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Lord Davies of Oldham: My Lords, I cannot go into detailed figures at this stage, but I can say this: it was made clear to the Royal Mail that the losses that obtained on the question of second delivery were making the service hopelessly uncompetitive with others entering the field, and that those losses were being borne by the whole service and by all paying customers. The Royal Mail has engaged in a transformation of its operations to wipe out that area of loss. I am not in a position at present to demonstrate how efficacious it has been. Certainly, none of us would want to see an improvement in its finances at the cost of quality of service to our people.

Lord Faulkner of Worcester: My Lords, will my noble friend confirm that in the days when the Post Office conveyed a far higher proportion of its mail by rail, it met a much higher proportion of targets for next-day delivery? Does that not underline the need for the organisation radically to rethink its decision to remove mail from the trains and put it on the road?

Lord Davies of Oldham: My Lords, I hear what my noble friend says, but I believe that he would also recognise that we must be fair in comparing a steady state that obtained for more than a century, with a great deal of our mail being transported by rail, and a situation that has obtained only for a matter of months, with the transfer of a great deal of mail to road. The Royal Mail will need some time to establish that it has in fact effected a worthwhile economy in that regard; but, of course, it would never have embarked on that action if it was not persuaded that such economies would be effective.

Select Committees

The Chairman of Committees (Lord Brabazon of Tara): My Lords, I beg to move the first Motion standing in my name on the Order Paper.

In moving the Motion I am sure that I speak for the whole House in thanking the noble and gallant Lord, Lord Craig of Radley, for his services as Convenor of the Cross-Bench Peers. As the Motion indicates, the role of convenor is a busy one involving, among other things, sitting on all the main domestic committees of the House. I can vouch for the noble and gallant Lord's assiduous membership of these committees and his constant efforts not only to promote the interests of his flock of Cross-Benchers, but also to serve the best
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interests of the House as a whole. He will be much missed in that role. But I am sure that I again speak for the whole House in wishing his successor, the noble Lord, Lord Williamson of Horton, the very best in his new role.

Moved, That the Lord Williamson of Horton be appointed a member of the following committees, in the place of the Lord Craig of Radley: House, Administration and Works, Liaison, Privileges, Procedure and Selection.—(The Chairman of Committees.)

On Question, Motion agreed to.

West Northamptonshire Development Corporation (Area and Constitution) Order 2004

The Chairman of Committees: My Lords, I beg to move the second Motion standing in my name on the Order Paper.

Moved, That the First Report from the Hybrid Instruments Committee (HL Paper 145) be agreed to and that the order be referred to a Select Committee.—(The Chairman of Committees.)

On Question, Motion agreed to.

Armed Forces (Pensions and Compensation) Bill

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach): My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the amendments for the Report stage be marshalled and considered in the following order—

Clauses 1 to 5, Schedule 1, Clause 6, Schedule 2, Clause 7, Schedule 3, Clauses 8 to 12.—(Lord Bach.)

On Question, Motion agreed to.


Lord Grocott: My Lords, before we start the debate on Iraq, I make a customary comment about timing. There are 35 Back-Bench speakers on the list. As the House knows, we have a target rising time of 10 o'clock which, if it is to be met, allows, roughly speaking, eight minutes per speaker. These are not precise figures. Obviously, if the time runs to nine minutes per speaker, rising time would be approximately 10.30 p.m. Eight minutes may not sound a great deal of time but, according to my
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calculations, that amounts to approximately 1,500 words. Admittedly, one cannot put the world right in 1,500 words, but one can make a start!


Baroness Symons of Vernham Dean rose to move, That this House takes note of the situation concerning Iraq.

The noble Baroness said: My Lords, it is now more than two months since the sovereign Interim Government assumed power in Iraq. As your Lordships will recall, Dr Allawi's Government was put together painstakingly as an interim government representing a wide spectrum of groups in Iraq, with advice from the United Nations. These two months have continued to present enormous challenges to the people of Iraq and their new Interim Government, but not only to them. The international community, close neighbours in the region, and those whose armed forces make up the multinational force, as well as the wider community, are also having to adjust to a new set of circumstances.

First, the Government of Iraq are a sovereign government. They are making their own decisions, on internal issues as well as on their international relationships. They are planning their own future on the basis of the model agreed under UN guidance, so that by the end of 2005 they will have a new constitution, a new government and enhanced security capacity.

