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Westminster Hall

Volume 401: debated on Tuesday 18 March 2003

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Westminster Hall

Tuesday 18 March 2003

[MR. JOHN MCWILLIAM in the Chair]

Serbia And Montenegro

Motion made, and Question proposed, That the sitting be now adjourned.— [Joan Ryan.]

9.30 am

It is a great privilege to raise this issue. The debate is timely in many respects, although it is overshadowed by another conflict that will be looming imminently. NATO started bombing Yugoslavia four years ago. Sadly, the debate is also timely because the Prime Minister of Serbia, Mr. Djindjic, was assassinated last week, an action that I am sure all hon. Members regard as a retrograde step for the country, as well as a personal tragedy.

I am pleased to introduce the debate, given that the hon. Member for Halifax (Mrs. Mahon) and I recently went on a private visit to Serbia. I also visited Montenegro briefly. I want to return to those events of four years ago. Although we must discuss the current position in the country now known as Serbia and Montenegro, which, until a few weeks ago, was known as Yugoslavia, we should bear in mind some lessons for not only that country but the current conflict. Perhaps we should have been warned, when it was decided that military action could be embarked on without the sanctions of the United Nations and a resolution, that that might set a precedent for further events. Tragically, that precedent has been used and we are in the position that we are in today.

It is sad that many people who are now vociferously opposing military action against Iraq were silent at the time of the problems in Yugoslavia. It is strange that some parties that were among the most hawkish of parties advocating bombing Yugoslavia are now the most dovelike. I have great problems concerning the current action against Iraq, but even I can say that there is much more of a case to answer in respect of Iraq than there ever was against Serbia four years ago.

There will be a small gathering of people in Whitehall on Sunday to note the passing of another year since that bombing, and to remember when once again this country, with its NATO allies, attacked a sovereign country that had not threatened us or British interests. Although the importance of history in the Balkans is vital, I shall not dwell too much on its past history. Suffice it to say that Serbia and Montenegro is a linchpin in the future of the Balkan region. The need for it to be a stable and democratic country, playing a major part in the European community—with a small 'c'—and among European countries generally, is indisputable.

When, on 5 October a few years ago, Milosevic was ousted from power, we all rejoiced. Some people claimed credit for that, although perhaps they should not have done, as it was the result of a popular movement and was made possible by the people, not outside powers. As always happens in such cases, the hopes of the country were riding high. It had been told by western powers that the removal of Milosevic would lead to democracy, freedom and, above all, prosperity for the country. Sadly, it was quickly let down, and by those very powers that had demanded Milosevic's removal.

Advances have been made, although the assassination of Mr. Djindjic has set things back greatly. Unfortunately, although law and order is present, there is a great deal of underworld activity, and the black market rules. I am not sure that the laws of the country are always put into practice as we would expect and hope them to be. We found on our visit that Mr. Djindjic was not, by any means, the most popular of politicians. There was a certain democratic deficit in his being in power. The main reason why many in Serbia feel let down is that they gave a lot, in terms of trying to agree to all the conditions imposed on them, and yet it seems that they cannot advance. Worse still, when they fulfilled the majority of those conditions, new ones were imposed.

In my opinion, the country is at a difficult stage. Our attention is naturally focused on the middle east, but we should ensure that we keep a close eye on developments in the Balkans, because others may decide that the time to move is when our attention is drawn away. The country has a huge economic problem, and unemployment is tragically high. One of the problems that we saw at first hand—in my case for the first time—and that moved me greatly was that of refugees and internally displaced persons, whom we visited. The difference between the two categories is that although all are from the former Yugoslavia, some of those people had fled from Croatia or Bosnia, which are independent countries, and so are refugees. The internally displaced people are those from Kosovo, and are mainly Serbs, but also include Roma and other ethnic minorities.

That visit moved me because I saw the forgotten story and the forgotten people of Europe. More than 750,000 people, by conservative estimates, have been placed in that country, which is itself struggling with its economy. Those people stay in conditions that would, if we saw them on our television screens, perhaps move us to act more. The Government have a great problem: some of the Kosovan people that we saw in Kraljevo, which is not far from the demarcation between Serbia and Kosovo, want to return. Nevertheless, Kosovo is, by international recognition, a part of Serbia and Montenegro. If the Government try to settle those people, which would be the humanitarian thing to do, notwithstanding the fact that they need assistance, that would give the lie to the fact that they would never return to Kosovo and it would mean that they would be giving up Kosovo as part of their territory. They are caught in a difficult position.

