourable treatment for children of service personnel, and we must not forget that the Department for Education has introduced the pupil premium, which will also benefit service children. We have also put £3 million forward to assist schools that have a disproportionate number of service children when they have problems. In general, though, service children do rather better in education than other children.

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T5. [72928] Mr Barry Sheerman (Huddersfield) (Lab/Co-op): Is the Secretary of State aware that the future of high science, research, innovation and design in our country very much depends on a fine balance among the defence industries, universities and the private sector? Many of us believe that that is now at risk because of failing demand from the defence sector.

Peter Luff: I am very sorry indeed that the previous Government introduced such massive cuts to the defence science budget, which did great harm to the issues that the hon. Gentleman is rightly concerned about. I can reassure him that the defence White Paper on equipment, support and technology, which will be published later this year, will address these issues very seriously, because he is right to draw the House’s attention to this very important question.

Mary Macleod (Brentford and Isleworth) (Con): I recently visited the Brentford air cadets, squadron 342, in my constituency and was really impressed by the training that the young people are given in respect, discipline and community responsibility. What more can we do to encourage more young people to get involved in the cadets?

Mr Robathan: I am grateful to my hon. Friend for that question, because I, too, absolutely support the cadet forces. They do fantastic work that is very much in tune with the Government’s policy of the national citizen service. They keep children off the streets and give them excellent training and discipline, which I think we all applaud. We also have the youth engagement review, but I will brief her on that later if she would like, because you, Mr Speaker, would stop me if I went on too long now.

T6. [72929] Kerry McCarthy (Bristol East) (Lab): The Secretary of State and I have a considerable number of constituents who work at the MOD’s Abbey Wood site in Filton. There is real uncertainty there at the moment about how many jobs will be lost, what new work will be sent there and what work will be lost. Could he give some certainty to the people working at the plant about the future of their jobs?

Peter Luff: I make regular visits to the Filton Abbey Wood site, as the hon. Lady knows, to discuss those issues with the staff, and I appreciate the concern that they face. The chief of defence matériel, Bernard Gray, is currently conducting a full review of matériel strategy and how the organisation will be structured in future, and I hope that its outcome will give precisely the certainty that she rightly seeks for her constituents.

Alun Cairns (Vale of Glamorgan) (Con): I congratulate the Secretary of State on the leadership that he has shown on Libya. What action is he taking with his Libyan counterparts to help prevent the risk of insurgent activity, in preparation for the national transitional council taking complete control?

Dr Fox: The first thing that we require is an end to hostilities; then we require disarmament and the militia’s incorporation into national forces; and then we require

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the formation of a Government as soon as possible—a Government who include all elements of Libya’s geography and ethnic make-up and are cross-generational.

T9. [72932] Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): The Under-Secretary of State for Defence, the hon. Member for Aldershot (Mr Howarth), waxed lyrical in earlier answers about his support for small and medium-sized businesses and for SME exports, so why are his Government forcing them to bear more of the cost of showcasing their equipment throughout the world?

The Parliamentary Under-Secretary of State for Defence (Mr Gerald Howarth): We are not imposing additional burdens on industry, but clearly we have to take into account the costs of supporting it in these difficult times and in view of the economic inheritance that we were bequeathed by the last lot.

Bob Russell (Colchester) (LD): What future does the Secretary of State envisage for the Ministry of Defence police?

Mr Robathan: The Ministry of Defence police are, sadly, as everybody else is, touched by the strategic defence and security review because of the £38 billion black hole that we were left, but I envisage a future for the Ministry of Defence police—providing security for our service personnel and their families—and I visited them in Portsmouth dockyard only last month.

Mr Bob Ainsworth (Coventry North East) (Lab): The future of European security will be enhanced by military capability, interoperability and co-operation; it will not be enhanced by an unnecessary duplication of military headquarters. What more can we do to convince our European colleagues that that is not a sensible proposal, particularly at a time when defence budgets are falling across the continent?

Dr Fox: The Government oppose, and I have always very strongly opposed, any concept of an EU military headquarters—and we will continue to do so, whether any proposal is made up-front or attempted with permanent structured co-operation through the Lisbon treaty. NATO is the cornerstone of defence in Europe, and it shall continue to be so, because it brings the United States into the defence of Europe. Such a concept would be a diversion, as the right hon. Gentleman says, and a dilution of scarce resources; it would not produce one bullet, one battle tank or one aircraft; it would be pretentious; and it would be bureaucratic—none of which commends it to me.

Richard Graham (Gloucester) (Con): The Ministry of Defence has invested considerably in additional reserve forces, which are welcomed by many of us across the House. What steps might the Secretary of State be able to take to ensure that the jobs of our reservists, such as those serving in 6th Battalion The Rifles in my constituency, will be protected, especially given that 10 of them are returning from Afghanistan this week?

Mr Robathan: My hon. Friend is quite right to raise that issue, and I pay tribute to those reservists who go out to Afghanistan, including those from 6 Rifles. We

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have the Reserve Forces Act 1996 and the Reserve Forces (Safeguard of Employment) Act 1985, both of which should protect reservists deployed on operations, but he is quite right to raise the issue, which we keep under close review.

Mrs Madeleine Moon (Bridgend) (Lab): Ministry of Defence medical services has a good record of engagement with the carers of wounded service people, but when servicemen are transferred to the NHS system, carers are often told that, because of patient confidentiality, they cannot be engaged with and information cannot be shared. Will the Minister ensure that such continued engagement with carers takes place for service personnel, especially those with traumatic brain injury or mental health problems, once they enter the NHS?

Mr Robathan: The hon. Lady raises a very important issue, of which I was not aware. Practitioners in the NHS certainly should get full medical records from the military medical services. If she were able to raise some specific cases with me, I would be most interested to hear them, and I look forward to hearing from her.

Mr Graham Stuart (Beverley and Holderness) (Con): The reason why so much public money has been invested in BAE technology is to protect British interests and British jobs. What steps can Ministers take to ensure that jobs at Brough and other BAE sites are retained in this country and not shipped abroad?

Mr Howarth: As I have tried to explain to the House, since we took office we have made huge efforts, led by the Prime Minister, to promote these first-class British products. The Typhoon is a world beater—not, as some press commentators have suggested, a cold war legacy programme. It is the most advanced combat aircraft in the world today, and the Hawk is the most proven and effective military training aircraft. We are working flat out to try to promote those in the interests of the constituents of everybody in the House today.

Mr Gerry Sutcliffe (Bradford South) (Lab): What further support are the Government going to give to ex-service people who belatedly discover that they have post-traumatic stress disorder?

Mr Robathan: The hon. Gentleman raises a very important issue, not least because PTSD can take many

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years—up to 16 years—to show itself. I am sure that the hon. Gentleman has read the report of my hon. Friend the Member for South West Wiltshire (Dr Murrison), called “Fighting Fit”, which leads a way forward.

Things are not perfect yet, but we are going forward. We are deploying additional mental health nurses across the country in NHS hospitals and we are working closely with Combat Stress to ensure that ex-service personnel get the opportunity, through both a call line and otherwise, to get treatment as necessary. It is extremely important that they get that treatment.

Dr Julian Huppert (Cambridge) (LD): Today is world homeless day. What recent progress has the Secretary of State made in reducing the number of ex-service people who find themselves homeless?

