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The department has awarded the franchise in line with the requirements set out in the invitation to tender (ITT), a commercially confidential document issued to bidders in March 2006. A supporting stakeholder briefing document was published at the same time setting out the specification included in the ITT.

The current timetable operated will remain largely unchanged. However, there are a number of improvements including a second train each hour to Weymouth from Waterloo, a new Salisbury-Romsey service via Southampton and Southampton Airport Parkway and additional late evening and Sunday services on several London suburban routes.

The new operator has addressed the continuing growth in passenger demand by redeploying the existing rolling stock, initiating a refurbishment programme to increase capacity on the suburban fleet and investing in additional rolling stock. Smartcard technology will be rolled out by 2009 so that passengers will benefit from electronic ticketing across the franchise area. This will include the acceptance of existing Oyster products in London zones 1 to 6. This means that passengers on South Western services in London can use Oyster pay-as-you-go products as well as newly available smart tickets.

Fare structures will change to incentivise travel outside the busiest periods of peak time and, in conjunction with the rolling stock initiatives, will address the key objective of accommodating future demand levels. The introduction of smartcards will facilitate the ability of the operator to offer flexible tickets to support this goal. Regulated fares will continue to be consistent with government fares policy, while Stagecoach will continue to have flexibility to make changes to unregulated fares.

A £40 million investment in enhancements at stations will be delivered. Waterloo station and 13 other stations in the franchise area will be gated. Extra security measures, including more visible staff and CCTV at all stations and on all trains, will be introduced.

The department required bidders to submit a number of priced options as part of their bids. Stagecoach has been asked to ensure that 95 per cent of the passenger franchise footfall will travel through stations that have been granted secure station accreditation.

Stagecoach will also operate an hourly Waterloo-Exeter service once Network Rail has built the necessary infrastructure, expected to be by December 2009. Until this new service can be implemented, existing services operating west of Exeter to Plymouth and Paignton will continue to run. The current two trains per day operation between Bristol and Waterloo will be retained throughout the new franchise.

New GSM-R radio equipment will also be fitted to all units in line with Network Rail's programme of updating radio systems across the network.

The decision on the future of the Island Line has been deferred to allow time for more extensive discussion with key stakeholders on the most appropriate way forward, and recognising the recent community rail designation of the railway. Further work is also needed to assess the most appropriate use of the platforms at Waterloo International once Eurostar operations vacate in late 2007.

In summary, the successful bid has addressed the objectives for the South Western franchise. Performance will increase to 92.5 per cent by 2009-10 (93.3 per cent by the end of the franchise); demand growth will be accommodated through capacity and ticketing initiatives; and stakeholder aspirations have been reflected in the timetable. The franchise improves security on trains and at stations and offers value for money to passengers and taxpayers.

Regional Development: EU Assisted Areas

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My right honourable friend the Minister of State for Industry (Margaret Hodge) has made the following Written Ministerial Statement.

A two-stage public consultation seeking views on the designation of future assisted areas from 2007-13 took place from February to August 2006. Approximately 420 written responses were received from a wide range of stakeholders and interested parties. There were several regional and national information events hosted across the country. Furthermore, the review team and I personally met several delegations to consider individual representations. We have responded positively to all representations and amended the proposed map where in our judgment this is possible and consistent with the principles and criteria which the UK Government have determined and the constraints established by the rules set by the European Commission. Copies of the Government's response to the consultation and the assisted areas map1 being sent to the European Commission for approval have been placed in the House Library.

The assisted areas map will be sent to the European Commission today and it has up to two months to approve it. The assisted areas map is not final until it is approved by the European Commission as complying with its guidelines on regional aid. Upon receipt of this approval, the assisted areas map will be implemented through UK legislation making it operational from January 2007.

Much has changed since the last review of assisted areas in 1998-99. The UK economy has prospered, growing faster than any of the G7 industrialised nations. Further countries have joined the European Union. The combination of these two factors has meant that less of Britain is eligible for assisted area status. The European Commission guidelines published last December specified that the proportion of the UK population covered by assisted areas for 2007-13 will be reduced from the 30.9 per cent currently covered to 23.9 per cent.

Assisted area status gives us flexibility to support investment, job creation and retention propositions in the more disadvantaged areas of the UK. This helps us to tackle regional disparities in the economic performance and to promote social cohesion across the UK. In England we will be working with the regional development agencies to recommend that areas losing assisted areas status in 2007-13 be recommended for Tier 3 coverage. This will offer SFIE to small and medium-sized enterprises under the new European Commission SME block exemption.