The trouble is that those conditions will cause unrest and I fear that, in the current political situation, that might become more than unrest. As we know, sadly, the people in those areas have always had great pride in their country. That pride has spilled over into unacceptable nationalism, but it is also part of their make-up and it does not mean that everyone is a rabid nationalist. To such people, Kosovo is at the heart of Serbia and it would be impossible for them ever to think of giving up that territory. There is trouble ahead.

Kosovo itself is not quite the picture about which we would like to be told. In debates about current military action, the action against Yugoslavia is hailed as one of the great successes. I want to know why—perhaps the Minister, who previously had a job in the Home Office, can tell me—there are so many Kosovan Albanians who come to my surgery, having had their asylum claims rejected, and who do not want to go back to Kosovo. They would rather go to Albania, because Kosovo is such a hell-hole. Perhaps those people were Albanian, not Kosovan. It seems strange that a country, or an area, that we claim is sorted out is, in fact, far from it.

The Minister for Europe apologised beforehand for not attending the debate—he has other duties, in Brussels. During Foreign Office questions, his answer to my question on the refugees indicated that perhaps he did not have his finger on exactly what was going on inside the region. Even the current country of Serbia-Montegro is something that was by and large suggested to that country by others outside. That leads me to a plea to our Government and all western Governments. We should stop treating some of these countries like 19th century central Asian sultanates, over which the great powers argue, trying to vie with each other for influence. The countries concerned are in Europe and the people and politicians are getting a little bit fed up with being told what to do.

Conditions follow conditions. We need to encourage the process of democracy—and there is democracy in Serbia. After all, Milosevic was ousted because he called an election, lost it and would not accept the result. He thought that he could win that election. To encourage the process, we must look to our laurels to see what we can do to help.

Serbo-Croat may sound strangely amusing to hon. Members. It used to crop up in comedy programmes as an obscure subject to study. Many hon. Members will know that I studied it at university. Perhaps I rather enjoy doing obscure things, which is why I became a Conservative Whip. I chose to study Serbo-Croat because, 20 or 30 years ago, although Yugoslavia was ruled by a dictator—who was not pleasant, but not in the premier league in the present scheme of things—it was at the forefront of trying to develop western influences. It was a nice place to be. That is why it is so sad that Yugoslavia has not had the same opportunity to move forward as the rest of Europe.

I return to the things that can be done. We should be doing more to encourage trading links. Unfortunately, the assassination of Mr. Djindjic has once again created an image of Serbia as a place where gangsters rule and bodyguards are everywhere. That is sad because it is not entirely true. There are many opportunities for British firms to invest, especially in Montenegro. Many people, including many hon. Members, will have enjoyed pleasant holidays on the Adriatic coast in earlier years. The coast in Montenegro is one of the most beautiful in the world. As a result of sanctions and isolation, the coast is largely unspoilt and there are many opportunities for tourism. I hope that, with encouragement from Government Departments, British companies will look seriously for those opportunities.

The one thing that will really improve relations between our countries and change the popular image that many people have of Serbia is for people to visit the country.

During our visit, the hon. Gentleman—I shall, if I may, refer to him as my hon. Friend—and I visited a camp in the most beautiful little town in the midst of a wonderful sculpture park. The arts are still thriving in Serbia. Does my hon. Friend agree that the Serbs have much culture and art to offer that is being overlooked?

I do of course agree with the hon. Lady, whom I shall refer to as my hon. Friend. Serbia has a great deal to offer, including many skills. My hon. Friend may wish to expand on the fact that we also visited spas where we saw the great skills of Yugoslavian and Serbian doctors and nurses, especially in physiotherapy. We are lamentably short of such skills in this country. Imaginative work by representatives of the national health service, or, dare I say it, private medicine might achieve a useful exercise in helping to improve facilities there while helping us to reduce our waiting lists.