Mr Robathan: This looks like my afternoon.

Although there are homeless ex-service personnel, in fact their number is much less than one might expect. Analysis has shown that those ex-service personnel who are homeless very often left the forces some 20 and more years before.

Mr Kevan Jones (North Durham) (Lab): It is 3.8%.

Mr Robathan: I hear from the Opposition Front Bench that the figure is 3.8%, and one might expect more than that. We do work with Veterans Aid in London, among others, to ensure that the maximum support available is given to ex-service personnel who, unfortunately, find themselves homeless.

Katy Clark (North Ayrshire and Arran) (Lab): Is the Minister aware of the campaign by the Royal British Legion Scotland to get a Ministry of Defence hospital unit based in Scotland? I understand that the tendering process for that is due to commence in 2013. Will the Minister look into the issue and try to get a better geographical spread for such units?

Dr Fox: The hon. Lady is absolutely right, and it is something that we will look at. As I said at the conclusion of the basing review, it is essential to remember that Her Majesty’s forces are for the whole Union, not for any one part of the Union. Having them more evenly spread is part of what the United Kingdom is all about.

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Defence Responsibilities

3.32 pm

The Secretary of State for Defence (Dr Liam Fox): I would like to take this opportunity to inform the House about my defence responsibilities in the light of considerable media coverage and the interim report this morning by the permanent secretary. I would like to discuss the meeting in Dubai in June 2011, my relationship with Mr Werritty and my involvement in Sri Lanka. If I may, Mr Speaker, I will take these in turn.

As I said yesterday, I accept that it was a mistake to allow distinctions to be blurred between my professional responsibilities and my personal loyalties to a friend. Mr Speaker, I am sorry for this. I have apologised to the Prime Minister, to the public, and, at the first opportunity available, to the House.

Let me deal first with the Dubai meeting, which has been the subject of so much speculation. Mr Werritty first met Mr Boulter of Cellcrypt on 1 April 2011 in Dubai. This meeting was arranged by the lobbying firm Tetra. At this time, Mr Boulter asked for a meeting to discuss Cellcrypt. Nothing happened for the next three months, but during the week of 13 June, Mr Werritty was dining in Dubai at a nearby table and Mr Boulter again requested a meeting. Mr Werrity suggested that it might be possible the following day, as I was coming through on my return from visiting forces in Afghanistan. The meeting—[Interruption.]

Mr Speaker: Order. Let me say at this early stage that the Secretary of State is making a full statement. It is a matter of basic courtesy that that statement be heard. By now the House can trust me, I think, to ensure that there will be a full opportunity to question the Secretary of State, but he must first be heard.

Dr Fox: Thank you, Mr Speaker.

The meeting took place on the morning of 17 June, where there was a general discussion about Cellcrypt and what it might be able to do to support the MOD. At the end of the meeting, in the interests of probity, Mr Boulter mentioned that he was in a dispute with 3M alongside the MOD, and I acknowledged this. Beyond this, there was no discussion of the case or any individuals involved, nor was any classified information discussed.

That night, Mr Boulter sent e-mails claiming that he had had discussions on the issue of George Buckley’s knighthood. This correspondence later became the basis of a blackmail case in the United States. I made it clear that I was willing to testify that I had never had any such discussions. Subsequently, Porton Group has since clarified that Harvey Boulter did not in fact discuss the matter of the knighthood.

I accept that I should not have had a meeting with a potential commercial supplier without an official being present. This was entirely my fault and I take full responsibility for it. After the meeting, however, I notified my private office and asked them to prepare a brief on the subject of Cellcrypt.

Let me turn now to Mr Werritty, whom I first met in 1998. While I was in opposition, he worked as a paid intern in my House of Commons office and at this time had a parliamentary pass. He also received payments for research work undertaken during my time in opposition.

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Records currently show total payment of some £5,800 over the total period. He has not received any payment from me while in government. He has a very wide range of long-standing business, international relations and political links of his own. He did not receive any payment as a result of the meeting in Dubai, nor has he been involved in any defence procurement issues.

As a matter of transparency, I would like to inform the House that I have met Mr Werritty in the margins of trips of various sorts overseas, including annual leave and holidays with family and friends, on a total of 18 occasions.

As the permanent secretary points out today in her report, Mr Werritty visited me at the Ministry of Defence over 16 months, either in my office or in the refreshment facilities, on 22 occasions. The majority of these were short social meetings. In only four instances were others present. Three related to Sri Lanka and one was with Matthew Gould, known socially to both of us. It was also during one of these meetings in June that I first learned about, and told him to stop, using his business card stating that he was my adviser. Mr Werritty was never present at regular departmental meetings. During private meetings we did not discuss either commercial or defence matters. He had no access to classified documents, nor was he briefed on classified matters.

As I said yesterday, I accept, with the benefit of hindsight, that I should have taken great care to ensure a more transparent separation of Government, party political and private business and that meetings were properly recorded to protect myself and the Government from any suggestion of wrongdoing. Again, I accept my personal responsibility for this. The permanent secretary is making arrangements to ensure that such a separation of powers will exist in the future. In addition, because I do not believe that to be enough, Mr Werritty will not make private visits to the MOD in future, will not attend international conferences where I am present, and we will not meet socially abroad where I am on official business. This should ensure that no appearance of potential wrongdoing will occur in the future.

Since 1996, when I was a Foreign Office Minister, I have been involved in attempts to help resolve the conflict in Sri Lanka. As the war with the Tamil Tigers drew to a close, I worked with a number of others in business, banking and politics. It was my aim to create a mechanism that would allow reconstruction funding to occur through the private sector. This was called the Sri Lanka Development Trust, which seeks to promote post-conflict reconciliation and development in Sri Lanka. The aim was to use a proportion of profits made to fund development projects in Tamil communities. Neither myself, Mr Werritty nor others sought to receive any share of the profits for assisting the trust.

During the Shangri-La dialogue of the International Institute for Strategic Studies in 2010, I attended a bilateral meeting with the Sri Lankan Foreign Minister. This was attended by Mr Werritty and MOD officials and was minuted. The purpose of the meeting was to make it clear that although I would no longer be able to participate in the project, the others involved would continue to do so.

In December 2010, Mr Werritty and I met with the Sri Lankan President in London. This was not an official visit, hence why it was held in the Dorchester hotel. In July 2011, I gave a lecture hosted by Mrs Kadirgamar,

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the widow of my friend and Tamil former Foreign Minister Lakshman Kadirgamar, who was assassinated by the Liberation Tigers of Tamil Eelam in 2005, as the House will know. Mr Werritty is a personal friend of Mrs Kadirgamar and helped with the arrangements, as it was a personal not a ministerial commitment. I know that there are some in the Sri Lankan diaspora who do not want any contact with the current Sri Lankan Government, but as I said in my lecture, unless we have reconciliation based on mutual tolerance and respect for all citizens regardless of ethnic origin, we will not find peace in that island.

I have made it clear throughout this process that my desire is to be as transparent as possible, and I accept where I have been at fault, as Ministers must. Following the interim findings, the Prime Minister has asked the Cabinet Secretary to work with the permanent secretary to complete the report, addressing all the remaining questions that have been raised publicly and privately by this issue, and I shall fully and willingly co-operate with this.