Whatever opinions there may be about the rights and wrongs of the military intervention in Iraq last year, the overwhelming view of people of good will around the world is that Iraq should now be a success for its people, for the region and for international stability. But of course doubts remain. There are those who will never be convinced that the decision to intervene was right; or those who will always believe it was a decision that was not taken in good faith. There are those who believe that Iraq's future will be dominated by violence, divisions within the country, coupled with constant friction with its neighbours; and those who believe that Iraq's recent history has undermined international security through provoking increased terrorism. We are all familiar with the arguments. To be honest, I suppose that our debate today will not resolve them, but we shall do our best. I look forward to the maiden speech from the noble Lord, Lord Wolfson of Sunningdale, giving us the benefit of his wisdom on the issue.

I suggest that resolution will take not only months—the next months of moves towards a constitution and an elected government—but years, as Iraq's identity as a sovereign state becomes clearer and the nature of its people's chosen government is established. But today I hope that we can discuss at least some of the latest developments on security; on the political process; on Iraq's internal development; on reconstruction; and on Iraq's relationships with its neighbours and others.
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I shall also touch on some of the issues arising from the reviews we have had of our own involvement in the conflict.

I shall begin with what, I believe, remains the toughest issue: security. Iraq's security is a dominant theme, understandably. Without real security on the ground, it is impossible for democratic institutions to flourish and for daily lives to function. Schools, hospitals, transport systems, economic growth and cultural energy are all affected. But it is also the case that in all those spheres—making people's lives better, democratic inclusiveness, functioning social services and economic prosperity—the appeal of violence as a means to achieve an end is undermined. So security and democracy, civil order and the rule of law are all interdependent. Terrorists know that as well as the rest of us, which is why they attack ordinary institutions so indiscriminately. They attack Iraqis who want to join the police force or to work on oil production or electricity generation. Some terrorist attacks have followed a familiar but horrifying pattern of vicious suicide bombings. Only last Friday, a car bomb outside a police training academy in Kirkuk killed at least 17. Iraqi leaders have been assassinated and the MNF continue to be targets. What is noticeable of course is the way in which terrorists target not only foreign nationals associated with security or reconstruction, but Iraqi nationals who are trying to build a more secure future for their families and society.

The latest round of kidnappings and brutal murders is a further hideous twist. Any country with a presence in Iraq is a target, and any issue, such as secularism in French schools or Turkish efforts to help a neighbour, is fair game to terrorists who will stop at nothing to try to ensure that Iraq's future is as bleak and wretched as its past.

At a different level, Moqtada al-Sadr's rebellion in Najaf has posed an early test for the capability of the Iraqi security forces and the authority of the Interim Government. Prime Minister Allawi's sensitivity towards the sanctity of the Imam Ali shrine for the Shia community and his restraint in using force to quell the rebels have been instrumental in bringing an end to the fighting. The Interim Government, Ayatollah Sistani and other senior religious leaders have shown that they do not accept violence and that Iraq's future will be secured only through peaceful means. But as we have all heard today, there is now fresh fighting in Sadr City. Prime Minister Allawi is now considering how to tackle the continuing insurgency in the so-called "seven towns" of the Sunni triangle.

Having said all that, I must also say that the picture is not universally grim. Prime Minister Allawi is making a determined effort to implement a national reconciliation process through an amnesty law aimed at low level, non-lethal insurgents, while concurrently creating special police units trained and equipped in counter-terrorism and insurgency and forming a new Iraqi National Guard.
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There is much to be done tackling border security and tackling neighbouring governments about their own security controls, as well as effective policing in towns and cities. But the Iraqi security forces now number over 200,000 and are gradually assuming full responsibility for restoring law and order. The multinational forces continue to support this effort acting under the mandate in UNSCR 1546 and under the policy of a sovereign government of Iraq.

I pay tribute to the 9,500 men and women of the British Armed Forces serving in Iraq, to those who have served there over the past 18 months, and to the many civilian volunteers who have willingly put their life at risk to help the Iraqi people. Let us not forget that Iraq is a vast country and for many, although there are outbreaks of violence and other setbacks, rebuilding and improving security are evident on the ground.