As my hon. Friend said, we should look at other cultural links, ranging from highbrow arts to things that my children know more about than me, such as pop music—although I think we are supposed to call it rock music nowadays. I have been moaning on for a bit, but I wish to pay tribute to the British Council. It has been working hard in Belgrade and Podgorica. It has an imaginative scheme that can be applied not only in Serbia and Montenegro but throughout the world. It is called Dreams and Teams, and it encourages young people to acquire leadership skills and other attributes through sport. There is a good link-up between the British Council and the Red Star Belgrade football team.

I could continue talking and bore for the party on this subject, but other hon. Members are present and we want to have a discussion about the matter as we rarely get an opportunity to do so. It is time for us to think seriously about how we can encourage the region— which includes not only Serbia and Montenegro but Macedonia as it is different but has similar problems. We have ignored the situation in the region. I understand some of the points that the Minister will undoubtedly make, but we must give encouragement to the region too. We have given it the stick for too long—although it might be a verbal stick on this occasion, in contrast to what happened four years ago. It is time to get the carrots out. We must do something positive to help the region, not as victors but as friends—which is what we have always been.

9.52 am

I want to start by expressing my sympathies to the family and colleagues of the murdered Prime Minister, Zoran Djindjic. His assassination was an appalling act that will do nothing to advance the cause of the people of Yugoslavia.

As my hon. Friend the Member for Uxbridge (Mr. Randall) said, he and I recently visited Serbia. We went there as officers of the all-party group on Serbia and Montenegro—I think that that is what we now must call the area—to see for ourselves the problems that the country is facing and to talk to as many people as possible about them. In September 2002, I also visited Kosovo for the fifth time with the NATO Parliamentary Assembly.

During our visit in February, we met representatives of all the major parties. We did not meet the Prime Minister as he was abroad, but we met his No. 2. We also met people from non-governmental organisations, Government officials and trade unionists. I wish to put on the record my thanks to our fellow parliamentarians, led by Liliana Colic, who showed us wonderful hospitality and worked very hard to ensure that our visit was fruitful.

We arrived shortly after the change was made to the constitution that replaced the name Yugoslavia with the Republic of Serbia and Montenegro. There was huge resentment across the board about that. Speaker after speaker told us that it was a temporary arrangement and that it had been invented by the United States and the EU to delay the secession of Montenegro. The west has interfered in and bombed Yugoslavia but it has not yet made up its mind about what to do to finish off the country: it is currently more occupied with bombing yet another part of the world. What I found most shocking about that major constitutional change was the fact that there was no referendum; the people were not asked about it. I think that most people feel deep bitterness about that.

Does my hon. Friend agree that there is a chance that there was no referendum because they knew what the result would be?

That is more than likely. All parties have a deep attachment to the name of Yugoslavia.

The dangers of further destabilisation in Yugoslavia are plain for all to see. The west does not want the secession of Montenegro because Kosovo would follow. Kosovo would, in my view, be swallowed up into a greater Albania if it became independent. That would have destabilising effects in Macedonia, where ethnic Albanians are seeking to redraw maps. The Greeks are understandably very nervous about that.

Last year, I visited Montenegro with a friend on the NATO Parliamentary Assembly and my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham). We talked with an Albanian MP who supported the bid to separate Montenegro from Yugoslavia. When I said, "Well, being a Montenegrin is okay, but this is a balkanisation process in which you might be better off sticking with a big country," he said that he did not want to be a Montenegrin; he would be an Albanian always. He made no bones about the fact that a greater Albania was his dream. We have to be very careful about what is going on in Montenegro. The west cannot simply walk away from the issue, as it appears to be doing.

In the present crisis, we are being told over and over what a success story Kosovo is, and that the liberation of Kosovo was worth it. Hon. Members in this Room have different opinions, and I will not go into the history, because we have different views on that. However, I must say that Kosovo is not, at the moment, a success story. It is under the protection of the United Nations Interim Administration Mission in Kosovo, which has some 30,000 or 40,000 troops and so many aid agencies that one almost trips over them. In fact, they seem to provide the only employment in Kosovo now.