Mr Jim Murphy (East Renfrewshire) (Lab): I remind the House of my properly declared interest and thank the Secretary of State for his statement. I have enjoyed shadowing him in the House of Commons, and until now we have had a good working relationship. Indeed, he will know that I defended him for the first month of this case, until he started to defend himself and his answers unravelled, but this whole crisis is self-inflicted. There have been daily revelations which barely 36 hours ago he described as “baseless”, but yesterday he was forced into a partial and belated apology. It is not a partial apology we want; it is full and complete disclosure of all the issues, so today we will listen with great care to any questions that he does not fully answer.

Some will question the loyalty of a friend who abuses his contacts in that way, and many will doubt the judgment of a Secretary of State who willingly allows himself to be professionally compromised in that manner. But this is not just about the Secretary of State’s judgment; it is also about his conduct and breaches of the ministerial code. The code is clear. Paragraph 7.1 says:

“Ministers must ensure that no conflict arises, or could reasonably be perceived to arise, between their public duties and their private interests”.

Yesterday the Defence Secretary apologised for the “misleading impression” that his actions may have given. His apology in itself is an admission of a breach of the code. So it is beyond doubt that he has breached the ministerial code; the only issue is on how many grounds and on how many occasions?

Paragraph 5.2 of the code says:

“Ministers have a duty to give fair consideration and due weight to informed and impartial advice from civil servants”.

The Secretary of State claims that the infamous meeting in Dubai happened by chance. Today we have another version of events: he has told the House that he did not discuss defence or classified matters with Mr Werritty. How then did Mr Werritty know his diary and how he was travelling back from Afghanistan? Why did the Secretary of State exclude civil servants from that meeting? Did he ask for advice and briefing before the Dubai meeting? Did he seek civil service advice in advance of any of the 22 meetings with Mr Werritty? If so, will the Secretary of State publish all such advice, together with

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a full list of topics discussed and those who attended, and any actions taken by his private office or his special advisers following those meetings?

The Secretary of State has admitted that distinctions between his professional responsibilities and personal loyalties have been blurred. Again, the ministerial code is clear on this. Paragraph 7.3 says:

“On appointment to each new office, Ministers must provide their Permanent Secretary with a full list in writing of all interests which might be thought to give rise to a conflict.”

Paragraph 7.4 continues:

“Where appropriate, the Minister will meet the Permanent Secretary and the independent adviser on Ministers’ interests to agree action on the handling of interests.”

So on their first day in a new job every Minister has to make a declaration. Under paragraph 7.5 of the code, statements of ministerial interests are published every six months, and the Secretary of State’s entry makes interesting reading. There are mentions of good organisations such as the Strawberry Line project in his constituency, but there is no mention of his adviser who ran a defence consultancy, arranged his meetings and handed out his business cards across the world.

Did the Secretary of State provide full and complete disclosure to his permanent secretary about his links to Adam Werritty and his defence consultancy, Security Futures? What advice did the permanent secretary give him and what was agreed on the handling of this interest? Will the Secretary of State now publish the record of the information that he supplied to his permanent secretary when he took up this job? In the media this morning, the former Chief of the Defence Staff, Sir Jock Stirrup, is reported as saying that he raised his concerns with the Secretary of State for Defence’s office. Is this true, and has the current or any previous permanent secretary ever raised their concerns about his professional proximity to Mr Werritty with him or his office?

Looking at the ministerial code, it is clear that, on paragraphs 5.2, 7.1, 7.2, 7.3, 7.4 and 7.5, the Secretary of State has driven a coach and horses through the rules. He cannot believe that today’s partial apology gives him a free pass round breaches of the ministerial code. Our forces look to him for leadership. When they step out of line, when they break the rules, they take responsibility and accept the consequences. They, and we, expect no less of the Defence Secretary. We all hope that he has done nothing wrong, but the only way to clear his name is total transparency, which is why this case should now be referred to the independent adviser on Ministers’ interests.

In conclusion, we might never know what got the Secretary of State into this crisis—whether it was arrogance, naivety or hubris. The British people

“expect the highest standards of conduct…We must be...transparent about what we do and how we do it. Determined to act in the national interest, above improper influence”.

[ Interruption. ] Government Members might shout about that, but those are not my words; they are the words of the Prime Minister in the foreword to the ministerial code of conduct. The Prime Minster must now apply those standards to the Secretary of State, otherwise the ministerial code will not be worth the paper it is written on.

Dr Fox: I am not entirely sure what questions arise from that. The right hon. Gentleman asked why no civil service advice was sought before social and private

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meetings. The answer is that civil service advice is not sought before social and private meetings. He asked when the permanent secretary raised concerns. The permanent secretary raised the matter of the business cards with me in August. I told her that I had dealt with that in June when I first saw them. I demanded that they should not be used again and that any subsequent cards should not display either the portcullis or a reference to me as Secretary of State. The right hon. Gentleman has spent most of his time over the last few days focusing on the meeting in Dubai with Cellcrypt. I have set out how the meeting came about, what the conversations were during the meeting, what conversations did not take place, what Mr Boulter said did take place and the action I took as a consequence, which was to ask my private office for a full briefing. No commercial contracts were made and no financial gain was made as a result of any of those discussions. When a man who was involved in a blackmail case is feeding information to the media, which is often taken without question, it is rather difficult to take the shadow Secretary of State beginning his statement without telling us the specifics of the declaration he was making, which is that his Front Bench team took £10,000 from Cellcrypt, the company at the centre of all this, to visit the United States. I hope that today I have answered as many questions as I can; perhaps the shadow Secretary of State might want to answer some that arise for him.

Sir Malcolm Rifkind (Kensington) (Con): May I, as a former Defence Secretary, pay tribute to the robust and effective leadership that my right hon. Friend is giving, which I hope he will continue to give to a Ministry of Defence that has sadly drifted in recent years? With regard to what he said about links with Sri Lanka, may I, from my own personal knowledge going back to the time when he served with me in the Foreign Office, confirm that my right hon. Friend made sterling efforts to try to broker peace between the various factions in Sri Lanka? I think it is a tribute to his integrity and his qualities that he has continued to advance that cause in the years since.

Dr Fox: I am grateful to my right hon. and learned Friend for that. A great deal of work is still to be done in Sri Lanka, and I am very pleased that I was able, eventually, to make an official visit as Secretary of State. I hope that the United Kingdom, with all its historical links to the country, will be able to use the levers at our disposal to try to bring peace to a region where, sadly, too little has been done in recent years to try to bring reconciliation.

Mr Dennis Skinner (Bolsover) (Lab): Experience shows that over the last 40 years these decisions are very rarely decided by the raucous voices behind the Government Front Bench. What the right hon. Gentleman really has to consider is the fact that his friends in the right-wing press—not, now, The Guardian, but The Mail on Sunday, The Daily Telegraph today and probably Kavanagh of The Sun are against him. It looks to me like Cameron is going to get his Fox.