The Government carried out an open and transparent review of the assisted areas in response to new European Commission guidelines on regional aid adopted last December.

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Terrorism: Finance

Lord McKenzie of Luton: My honourable friend the Economic Secretary to the Treasury (Ed Balls) has made the following Written Ministerial Statement.

The Government are strongly committed to tackling terrorist financing. Just as there should be no hiding place for those who perpetrate terrorism, so there should be no hiding place for those who finance terrorism. This Statement updates Parliament on counter-terrorist finance actions taken over the Summer Recess to strengthen further our framework for rooting out the financial networks underpinning terrorism.

On 10 August 2006, the police arrested a number of suspected terrorists in connection with an alleged plot to blow up airplanes leaving the UK in mid-flight. Acting on the advice of the police and the Security Service, the Treasury froze the assets of 19 of these individuals on 11 August. The asset freeze was imposed within 24 hours of the police arrests and was in place before banks opened in the morning. This was the quickest and most comprehensive asset freeze that the Treasury has undertaken and it has yielded valuable operational benefits. The Executive Secretary of the international Financial Action Task Force (FATF) has said in relation to the 11 August freeze that,

This latest action means that a total of 188 accounts and around half a million pounds of suspected terrorist funds have now been frozen in the UK.

The measures set out here are designed to help to detect, deter and disrupt money laundering and terrorist finance, while safeguarding the UK's position as the world's most secure and dynamic financial sector. The Treasury plans to produce a detailed strategy document around the end of the year.

Terrorism (United Nations Measures) Order

Today, the Treasury is asking the Privy Council to adopt a new Terrorism (United Nations Measures) Order updating the existing order. This makes a number of changes to the UK's domestic asset freezing regime, allowing us to prevent funds, economic resources and financial services being made available to anyone who is designated under the order on suspicion of involvement with terrorism, while introducing a confidentiality provision to protect, where necessary, information that may be disclosed on a confidential basis.

Closed-Source Evidence

The Treasury has agreed, on the advice of law enforcement agencies, to use closed-source evidence in asset freezing cases where there are strong operational reasons to impose a freeze but insufficient open-source evidence available. The use of closed-source material will be subject to proper judicial safeguards. The Government intend to put in place a special advocate procedure to ensure that appeals and reviews in these cases can be heard on a fair and consistent basis. In order to ensure appropriate accountability to Parliament, we will report to Parliament quarterly on the operation of the UK's asset freezing regime.

Money Service Businesses

On 29 September, the Treasury published a review into the regulation and performance of money service businesses in preventing money laundering and terrorist financing. The vast majority of bureaux de change, cheque cashers and money remitters are honest and important partners in the fight against financial crime. But the scale of the challenge we now face demands we strengthen our current financial controls so that we can root out money laundering and terrorist financing. Our proposals to replace the registration system with a licensing system, take tougher action against non-compliance and demand firms keep better records, build on the controls we introduced five years ago and give us the powers we need. I also want to give firms in the sector better support and guidance and recognise the important contribution they make to our financial system at home and abroad.

State Benefits

On 3 July, I made a Statement to Parliament announcing that the Government would be restricting the payment of state benefits to the households of UN-listed terror suspects. This policy has now been applied to six households. Following a legal challenge, the High Court ruled on 22 September that the Government's approach was lawful and was consistent with their obligations under the relevant UN Security Council resolutions.


In February, the Government launched a review into the regulation and performance of the charitable sector in preventing terrorist financing and will make recommendations later this year for protecting the charitable sector from terrorist infiltration. It is essential that charities are protected from abuse by terrorists seeking to exploit the goodwill of donors. On 24 August, the Charity Commission, having consulted Treasury and Home Office Ministers, launched an inquiry into the charity Crescent Relief and froze its bank accounts.

Third Money Laundering Directive

On 31 July, the Treasury published a consultation document on implementing the EC Third Money Laundering Directive. This will ensure our systems for tackling money laundering and terrorist financing continue to be in line with international best practice and will implement a risk-based approach, allowing businesses to target their resources in the most effective and proportionate manner. The consultation closes on 20 October and we will report the results when we publish draft regulations around the turn of the year.

International Action

Because terrorist financing operates globally, so the response must be global. Last year, the UK used its presidencies of the G7 and the EU to step up international action against terrorist financing. The Chancellor will today write to EU finance ministers about taking this agenda forward. The UK has recently been appointed to serve as president of the Financial Action Task Force (FATF) from summer 2007. We will use our presidency to drive forward a reform agenda urging the FATF to be more outward- looking and more clearly focused on tackling abuses and risks in the international financial system.

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