Kosovo has become an almost mono-ethnic state. We visited the tiny enclaves. We went to Mitrovica in September and talked to people, and to the army. It is always interesting to do that, because one always gets the truth from servicemen and women; they do not have a political axe to grind. In spite of all the real efforts—some really good people are working there; I would not like to dismiss them—the Government of Ibrahim Rogova is not really able to rule because the Kosovo Liberation Army is still in charge. It is, in effect, a mafia-run state. People staying in the Grand hotel, Pristina could pay only in cash—in dollars or marks. I have met Mr. Rogova a number of times and admire him greatly; I wish that there were far more people like him in that part of the world. However, the truth is that he is powerless. Some of his colleagues have been killed by the mafia, and the mafia state carries on.

Even with all the troops in Kosovo, some 1,300 Serbs, Roma, Ashkali and people from other minorities are still missing. More than 1,000 have been killed since NATO liberated Kosovo. Nearly 300,000 have been subject—permanently, it seems to me—to ethnic cleansing. That, our Prime Minister tells us day after day, is a success story. God help us if that pattern should be repeated in Iraq.

My hon. Friend the Member for Uxbridge and I visited the camps, many of which I had visited before. I do not think that I have ever felt more depressed than when we visited the Kosovo refugees. They are about 50 miles from home. It is ironic that one camp that we visited is in a beautiful setting; I mentioned the sculpture park and the mountain in the background. It is a lovely place, but the conditions are a disgrace, and it is a disgrace that we can allow them in the middle of Europe. The people there want to go home. They are mainly not sophisticated people from Sarajevo or Croatia but rural people who have, for centuries, farmed in Kosovo. That is where their cultural background and churches are. I have been to camps all over the world and it was one of the saddest visits that I have made. Eyes look up hopefully when people visit. Children are born in those camps. The real disgrace was the attitude of UNMIK to the returnees—less than 1 per cent. have returned.

We talked to politicians in Belgrade and to the head of the returnee programme. The high representative, Michael Steiner, refuses to implement plans to take 50 or 100 people back to their empty villages and to protect them there. The policy seems to be—I hope that the Minister will take this on board—that if one or two people want to return and their Albanian neighbours do not mind, they may go back. In effect, the Albanian neighbours have a veto. We supposedly went to war to stop ethnic cleansing, but we have presided over the biggest permanent ethnic cleansing in the Balkans, which is an absolute disgrace.

A 75-year-old lady in Mitrovica, Vero Stalantovic, had to go into hospital. While she was away, some Albanians looted her home and the final straw was that they took everything, so she is unable to return home. If 40,000 troops cannot protect one elderly lady in Kosovo, that is a symptom of terrible failure.

We talked at great length to politicians about the international war crimes tribunal at The Hague and we talked to people who had helped to depose Milosevic. They were not Milosevic lovers, but belonged to the assassinated Prime Minister's party. Our host, Liliana Colic, was a member and had spent years opposing Milosevic. Everyone expressed their dismay at Carla del Ponte's attitude to Serbs and her lack of interest in going after other world criminals from other ethnic groups. They all said that they were fed up with the threatened withdrawal of aid if they did not deliver this or that war criminal. One exasperated Minister said, "If I knew where the war criminal was, I would personally go and get him, but I do not know and we might lose $100,000 in aid by the end of March if we do not deliver." That attitude is breeding bitterness and we shall reap the whirlwind.

Unemployment, as my hon. Friend said, is appalling. Organised crime in Kosovo and links with terrorist organisations are all very frightening.

Reconstruction in Yugoslavia has been a dismal failure. The bridges across the Danube have still not been rebuilt. There is some reconstruction, but it is very little and not enough. My firm belief is that a truth and reconciliation commission should have been set up on the Balkans. That was hugely successful in South Africa. As my hon. Friend said, politicians from some European countries act like victors storming in and laying down conditions. We are creating an undercurrent of bitterness, such as that in Germany during the 1930s because of reparations, and a feeling of injustice. We are pushing people into extremist camps.

I agree with my hon. Friend about trading links because it is vital to reintroduce them. We were impressed by the spas—it seemed that there was a physiotherapist for every patient—and by the continuing high level of training for health service workers. Were I to suffer from, for example, a stroke, I hope that the national health service would send me there. I imagine that I would recover well at one of those spas.