Dr Fox: It is certainly possible to keep a good bottle just a little bit too long. The hon. Gentleman makes a valid point—that these issues are not decided purely

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inside this House, as they reflect the judgments made not just by the media, but by the public in general. Serious issues have been raised here. I accept that, and I accept that they must be investigated fully, which is why I said I would co-operate with the Cabinet Secretary on all the issues raised. It is important not only to be clear that, as I believe, there was no wrongdoing, but to recognise that the perception of wrongdoing also has to be eliminated.

Mr James Arbuthnot (North East Hampshire) (Con): My right hon. Friend has said that he has made a mistake, and he has apologised to the House. Will he accept that many people believe that, compared with the important issues with which he has to deal, this is pretty small-scale stuff? Will he please concentrate on issues such as the conflict we are continuing to fight in Afghanistan, the shortage of money in the Defence budget and the implementation of the strategic defence and security review?

Dr Fox: I am grateful to my right hon. Friend, who does not have to remind me of the list of serious projects with which we are currently dealing—not least with our armed forces in combat in Libya and Afghanistan. It is important for me to continue with that work. We will certainly not be diverted from the important issues. I nevertheless think it important for those in front-line politics to be big enough to say that they are sorry and have made a mistake if they have done so.

Ann Clwyd (Cynon Valley) (Lab): As Mr Werritty joined the Secretary of State, attending defence meetings in various countries, will the right hon. Gentleman assure us that at no stage during those meetings were security issues or security relationships raised? Will he also assure us that Mr Werritty had no pecuniary interests whatever in any of the items under discussion at any of the meetings?

Dr Fox: The right hon. Lady raises a key point with which I thought I had already dealt, but let me deal with it again for her. I have made it clear that at no point did Mr Werritty attend departmental meetings; that at no point did he have access to classified documents; that at no point did he have classified briefings; and, therefore, that at no point was any issue of security affecting the United Kingdom either discussed or put at risk. As for the pecuniary interests of Mr Werritty in those particular conferences, I am confident that he was not dependent on any transactional behaviour to maintain his income.

Richard Ottaway (Croydon South) (Con): I congratulate the Secretary of State on what he has achieved in the Ministry of Defence to date. Does he agree with one of the oldest maxims in politics? Advisers advise; it is Ministers who decide.

Dr Fox: It is Ministers who decide, and, as I have said, I am still awaiting any information or proof that any advice that I was given changed the way in which I made a decision. There has been a lot of speculation and a lot of innuendo, but if someone has an accusation to make—that there was wrongdoing, that there were financial transactions, or that advice was given that changed a ministerial decision—let that person come forward with it.

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Helen Goodman (Bishop Auckland) (Lab): This afternoon the Secretary of State said, “with the benefit of hindsight… I should have taken great care to ensure a more transparent separation of Government…political and private business”. However, we know that he was warned by Sir Jock Stirrup and Bill Jeffrey, the then permanent secretary, about his relations with Mr Werritty. Will he tell us why he ignored their advice and shuffled them off quickly, and will he publish their advice?

Dr Fox: The two individuals that the hon. Lady mentioned were not shuffled off quickly; they retired after long and distinguished service to the armed forces and to the civil service. In any case, as I said earlier, I accept that there was a lack of transparency and clarity, and that, as the permanent secretary pointed out in her report this morning—which I suggest the hon. Lady read —there is a need for more mechanisms in the Department to ensure that the ministerial code is clearly implemented.

Nadine Dorries (Mid Bedfordshire) (Con): I believe that this may be the first time that the shadow Secretary of State, the right hon. Member for East Renfrewshire (Mr Murphy), has mentioned a registered interest. If that is the case, I wonder whether he could tell the House how long he has had that registered interest, and why it has not been mentioned before.

Mr Speaker: Order. The question needs to be put to the Secretary of State. However, it is on the record now, and I do not think that the House can wait any longer to hear from Mr Peter Bone.

Mr Peter Bone (Wellingborough) (Con): I think that Members on both sides of the House will welcome the Secretary of State’s action in coming to the Dispatch Box. I do not recall that, in all my time in Parliament, a Minister has come to the Dispatch Box voluntarily to answer such questions. However, there is one group of people whom we have forgotten today: our armed forces, in Afghanistan and also in Libya, who will be amazed that the House could be packed with Members wishing to discuss a matter relating to a business card when they have a superb Secretary of State getting on with the job.

Dr Fox: I accept that tribute with particular humility, given that my hon. Friend has a son serving in our armed forces at present. I think it important for us to deal with issues such as this and for them to be fully and transparently addressed, but I also think it important for me to recognise that I have very important issues with which to deal. I have just come back from Libya, where I was over the weekend. Those were not, perhaps, the best two days on which to be incommunicado, but none the less a very important task is still in hand. I realise that a great deal of attention and time will have to be given to it, and I still fully intend to ensure that that is my primary objective.

Paul Flynn (Newport West) (Lab): I thank the Secretary of State for the letter in which he apologised for misinforming the House on a matter earlier this year, but his judgment is what is in question today. He confessed his lack of judgment yesterday. Is he a fit person to take what can be life or death decisions affecting our troops in Afghanistan?

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Dr Fox: As soon as I had information from the civil service that there might have been a mistake in a parliamentary answer, I did what you would expect us to do, Mr Speaker, and corrected it immediately. It seems that if we correct mistakes of one kind or another, we are now regarded as lacking in judgment. I think it absolutely correct that, when we make a mistake, we apologise for it; but, as I said earlier, if the hon. Gentleman or anyone else has a substantial charge to make, let him or her bring it out into the open rather than whispering from the weeds.

Tony Baldry (Banbury) (Con): Those of us who were in the House in 1996 will recall my right hon. Friend, as a Minister in the Foreign Office, devoting considerable efforts and energy to the peace process in Sri Lanka. I am sure that any reasonable Member would think it commendable that he has consistently supported the peace process and those involved in it, and I fail to understand why there should be a scintilla of criticism of him for wanting to maintain those contacts and help to bring peace to that benighted island.

Dr Fox: I agree that it would be surprising if anyone did not want that peace to occur, but we have to accept that there are forces in that country, and even more in the diaspora, who do not want anyone to deal with the current Sri Lankan Government. My point is this: however much people may regret what the current Government have done or dislike them, unless we deal with that Government and get proper reconciliation, we will not be able to get peace in that island. [Interruption.] The hon. Member for North Durham (Mr Jones) shouts “Foreign Office” from a sedentary position. The Foreign Office, through the Foreign Secretary, agreed that I should make that visit and, indeed, cleared the speech that I gave, as it believed that because of the contacts I had developed over time in Sri Lanka, I was in a good position to try to take the process forward. In respect of achieving peace, what matters is what works, rather than what is a departmentally strictly delineated process.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): The Secretary of State has twice failed to respond to a specific question, so may I ask him for a third time? When was he made aware that first the permanent secretary and then the Chief of the Defence Staff were concerned about this relationship, what was the advice given to him, and what he did he do as a result of that advice?

Dr Fox: As have I said, I was not aware of any direct approach from them. The first direct approach I can remember was when my current permanent secretary came to me in August and said that she had grave concerns about the use of a business card that had “adviser to the Secretary of State” printed on it. She asked what I was going to do about it, and I was able to reply to her that I had already, in June of that year, decided to stop those cards and demand that they not be used again.