While the world's attention has been focused on the intense fighting around Baghdad, Kirkuk and the Sunni triangle, British troops, stationed in and around Basra, have played a vital role in improving security and rebuilding southern Iraq. They are providing extensive training and mentoring to the Iraqi security forces in the south and we have other personnel engaged in Iraq-wide training programmes to help meet the challenge of restoring order. I thank the commanding officer and our new Consul General, Simon Collis, and their teams for their dedication and professionalism.

Try as they might the men of violence did not disrupt the transfer of power to the new government. They will now try to impede the political process, a process which, if it goes well, will undermine any claim they make about puppet governments, exclusion from political institutions or the truly Iraqi nature of the future leaders of their country.

The bald fact is that political stability will bring security but without security a political process cannot take root. The national conference in August brought together 1,300 Iraqi delegates across Iraqi society, including members of Sunni tribes opposed to the interim government and representatives of Moqtada al-Sadr. After vigorous debate a broadly representative 100-member national council was elected. Twenty-six per cent of the members are women.

The council has an important role to play in holding the government to account, in advising Ministers and approving the budget. It has already held its first meeting at which it elected a Speaker and agreed operating mechanisms and a work programme. But, of course, the council's task is not an easy one. It must work closely with the interim government to prepare for the January 2005 elections. Those elections are the key milestone in the transition towards election for a constitutionally based Iraqi government by the end of next year. A new constitution is key. By mid-2005 we hope that the transitional government will have a draft constitution ready for consultation with the Iraqi people. Subject to its adoption, constitutionally based elections will be held at the end of next year. The
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timetable is an ambitious one, but with real commitment by the Iraqi government, the Iraqi Elections Commission and the United Nations, and with the full support of the international community, the groundwork for the elections can be completed on time.

Post Saddam there has been a strong appetite for elections across Iraq, and ad hoc local elections have taken place in a number of cities including Najaf, Salah Ad Din, Dhi Qar, Basra, Ninewah and elsewhere. Iraqi election officials are learning lessons such as the need for effective organisation, effective security and proper funding.

A number of commentators have said that the United Nations should now take a greater role, implying perhaps that leading members of the multinational force have somehow been an obstacle to this. This Government have made it clear that we welcome the UN role but we must be patient and understand that the UN must be satisfied with its ability to fulfil its duty of care to its own staff before it can confidently redeploy to fulfil its full range of duties under the mandate given to it by UNSCR 1546. But I am pleased that this is well in hand and that, throughout July and August, the UN has begun to redeploy in Iraq and that this will continue with the imminent arrival of Ashraf Qazi, the Secretary General's new Special Representative, and his team.

Just as Ambassador Brahimi's patient negotiation with Iraq's political and religious leaders was vital in preparing the handover, so Ambassador Qazi's will be in the next stage of supporting the Iraqi Election Commission. We shall continue to do everything that we can to support that process. We welcome our own diplomatic relationship with Iraq—our ambassador Edward Chaplin now in Baghdad and Ambassador al-Shaikhly, who is very welcome here in London. We wish them well.

Economic development is the lifeblood of any country. That must be particularly true for an economy which has suffered decades of mismanagement, embezzlement and war under Saddam. Huge debts were accumulated and poverty was endemic in some parts of the country. The economy was starved of investment across all sectors: electricity, water, health and education, as well as oil production, which provides almost all of Iraq's income. However, there has been real progress since May 2003. The International Monetary Fund expects Iraq's economy to grow by 33 per cent this year. The newly independent Central Bank has kept inflation below 30 per cent and the new Iraqi dinar is holding its value internationally. The financial sector is at last beginning to grow again.

However, many areas of Iraq's economy are still in need of major reform. Fuel prices remain hugely subsidised, draining the budget and encouraging smuggling to neighbouring countries; no charges are collected for the electricity and water supplied by the state; food is handed out virtually free to everyone, rich and poor alike; and many inefficient state-owned enterprises are running up great losses. But reforms—
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and they are much needed—must protect people who are already poor and vulnerable. DfID is providing policy advice on subsidy reduction programmes and the reform of state-owned enterprises.

Iraq's health and education services are also in need of reform and, of course, large-scale investment. The United Kingdom is supporting these sectors, along with others, through DfID's contribution of £70 million to the trust funds set up by the World Bank and the United Nations.