Culturally, we have much in common with Yugoslavia. Cultural exchanges and sports competitions have taken place, and we share a sense of humour with its people. I hope that people start holding out the hand of friendship and that they stop the bullying and stop strutting the European stage as victors, because that is helping no one and is destabilising Yugoslavia still further.

10.5 am

I congratulate my hon. Friend the Member for Uxbridge (Mr. Randall) on securing the debate and on his very informed contribution. He probably knows more about the region than almost anyone in the House of Commons. I have had many interesting conversations with him about the Balkans, which is an area that I dealt with when I worked for the European Bank for Reconstruction and Development.

As a preamble, I wish to say that for many years the west's foreign policy in the region left a great deal to be desired, contrary to the rewriting of history in which the Foreign Office Ministers of successive Governments have engaged. The United Kingdom and the west should have intervened very early at the time of the break-up of Yugoslavia. Western policy in the last days of Margaret Thatcher was to prop up the then Yugoslavia because its collapse would signal the collapse of the Soviet Union, and Margaret Thatcher's policy was to hang on to Gorbachev at any cost. As Kissinger later said, it is always a great mistake to try to build foreign policy around the retention of a single individual. So it proved, because both Gorbachev and the Soviet Union fell shortly afterwards.

The right policy in that instance was that of the Germans, who said that it was vital that Yugoslavia be allowed to collapse and that we were prepared to respect the integrity of those parts of Yugoslavia that were trying to pull away from Serbia, particularly Slovenia and Croatia. It was absolutely clear very early on, after the assaults by Serbia on Vukovar in eastern Krajina, that the retention of an integrated Yugoslavia was unsustainable, but the west did nothing. That was a grave policy error. Early intervention might have avoided much of the terrible suffering that has since been experienced in the Balkans.

We failed to intervene early enough in Bosnia. We eventually arrived at a better policy, but we were very late. As a result of those two failures, we drew the wrong conclusions about what was happening in Kosovo. We decided to get in early because we had failed to intervene early enough in the two earlier cases. We made a great mistake by intervening in Kosovo. I do not agree with the prevailing human rights-dominated view that we did some moral service to the region. Instead, we inflamed the suffering in Kosovo.

A large part of the policy on Kosovo was driven by an early form of regime change pursued by Madeleine Albright. Rubin, her adviser, said that at a meeting she banged on the table and asked whether she had made it clear enough that her No. 1 priority was that Milosevic had to go before she left her job. That was how foreign policy was conducted in the United States at that time.

I supported the Afghanistan invasion. It was absolutely right to go in and break up al-Qaeda. However, the issue of what was to be done afterwards was the same. The Prime Minister said that we must not walk away from Afghanistan, but we have. There are only 300 troops in Kabul. Most of the rest of Afghanistan is controlled by warlords who are scarcely better than the Taliban, which we ousted. Of course it was right to intervene. We had to, because there were terrorist cells there that had to be broken up, but we have not cut a very good figure in the reconstruction effort.

That brings me to the question of how to reconstruct Serbia. At the absolute heart of that reconstruction must be an attempt to win over ordinary, middle-of-the-road Serbian opinion. Without that, we will not manage the reconstruction effort. Anything that we do will be a failure. Although we like to try to minimise this and Ministers, if I may say so, have on occasion seemed to imply that it was some sort of liberation, the people of Serbia, especially Belgrade, were shocked that the west engaged in a series of bombing attacks on them. They do not see that as an attack on Milosevic, as we said in public, but an attack on them, their values and their way of life.

The hon. Gentleman will know that I visited Yugoslavia during the bombing. One small town, Cuprija, which was bombed by mistake—fortunately, only one person was killed—was almost totally opposed to Milosevic. It had an Opposition mayor, and every person that I met said, "He got a handful of votes here. Why are you bombing us?" That was the message from that town.

That point makes in microcosm the point that I am making in general. The hon. Lady speaks with the benefit of having been to the region recently and had such discussions.