Richard Harrington (Watford) (Con): With the revelations today that the Labour Front Bench took money from Cellcrypt, is it not clear that we are witnessing a conspiracy between a desperate business man and a rotten Labour party?

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Dr Fox: I think we should keep our discussion within the realms of reasonable debate, but I understand the reasons for my hon. Friend’s anxiety. Huge amounts of criticism have been emanating from Cellcrypt in recent times, and the Opposition have said that all they want is to get information. As it has come to light that, in fact, they took a lot of money from that company, we need to know when, and on what terms, that happened, because it raises a potential conflict of interests.

Ian Lucas (Wrexham) (Lab): Will the Secretary of State confirm that he had meetings with Mr Werritty on defence matters in which Mr Werritty had a pecuniary interest, and if so, why does he think he was asked to be there?

Dr Fox: As I have made clear, I am not aware of any specific interests in that sense at all, but if the hon. Gentleman thinks there was any particular pecuniary interest, I am sure the Cabinet Secretary would love to hear from him, as would I.

Mr Julian Brazier (Canterbury) (Con): Is it not the case that taking a close interest in a dangerous and divided country with a civil war going on does, indeed, amount to an interest, but is it not also the case that the framers of the ministerial code took it for granted that people reading it would understand the difference between a public and a private interest?

Dr Fox: I am sure that is correct, but although we may understand that, it does not allow any of us to absolve ourselves of our responsibility to ensure that it is fully transparent and understandable. As I said in a previous answer, although the code is clearly set out, we must now ensure that we put in place processes that make it properly waterproof.

Clive Efford (Eltham) (Lab): It would appear that if anyone wanted to breach the Secretary of State’s security arrangements all they had to do was check the travel plans of Mr Werritty. Can the Secretary of State take me through this: one day Mr Werritty just happened to be in a Dubai restaurant at the table next to that of somebody who had a pecuniary interest in defence procurement and defence expenditure—Mr Boulter—and that just happened to be the day before the Secretary of State was passing through Dubai? We are being asked to accept that, but can the Secretary of State say—I did not hear his answer earlier on—how Mr Werritty knew of the Secretary of State’s travel arrangements?

Dr Fox: Very simply, because I told Mr Werritty, who was in Dubai with his girlfriend at the time, that I would be passing through and that we should meet up. The hon. Gentleman will have to take my word for it that there was a chance meeting with Mr Boulter, and I think that that is perfectly reasonable. [Interruption.] Labour Members are saying, “It is classified”, but we are allowed to tell our friends and family where we are going to be as Ministers, because all Ministers, in ministerial down time, will want to try to get their diaries to coincide. If the Opposition are saying that we can never, as Ministers, divulge to anybody—friend or family—what is in our diary, that is an utterly ridiculous position to take.

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Mr David Davis (Haltemprice and Howden) (Con): The Secretary of State said that this issue will not be resolved in this House. Nevertheless, in coming to the House and presenting his apology to it, he has acted both properly and honourably. Let us put this issue in context. He has been attacked and criticised today by members, or previous members, and supporters of the Blair and Brown Governments, for whom a single meeting without officials or a record was not an issue; they made it a whole system of sofa government. Furthermore, in some cases they took very large sums from the attendance of that and changed public policy. Can the Secretary of State confirm to this House that he neither gained financially, either personally or politically, nor changed public policy in any way as a result of these meetings?

Dr Fox: I know exactly what my right hon. Friend is referring to, but I want to get back to the point that where there are serious allegations we do have to treat them seriously. I go back to the point I made earlier, which was that my contacts with Mr Werritty were neither for his financial gain in any of the issues I have mentioned, nor for my financial gain. However, I do think that in terms of making sure that there is total transparency, we have to make every effort not only to behave properly, but to be seen to behave properly.

Thomas Docherty (Dunfermline and West Fife) (Lab): On the issue of the meeting with the President of Sri Lanka, can the Secretary of State give assurances to the House that the President of Sri Lanka was clear as to Mr Werritty’s status in that meeting?

Dr Fox: Yes, the meeting in London, as the hon. Gentleman will remember, was not an official visit to this country by the President. I was very keen to talk to him about some of the projects that I had been running in opposition but was not going to be able to run in government. That meeting included the Sri Lankan Foreign Minister, a long-standing friend of mine, and the governor of the bank of Colombo, who is also a long-standing acquaintance. I simply wanted to try to make it clear that much as I would not be able, as the Secretary of State and a member of the Government, to continue with what I had done in opposition, there were those who were willing to continue to do that in politics and business. I hope that they will be successful.

Charlie Elphicke (Dover) (Con): Listening to my right hon. Friend’s statement one gets the impression that a company, Cellcrypt, spent hundreds of thousands on lobbyists to try to get a contract and failed to do so. Will he confirm that that understanding is correct? Having failed to get that contract, the company then tried to buy the politics of the Labour party, which is now throwing rocks. Does that not have profound implications for our politics, on both sides of the House?

Dr Fox: Following the meeting in Dubai, when I had been interested in what Cellcrypt could bring to the Ministry of Defence, I immediately called my private office and asked to be provided with a briefing that I could get on my return. The correct way to make decisions about procurement is through our regular procurement process. It is quite reasonable to talk to contractors, as we do on a regular basis. All Ministers

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talk to contractors on a regular basis about what they may or may not bring in terms of capability to the MOD. The question is whether, having been given that information, we make snap decisions or we put it through due process, and this—Cellcrypt—is being put through due process.

Joan Ruddock (Lewisham, Deptford) (Lab): The Secretary of State has told us today that on 18 separate occasions he met Mr Werritty on overseas trips. In my experience as a Minister, in the margins of visits the diary secretary records where the Minister intends to be. Was that the case on the 18 separate occasions on which the Secretary of State met his friend on official visits?

Dr Fox: As I said earlier, there were a wide range of visits, and they included overseas visits that were family holidays and so on. I included them all for the sake of completeness. A number would have been conferences, such as the International Institute for Strategic Studies Shangri-La dialogue in Singapore or Bahrain, for example, that Mr Werritty was attending in any case. Many of the occasions would have been on the margins and would not have been political meetings. Of a very small number of the meetings I have had, which I set out today, three were about Sri Lanka, where I included him because of the experience we had in opposition, and one was with a member of the diplomatic staff whom we happened both to know personally. I know that the right hon. Lady is trying to get to genuine and legitimate concerns, but I can assure her that we have tried at all times to separate the professional work abroad, either party political or governmental, and the social.

Nadhim Zahawi (Stratford-on-Avon) (Con): Is my right hon. Friend aware that the Labour party’s so-called independent report on defence procurement was supported by the same company, Cellcrypt, as is funding Front-Bench trips overseas?

Dr Fox: I was aware of that issue. The right hon. Member for East Renfrewshire (Mr Murphy) talked about his declared interest today, but I think that it would have been better to have been frank and upfront and to have said that the particular company concerned is the central company in many of the allegations about the meeting in Dubai on which the shadow Secretary of State has so focused. I am not saying that that would in any way diminish his case, but I think it would have been better for transparency all round.