My right honourable friend the Secretary of State for International Development visited Iraq last week to see for himself progress on reconstruction on the ground. He met with Prime Minister Allawi in Baghdad, other key members of the government and representatives of the UN, civil society and the Electoral Commission. He was struck by the change that had occurred since the handover of power on 28 June. The Iraqis are now clearly in charge, although recent events in Najaf have inevitably dominated the IIG's first couple of months in power.

My right honourable friend was able to see the progress made on reconstruction since his previous visit in February 2004. Forty-five kilometres of water pipes have been laid in Basra and electricity distribution is now more equitable across the national grid. My right honourable friend also announced £50 million of new bilateral projects, in addition to the £78 million that we have already committed. The bulk of that will be spent on building Iraqi capacity and employment creation.

My right honourable friend was left under no illusion: security will be a major factor affecting the pace of reconstruction. However, I know that he joins me in thanking all those who have made tireless efforts on reconstruction and have kept working under difficult and sometimes dangerous conditions; military and civilian personnel who are helping Iraqis to build a better future.

I turn to international questions. Iraq is now taking its place in international fora around the world. Its Foreign Minister, Zebari, has become a familiar and welcome participant at the UN, in the Arab League and at EU meetings with regional representatives. He has put Iraq's case clearly and effectively to Iraq's neighbours, on difficult issues concerning security and border controls. Of course, UNSCR 1546 calls on all member states to support the new government in Iraq. The international conference planned for later this year will be an important opportunity for the international community to come together to provide more support for Iraq, which it so desperately needs.

However, the fact remains that the war in Iraq has divided international opinion. My right honourable friend the Prime Minister has said on a number of occasions that he respects the view of those who disagree with the war because of a difference of judgment on the right thing to have done. It may be a decision that will continue to divide opinion for years. However, I hope that the accusation that it was a decision taken in bad faith can be laid to rest. Just before your Lordships went to a well earned summer
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Recess, we received the Butler report, and I note that the noble Lord, Lord Butler, is to speak later in this debate. The report is thorough; it is detailed, and in places clearly critical of some aspects of the intelligence processes in this country. However, the noble Lord's inquiry, like the three that preceded it, including that by the noble and learned Lord, Lord Hutton, found that the allegations of misusing intelligence or being deliberately misleading were wrong and misplaced.

I thank the noble and learned Lord, Lord Hutton, the noble Lord, Lord Butler, and their teams, including the noble and gallant Lord, Lord Inge, for their hard work and their contribution to the important debate on terrorism and the spread of weapons of mass destruction.

Let me be clear: the report of the noble Lord, Lord Butler, raised important questions about intelligence-gathering, intelligence analysis and presentation. As my right honourable friend the Prime Minister said on 20 July, the Government fully accept the report's conclusions and criticisms and have already taken action to implement its recommendations. I have no doubt that there will be further comment on the report during the debate and I look forward to responding to it in my winding-up speech.

It is important to emphasise that our intelligence services do an outstanding job for this country and have made a significant contribution to exposing the extent of illicit weapons programmes, and the threat they pose, around the world. The joint operations on counter-terrorism, now run across government, are highly effective. This huge effort against terrorism, coupled with our concern to control the proliferation of weapons of mass destruction, are key issues, certainly for us here in the United Kingdom but also for countries across the globe. The appalling and heartrending events in Russia are an horrific and stark reminder of the indiscriminate nature of terrorism: terrorists acknowledge no limits to who they attack or the numbers they kill. Our hearts go out to all those who have suffered so grievously in recent days.

While acknowledging this dangerous and turbulent backdrop of terrorism, we must learn the lessons of the past 18 months in Iraq. We need to acknowledge our own shortcomings: what might have been foreseen and was not, and what we can learn about helping countries which wish to come closer to a democratic and peaceful future. While we look back—and it is right that we should do so—I hope, too, that we shall also concentrate on the next 18 months in Iraq. We must look to the future. It is going to be very tough. There will be many setbacks. But the overwhelming majority of people in Iraq believe in their future. They believe in a better, more peaceful and fairer society: a democracy under the rule of law and at peace with their neighbours. Iraqis believe they have a real future now. Let us do our best to help them to that future.

Moved, That this House takes note of the situation concerning Iraq.—(Baroness Symons of Vernham Dean.)
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3.51 p.m.

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