We are now engaged in another form of alienation: the persistent attempt to impose heavy conditionality on the provision of development assistance. That will only breed a sense of mistrust between the Serbian population and the west. In particular, the linkage of development assistance to the extradition of alleged war criminals to The Hague is sending completely the wrong signal to the wider population. It looks to them almost like a form of imperialism, and the imposition by force—or by a very muscular diplomacy—of a western way of doing things. The west gets its conscience-salving display of defendants for trial, but the people of Serbia get the message that they are being pushed around by the west in general and by Washington in particular.

We need to take a much longer, broader view of our relationship with Serbia.

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs
(Mr. Mike O'Brien)

Will the hon. Gentleman clarify his position? I am not entirely sure what it is. Is he suggesting that the alleged war criminals should not be returned, or is the issue that concerns him the link between aid and their return? Does he feel that they should be returned but that aid should not be linked to that? In that case, how would he propose to provide encouragement? It would be very difficult then to return some of those war criminals, who have, in certain ways, some popular support.

There are a number of alleged terrorists in Britain at the moment, one of whom, in particular, the French want to interview. We are refusing to send him over because we are concerned about the treatment that he may receive and we are not convinced that the evidence is strong enough to require his extradition to France. We are doing that because we think that our judicial system is robust enough to form such judgments. However, we are now saying to Serbia—a new democracy, proud of its new institutions—that it is not capable of dealing with such issues itself. The truth is that the overwhelming majority of the Serbian population want to bring those people to trial and see the issues resolved. They want to do that, however, in their own way and in their own time, using their own institutions. That must be the best way to strengthen those institutions in the medium term. We are making a crass mistake by trying to impose on those people our western values and our rather narrow idea of exactly how that judicial process should take place.

My answer to the Minister is: take a broader view. Do not rely on that very narrow reciprocity to try to achieve what we all eventually want to see—those who have perpetrated terrible offences brought to trial. The first thing that we need to do is to win over the Serbian population, but there are two or three other things that we need to have in mind. We need to bear in mind the symbolic importance of membership of the EU to the Serbian leadership. Whatever the costs and benefits of the EU to Britain, they pale into insignificance compared with the benefits to the fledgling democracies of eastern Europe, for whom membership of the EU is the hallmark of re-entry into the family of western nations. We should be holding out a much more direct pathway to EU membership to Serbia. That is also true of Croatia. If anything, we should be trying to create some sort of competition and a sense of encouragement that the door is open and that both countries may achieve membership of the EU.

Another crucial factor is that we must give Serbia the impression that it can start to play a role in assisting with the stability of the whole region. Far from being a problem, a new democracy can be part of the solution. We have not done remotely enough about that. I have heard scarcely a word about the long-term prospects of Serbia becoming integrated or greater co-operation with the western alliance.

Finally, we also need to take a much broader and longer view of reconstruction. We need to grasp that the early stages of reconstruction are by far the most difficult. The creation of a set of institutions in a country that—although it has a highly educated and sophisticated middle class—has been in the hands of a narrow group of thugs and criminal gangs for some years, needs an enormous kick-start of assistance. If we can provide that assistance early on, even if it is costly in the early years, we will find that it is amply repaid down the line. I am talking about basic things such as assistance with the consolidation of property rights, cleaning up the banking system and giving whatever support is required to ensure that the judicial system operates adequately and that the faith and trust of the population is restored. That last point is closely linked to the one that I made a moment ago about war criminals. Such basic building blocks of development will be crucial in the weeks and months ahead.

In the period after the collapse of the Soviet Union in the mid-1990s, the west decided to channel huge amounts of extra aid to the region, first through the International Monetary Fund and then through other western institutions. Even though the amounts coming in were still relative pinpricks because of the size of the Soviet Union, at least we realised the need to go down that road. In the case of Serbia, even though the amounts of money involved are comparatively small, we have not gone down that road. We are not moving up a gear to the much higher levels of aid that are required in the early years to give Serbia the stability that it needs to develop quickly, as several other east European countries did immediately after the collapse of communism.

I do not know what will happen in Serbia in the weeks and months ahead, but I do know that the west can have a real influence. The decisions that we take will be absolutely crucial to the direction that Serbia takes, which is why I am participating in this debate and why I am so pleased that my hon. Friend the Member for Uxbridge managed to secure it. I plead with the Minister to give careful and serious consideration to putting Serbia and the stabilisation of this part of the Balkans much higher on the Government's agenda. Achieving stability is crucial to the west's interests and our interests.