Huw Irranca-Davies (Ogmore) (Lab): I apologise for my voice, Mr Speaker—I was shouting at the television over the weekend. Several years ago, on my first day as a Minister in the Wales Office, the ministerial code was put in front of me and I was asked clearly and precisely whether there were any associations with individuals or organisations that I should declare. I declared them, including my long historical link with the Scout Association. I was advised at that point—and I listened to my private secretary—to break that link on a temporary basis and as far as I know that organisation was not involved in arms lobbying or trading, and neither is it now. Did the Secretary of State make clear his association to this individual and to this lobbying company at all points or did he hide it from his private secretary and the

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permanent secretary? If he did make it clear, was he ever given advice that this should not be done?

Dr Fox: Like all Ministers, on taking office I believed that I was fully within the ministerial code. As I have said to the House several times today, I accept that I have allowed the blurring of the distinctions on occasion and I fully accept my personal responsibility for that. I do not believe that there was a specific allegation for me to deal with at the time, nor a specific interest to deal with.

Conor Burns (Bournemouth West) (Con): May I say to my right hon. Friend that Combat Stress came to the House of Commons earlier today, to the Speaker’s apartment, to launch the next phase of its campaign, “The Enemy Within”, highlighting the plight of veterans who are suffering from mental illness due to the scars of war? As the Secretary of State made his statement on defence responsibilities, he will doubtless have those responsibilities in mind. It is the mood on the Government Benches that we hope that the matter will quickly be put behind him so that he can get on with the excellent job he has been doing as Secretary of State.

Dr Fox: My hon. Friend is not the only one who would like this put behind us quickly, but I think that it is more important that it is put behind us thoroughly and comprehensively. I do not wish in any way to diminish the seriousness of some of the questions that have been raised and I hope that what I have set out today, and the process the Prime Minister has set out for the Cabinet Secretary to examine further questions, will ensure that such an inquiry is thorough rather than quick.

Chris Bryant (Rhondda) (Lab): The Secretary of State is right—[Hon. Members: “Hear, hear.”] I am sure that hon. Members will agree with everything I am about to say. The Secretary of State is right that it is perfectly understandable for a Minister, when travelling abroad, to bump into a friend. It is also perfectly understandable for a Minister, even in politics, to have a friend—[ Interruption. ]The hon. Gentleman is one of mine, so he should be careful. However, the Secretary of State is stretching our credulity by suggesting that he could have done so on 18 separate occasions. Will he provide us with a list of the meetings when he went abroad when Mr Werritty was not present? Is the only reason that Mr Werritty was able to be there because he had access to the Secretary of State’s diary? From what we see he is going to continue to have access to it—surely, that is inappropriate.

Dr Fox: In general, it is inappropriate for the civil service or anyone else to release ministerial diaries, which could be a threat to the security of the Minister or to national security. Where Ministers choose to give information in advance about where they will be to family or friends, that is perfectly reasonable. I would say to the hon. Gentleman that Ministers—particularly Defence and Foreign Ministers—travel abroad with excessive regularity and I would be happy to provide him with a list of the times I have been abroad, excluding those 18 times, over the year and a half that I have been Secretary of State.

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Dr Julian Lewis (New Forest East) (Con): My right hon. Friend has been very frank indeed in accepting that it was a bad mistake not to have an official present at the Dubai meeting and he has apologised for that. Does he also accept that the main victim of an official not being present was he himself? Had an official been present and had a proper note been taken, it would not have been possible for anyone else at the meeting to misrepresent what was said and then have to withdraw it afterwards.

Dr Fox: Yes, it does damage to me as the Minister to have failed to take the appropriate precautions of having a meeting minuted and having an official attend. It also, sadly, does damage to the Government in that it might give the appearance of something being wrong. However, I will say to my hon. Friend that it beggars belief that a particular individual at that meeting, Mr Boulter, has said that I discussed with him a knighthood and said that I was going to have the Cabinet discuss a knighthood being taken away. I was very clear that I was willing to give evidence in a US court if required, because I was very clear about what was said and what was not said. Mr Boulter has subsequently given a totally different version of events, which, sadly, leads me to believe that he is a very poor witness and lacking in credibility.

Emma Reynolds (Wolverhampton North East) (Lab): I should like to ask the Defence Secretary again today exactly how many unofficial visits he has made to Sri Lanka, who sponsored those visits, why they are not registered in the Register of Members’ Financial Interests and what role Mr Werritty played in any meetings during those unofficial visits that the Secretary of State had with Government officials in Sri Lanka.

Dr Fox: There are no meetings that were unofficial that were not recorded and I made one official visit as Secretary of State. As I have said, the role of Mr Werritty in that was, first, in the official meeting, to organise the lecture for the Kadirgamar Institute, which he did, and, secondly, to ensure that we were able to try to get continuity in the efforts we were trying to bring to investment and subsequent diversion of profit into social projects. I think that is an enterprise that is still worth following.

Gavin Barwell (Croydon Central) (Con): May I commend my right hon. Friend for his apology to the House and for his answers to the questions that have been raised? Over the weekend, I met two servicemen who are shortly to be deployed to Afghanistan. Now that those answers have been provided, I am sure that they will want him, and indeed the whole House, to focus on that conflict and on sorting out the mess in the defence budget that we inherited from the previous Government rather than on this story.

Dr Fox: I am grateful to my hon. Friend for his very kind words. We will continue to focus on those issues because we cannot afford not to. They are literally a matter of life and death and they have to be what we give our greatest attention to. These political matters are matters of extreme discomfort for those of us in the firing line and for our families; however, we have to

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recognise that the trials and tribulations that we face in public life are nothing compared with the threats facing those in our armed forces.

Mr Frank Roy (Motherwell and Wishaw) (Lab): The Secretary of State has just told the House that Mr Werritty had no access to confidential material. The House knows that the Secretary of State’s diary is highly confidential. Has the Secretary of State ever shown Mr Werritty a copy of his diary, or discussed what was in his diary?

Dr Fox: As I have said, it is entirely appropriate for Ministers to show anybody they like what is in their diary. What is not acceptable, under departmental rules, is for the Department to release a diary to any third party when that is not agreed by a Minister. However, because of the question that the hon. Gentleman raises, I have instructed the Department not to release any part of my diary, on paper, to any individual—friend or otherwise.

David Morris (Morecambe and Lunesdale) (Con): First, I would like to thank my friend for being so up-front and honest. I have known him for many years, and he has always been an upstanding gentleman. Let us put this in the truest context: the Opposition are trying to accuse him of some kind of negligence, but 10 years of no spending reviews have been forgotten about; that is true negligence, and that should be put before the House today. That is what the troops are worried about.

Dr Fox: All those involved in the complex matters of defence and national security will want to ensure that we are able to put this issue to bed as quickly as possible and to deal with it, as I said, as thoroughly and transparently as possible, because there are great issues at stake for our country, our armed forces, and those countries that we are involved with. I hope that we, and the Cabinet Secretary, can deal with this as quickly as possible. I assure my hon. Friend that in the meantime I will not be deflected from what I understand are the great burdens and responsibilities of my office.

Angela Smith (Penistone and Stocksbridge) (Lab): Can the Secretary of State inform the House whether any information has been passed to Adam Werritty concerning the legal case involving Porton Capital and 3M?

Dr Fox: As far as I am aware, the only information has come from Porton Capital’s lawyers, who sent a clarification following the meeting in Dubai to say that the account of the meeting given by Mr Boulter was incorrect. The lawyers accepted, on the legal case that Porton Capital faced with 3M, that none of the accusations made by Mr Boulter were correct, and no confidential information was given.

Penny Mordaunt (Portsmouth North) (Con): I want to place on record my support for the Secretary of State. There is no one I would rather have going in to bat for our armed forces and our country when it comes to the difficult issues in his in-tray. Can he assure me and the House that the issues in his statement will not

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detract from the way that he deals with the other issues in his in-tray, and particularly our immediate opportunities to get our allies to pull more weight?

Dr Fox: It would be disingenuous of me to say to the House that being confronted, as some of my other colleagues have been, by a non-stop bombardment from the media, day in, day out, and the effect that that has on our families, does not in some way make it more difficult to get on with our daily work. I thank my hon. Friend for her comments, and say to her that when we are confronted with these situations, we sometimes find unexpected resilience.

Kevin Brennan (Cardiff West) (Lab): May I clarify that the Secretary of State has told the House today that his officials were, on his instructions, routinely giving out details of his ministerial diary to Adam Werritty, who then passed on that information to the people sat next to him at a dinner table in Dubai? Is that, in essence, what he has told the House today?

Dr Fox: The hon. Gentleman will see, when he looks at the official record, that that is not what I said. I was perfectly capable, without officials, of telling any of my friends where I would be, if I wanted to meet up with them. We have to be very clear—the permanent secretary is clear about this in her report today—that it has to be understood by the civil service that it does not give out to anybody details of ministerial diaries unless that is personally sanctioned by a Minister.

Dan Byles (North Warwickshire) (Con): I strongly echo the sentiments of my right hon. Friend the Chairman of the Defence Committee and others: British servicemen and women are daily risking their lives in the deserts and mountains of Afghanistan, and they will be looking in bewilderment at the priorities of Her Majesty’s loyal Opposition. Will the Secretary of State confirm to the House that he will not allow smear, innuendo, and lack of substance on the part of the Opposition to distract him from the important business of his job?

Dr Fox: When these stories began to appear in earnest last Wednesday during our party conference, I faced the option of trying to stay and deal with immediate issues or attending the NATO ministerial in Brussels and going on to the planned visit in Libya to Tripoli and Misrata. Had I decided to cancel any part of that official programme because of what was happening domestically and politically in the United Kingdom, it would have sent the wrong signal, not only in this country, but to our allies and to those who are fighting for us overseas.

Toby Perkins (Chesterfield) (Lab): Returning to the subject of the business cards that said that Mr Werritty was the adviser to the Secretary of State, and which the Sri Lankans believed were true, will the Secretary of State confirm that those business cards were known to him before he asked for them not to be used in June, and will he say whether they were funded from his parliamentary expenses or from Ministry of Defence expenditure?

Dr Fox: I was first aware of them in June, when I saw them for the first time. I commented that it was inappropriate for a portcullis to be used on a private

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business card and that it was not appropriate for anyone to say that they were an adviser to the Secretary of State. At that point, I made it very clear that they should be withdrawn and not used again. They were funded privately, and have nothing to do with public or, indeed, my money.

Bob Stewart (Beckenham) (Con): May I commend my right hon. Friend on not changing his programme, and on going to visit our armed forces abroad, when it must have been tempting for him to come home immediately, given what was happening here? I have listened carefully to what he said today, and I personally am very satisfied. May I advise him to go back to his job, which is looking after our armed forces, who are in combat in two operational theatres? That is what he must concentrate on now.

Dr Fox: Again, I am grateful to my hon. Friend. I intend to concentrate very much on those issues, which remain at the top of my in-tray. As I said, we in the House understand that those outside have legitimate concerns and that they have a right for them to be addressed, and I think that the correct way to do so is for the Cabinet Secretary to continue the investigation begun by the permanent secretary. I can only reiterate my willingness to co-operate in every way that I possibly can with that investigation.

Steve McCabe (Birmingham, Selly Oak) (Lab): What was the perfectly innocent explanation offered up by Mr Werritty when the Secretary of State had to confront him about touting around false business cards?

Dr Fox: He—Mr Werritty—accepted that he should not have done so, and I think that with hindsight, he would think twice about doing so. Having made that clear, he told me that he would get new business cards, not use those ones again, and he accepted that what he had done was wrong.

Andrew Bridgen (North West Leicestershire) (Con): May I welcome the statement by the Secretary of State today and his apology? It is clear that some errors have been made, and it is quite right that the Cabinet Secretary should look into those matters. However, it is also clear that there was no breach of security, and I assure the Secretary of State that he retains not only my support but the support of these Government Benches?

Dr Fox: The permanent secretary makes it clear that at no time was Mr Werritty given access to confidential information or any security information to which he should not be given access; and that no documents or briefings were given. I am afraid that these accusations that national security was breached, which is probably the most serious accusation that could be thrown at any Government Minister, are utterly baseless. If anyone knows of a genuine case where they believe that to have happened, they have a duty to bring it to the Cabinet Secretary. If they do not do so, they should do what is appropriate and not say anything about it at all.

Pat Glass (North West Durham) (Lab): The Secretary of State has told us today that Mr Werritty was present with him on 18 separate occasions on overseas visits, but he has told us that some of those were family

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holidays. I think we could all accept that. I have done a quick mental calculation. Since May 2010 I have had two family holidays. Could the Secretary of State clarify for us how many of those occasions were family holidays and how many were official visits?

Dr Fox: There were a number of different categories, as I said. Some of them were overseas visits where I was there purely on a defence basis. Some were conferences, for example, where I may have been speaking and Mr Werritty might have been a delegate. Some were long weekends when my wife and I were abroad. Some were longer family holidays. One was a skiing holiday. We need to understand that Ministers have downtime on visits. In particular, when we have long overseas visits, we try to manage our political time, our party political time often, and our personal time. It is unreasonable to think that we should not have any private time at all.

Jack Lopresti (Filton and Bradley Stoke) (Con): I would also like to put on the record my support for my right hon. Friend. The way that he has come to the House today, with honesty and courage, to make his statement without any pressure from elsewhere has been excellent. Given where we are, with our troops in action all over the world and with the challenges that we face, it is time that we move on from this and concentrate on the job in hand.

Dr Fox: I am grateful to my hon. Friend for much of the help that he has given me in recent days. I finally say this: where there are serious issues of probity to be dealt with, we need to deal with them in an open and transparent manner. I hope I have helped with that process today, but I shall continue to co-operate with the Cabinet Secretary in doing so. However, there is an equal duty on those who have genuine allegations of wrongdoing to make that they bring them into the public domain. When we get sniping from the sidelines and innuendo, it does nothing to improve the health of our political process. I hope that if those exist who have such accusations, they bring them forward. I will be very ready to give my explanation, but what I think is unacceptable is this constant sniping and undermining without, it appears, genuine substance.

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4.32 pm

The Chancellor of the Exchequer (Mr George Osborne): I would like to update the House on the situation in the eurozone and what we are doing to mitigate the impact of the crisis on the UK.

Markets remain exceptionally volatile. Since July stock markets are down by 11% in the UK, 12% in America, 23% in France and 24% in Germany. Bond spreads have widened significantly for a number of European countries. Bank shares have lost a quarter of their value in the past three months, and yesterday the Governments of France, Belgium and Luxembourg came together to rescue the major European bank Dexia.