10.19 am

There are one or two points on which I profoundly disagree with the previous three speakers, but I support the general tone of what they said.

I say to the hon. Member for Chichester (Mr. Tyrie) that the demand that indictees be sent to the International Criminal Tribunal for the Former Yugoslavia at The Hague must be fulfilled. The demand is of long standing and is correct under all known interpretations of international law. It is right and proper that Belgrade and other countries in the region should honour their obligations.

The hon. Gentleman's assertion on the renationalisation of the judicial process would make more sense if the renationalisation process had begun in all countries in the region to deal with those charged with crimes of a standard below that required to take them to The Hague, but that has not been the case. Every country in the region has lessons to learn in order to conform to the standards that we expect. Those standards are not, as the hon. Gentleman said, "our western values"; they are the values to which Serbia and Montenegro aspires as part of the European family. I profoundly believe that Serbia and Montenegro is part of our European family, and we should make that clear.

I also disagree with the hon. Gentleman's view on the need for military action in Kosovo. Given the humanitarian situation, we had little alternative but to act. I say to my hon. Friend the Minister that since then the way in which Britain and the international community have not got a grip on the Balkans has been a bad exemplar for other parts of the world where reconstruction is a necessary process after conflict. More important, the Balkans is still a difficult area in our European home and things can still go badly wrong if we do not begin to put in the effort to rebuild its shattered communities.

My hon. Friend the Member for Halifax (Mrs. Mahon) made the point that there cannot be further balkanisation of the Balkans. We have a problem with Kosovo, which was put in the too-hard-to-handle box four years ago—it is still in that box and there has been little progress. I agree with the comments made by other hon. Members that the ethnic cleansing of Serbs from Kosovo shames us all; it should rest on the consciences of those, like me, who played an active role during the military conflict in Kosovo.

I want to join the previous three speakers in saying to my hon. Friend the Minister that we must carefully examine where we are today. In the context of Serbia and Montenegro, we are in a position of uncertainty because of the brutal assassination of Prime Minister Djindjic. Along with other Members, I should like to place it on record that the assassination was, by any standards, an outrage. I first met Zoran Djindjic when he was an Opposition politician. At the time, he was acting bravely and putting his liberty, and maybe his life, at risk. That was no mean feat against the powerful Milosevic regime in Belgrade. As many commentators have pointed out, Zoran Djindjic was not flawless. Nevertheless, he was trying to take his country into a position in which it would be better able to deal with the United Kingdom, the rest of Europe, the international community and, indeed, Belgrade. His death is not only a personal tragedy but a tragedy for Serbia and Montenegro.

Recently, I met Mr. Dragoljub Micunovic, the Speaker of the Parliament of the Federal Republic of Yugoslavia, who led the delegation to the Council of Europe, which Serbia and Montenegro is actively trying to join. His feeling that the standards demanded of Serbia and Montenegro change and that there is not a consistent road map came up in that conversation. Those issues come up time and again in conversation with people from Serbia and Montenegro. There is no clear indication of what Serbia and Montenegro has to achieve in order to make progress—to access the carrots, if you like. There is a feeling that too often the sticks are easily available and visible, but the carrots are more difficult to access. I say to the Minister that we need to pay serious attention to what that means.

We are blind if we do not recognise that there has been real progress in Serbia and Montenegro. Equally, Serbia and Montenegro is blind if it does not recognise that there is an expectation of more progress in the reform of its institutions, and various aspects of its relationship with the international community and its own population. If we do not address some of the basic problems, we confine the region—not just one country—to much slower progress or the possibility of regress. I acknowledge the pleas from other hon. Members for recognition of economic factors.

My hon. Friend the Member for Halifax made the fair point that the reconstruction of the shattered infrastructure that was the result of military conflict has not moved forward at any great pace. The Danube still operates, as it did historically, as a barrier in the region, not as part of the main infrastructure. We need to pay attention to that, and to trade. A country that has so many unemployed and so many thrust into poverty, which is unusual and way below the expectations of Serbia and Montenegro, will experience political instability and will potentially suffer a reversion into the narrow nationalism that cost the country so dearly over the years.