Although the weakness of the US economy, and its recent downgrade, have contributed to the lack of confidence gripping world markets, it is clear to all that the epicentre of this crisis lies in the eurozone, so we need a comprehensive solution that puts our largest trading market on a much more stable footing. In a string of international meetings, including the recent flurry that began with the G7 meeting in Marseille, Britain has helped to lead the international community in setting out what the components of a solution should look like.

We have again pressed our argument in calls over the past couple of days which I, the Prime Minister and the Deputy Prime Minister have made to the leaderships in Germany, France, the institutions of the European Union and international bodies such as the International Monetary Fund. Half an hour ago the Prime Minister spoke to the President of the United States about the issue.

In short, we need a comprehensive solution which ring-fences vulnerable eurozone countries, recapitalises Europe’s banks and resolves the uncertainty about Greece. Ring-fence, recapitalise, resolve—let me take each in turn. First, we need to see the eurozone members increase the firepower of their bail-out fund. If they are trying to protect larger countries, €440 billion is sadly not enough. How they increase that firepower—whether by using more paid-in resources, more leverage, or more help from the European Central Bank—is up to them. What I can confirm is that Britain will not be a part of any permanent eurozone bail-out fund. We have provided a bilateral loan to Ireland with the support of the House, in recognition of our exceptionally close economic and social ties. But when we came to office we inherited a situation where we were also part of the EU-wide bail-out fund, the European financial stabilisation mechanism. As the price that we extracted for ratifying the treaty change creating the permanent bail-out fund, British taxpayers have made no contribution to the eurozone bail-out of Greece and will not be part of the permanent fund.

Alongside the ring fence, we need the second R, which is recapitalisation. The European bank stress tests have not been nearly tough enough, as proved by the fact that Dexia did not fail them. At the beginning of the year, I said that the new stress tests must be much tougher. The IMF now estimates that sovereign credit strain could have a direct impact of about €200 billion on European banks, and at last the European Banking Authority is working on a plan to test leading European

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banks against higher capital ratios and more credible benchmarks on their exposure to sovereign debt. European nations will need to set out the backstops that they have in place to raise capital privately if they can or provide public capital if they cannot.

Detailed work by the Financial Services Authority confirms that UK banks are much better capitalised and more liquid than many of their European counterparts. As the IMF showed in its recent assessment of the UK economy, the core tier 1 ratios of all the major UK banks are in double-digit territory, which compares well to most European peers. On Friday, the credit rating agency Moody’s downgraded 12 UK banks. However, it stated explicitly that the

“downgrades do not reflect a deterioration in the financial strength of the banking system or that of the government”.

Rather it is the recognition of the success of the Government’s efforts to reform banking and remove the perceived taxpayer guarantee for banks deemed too big to fail. That is the direction in which policy should be moving.

The third R is a resolution of the situation in Greece. The weekly drama of troika visits, parliamentary votes and uncertainty about the disbursement of future tranches of international funds are causing great instability for the whole world. Our advice to European neighbours about what needs to happen is provided in private, but our overall intent is very public. The speculation about Greece’s future needs to end. The eurozone needs to come to a clear decision now and stick to it, and that decision needs to be based on a rigorous and realistic assessment of what is really happening in Greece and the debt dynamics of that country’s economy. Such an assessment should be provided by the IMF. We need to ensure that the IMF has enough resources to support economies around the world that require the help of the international community.

Ring-fencing, recapitalisation and resolution—that is what needs to happen now. At the same time, the eurozone countries need to undertake structural reforms to make their economies more competitive and move towards greater fiscal integration to underpin the single currency. At the same time, we must ensure that Britain is not part of that integration and that our influence is protected. These things are required by the remorseless logic of monetary union. That is the comprehensive package—all these things—that we have been urging and will urge again at the G20 Finance Ministers meeting on Friday and the European Council meeting, which has now been moved to the end of next week. We believe that the package must be in place as soon as feasible and certainly no later than the G20 leaders summit in Cannes in less than four weeks. Our time frame has been clear and is now broadly accepted by the international community. Indeed, there are now signs of progress from the leadership of the eurozone.

The crisis in the euro may now be inching towards resolution, but it has already delivered a huge knock to international confidence. I said earlier this summer that Britain could not be immune from what was happening on our doorstep. Sadly, that has proved to be the case. That is the principal reason given by the independent Monetary Policy Committee for its decision to request authorisation to undertake further quantitative easing. As Mervyn King said in interviews explaining his decision,

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“clearly the impact of the rest of the world on the UK does threaten our recovery. That’s why we took action today to try to head that off.”

I made it clear last year that I would follow exactly the same procedures that my predecessor established. I therefore agreed to the request and authorised a further £75 billion of asset purchases. I think that this is the right response to the deterioration in the international situation.

That is what the Bank of England can do. Although we have gone further than the last Government in extracting commitments from all the high street banks to increase SME lending and extend loan guarantees, I believe that we can do more domestically to get credit flowing, including credit easing.

The purpose of a credit-easing programme will be not only to lower the risk of another credit crunch, but to bring about a structural improvement in access to finance for mid-sized and small businesses so that a loan from their local bank is not the only source of finance, addressing one of the long-standing problems in the British economy. This action will sit alongside the other measures we have announced to improve our infrastructure, invest in science and make it easier to employ people. We will announce more details alongside the autumn forecast next month. All this recognises that our economic problems do not all come from abroad; many were home grown. Last week’s revisions to the GDP data revealed that Britain had one of the biggest booms in the entire world, followed by the deepest recession of any major economy other than Japan’s. We went into that bust with the biggest structural deficit in the G7 and came out with a deficit forecast to be the biggest in the G20.

None of the measures I have described would be possible if Britain did not have what the Governor of the Bank of England himself described last week as

“a credible plan to repay our debts”.

Fiscal responsibility allows the British authorities to be monetary activists. Without that credible plan, market interest rates in Britain would soar as they have in other European nations. Instead, interest rates here are just 2.5%, half of what they are in Spain and Italy. A 1% rise in interest rates would take £10 billion out of the pockets of British families through higher mortgage costs and lead to more repossessions and job losses as companies failed. These low interest rates are hard won and easily lost. I can confirm that the credit rating agency that downgraded the United States, Standard & Poor’s, has this month affirmed our triple A rating, but it made it clear that the greatest threat to that rating would be if

“the coalition government’s commitment to fiscal consolidation falters.”

We will not take that risk with our nation’s credibility and our interest rates.

These are difficult times. There is no doubt that a solution to the eurozone crisis is urgently needed. It would provide the greatest boost available to the British economy this autumn. We have been leading the international effort to help the eurozone find that solution while at home taking the steps needed to ensure that Britain rides out the storm. I commend this statement to the House.

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Ed Balls (Morley and Outwood) (Lab/Co-op): Let me start by thanking the Chancellor for making his statement and for advance notice of it. It is right that he has today updated the House and the country on the ongoing crisis in the eurozone. It is also right that he and I will have the opportunity to debate the ongoing growth crisis in the British economy in the House on Wednesday.

A year ago the Prime Minister told the House that our economy was