My appeal to the Government is for us to look again long and hard at what we do put on offer. Council of Europe membership is a small thing for this country, but would send a strong signal to Serbia and Montenegro that people believe it to be part of a European home. It is making progress on the journey to that common European destiny. It is important that we put out a hand and say that we want Serbia and Montenegro to look outwards. That is a step forward, and we should be clear about the conditions that we expect to be fulfilled.

People in Belgrade say that they have met the criteria that were part of the original demands. To make progress on that would be a strong signal. To explain what Belgrade must do to make further progress is vital, so that there is clarity in the relationship above and beyond everything else. It would be valuable if the Minister could take that message back to his colleagues, and our country could pursue that process with our American partners as part of our ambitions in the EU—if we are still talking to people in the EU at this stage.

We can take the view—as most of our colleagues in the House do—that the Balkans is a finished operation, which happened some years ago and is now done and dusted. There will be, quite rightly, a huge turnout for a debate on Iraq today; there is a relatively small turnout for a debate on Serbia and Montenegro this morning. Serbia and Montenegro is vital to the whole of south-eastern Europe. We want to be part of a process of building a south-eastern Europe that trades, works and re-establishes the old relationships—not the old nations, which are gone—that allow the emergence of a strong part of our continent, which is less problematic for us. That is not a difficult ambition, and it is certainly easy to state.

Progress has not been made in recent years. All parties need to make a commitment and say that the region still matters enormously. We have responsibilities, and we have something enormous to gain if we get the process right. In this case, we can travel with a little more hope than the hon. Member for Uxbridge (Mr. Randall) showed in his remarks. I want to finish by paying tribute to him. He speaks with enormous affection and emotion for the region, and Serbia and Montenegro. He has done the House a great service by securing the debate this morning.

10.29 am

I thank the hon. Member for Uxbridge (Mr. Randall) for securing the debate. He will acknowledge that, given the assassination of the Prime Minister, the debate sadly has become more topical than he might have appreciated when he requested it. I certainly defer to his local knowledge and expertise, and to that of the hon. Member for Halifax (Mrs. Mahon) and others who have spoken.

I should declare an interest as a member of the steering board of an organisation cumbersomely named the East-West Parliamentary Practice Project; it is changing its name to the Institute for Parliamentary Democracy, which is more manageable. It is organising a series of programmes over three years to work with parliamentarians in all the new Balkan democracies, at their request and according to the structure of their reforms and parliamentary workings. It has always been my view that we have as much to learn as to teach at seminars and discussions. It is our job not to turn up and tell people what to do but to share our weaknesses and failings.

As the hon. Member for Manchester, Central (Mr. Lloyd) half implied, it is a huge irony that, at the beginning of the 20th century, the future of Serbia was a matter of great concern on which the shape of the century pivoted. Here we are at the beginning of the 21st century, and the problem of Serbia and Montenegro is as unresolved, and as important to the stability of south-east Europe and the future shape of Europe, as ever. The history and politics of the Balkans are confusing, and none of us has the right to stand up and suggest that one solution is correct. Ultimately we have to work with the people of the area to help them arrive at viable solutions.

Britain has a legitimate interest in the area. I take gentle issue with the hon. Member for Uxbridge, who seemed to be casting aspersions in the direction of Liberal Democrats about a difference between our approaches to the Balkans and the current crisis in Iraq. The difference hinges on the fact that the Balkans is part of the Europe that we are trying to build and it is important that those of us who want to see a successful, if changing, European Union, recognise that Britain's interest is directly involved. By contrast, many of us view Iraq as crucial to the stability and future of the middle east; of course, we have an interest there, but it is not under our immediate political influence. That is why our approaches differ.

I absolutely agree that whatever one's view about the actions in Kosovo and elsewhere in the Balkans, they were supported because we saw the immediate effects of people killing one another and sought to intervene to stop that. As the hon. Member for Uxbridge rightly acknowledged, we might have been successful in stopping ethnic cleansing in the short run, but not in its ultimate manifestation. We were successful in stopping people killing each other, and that was the justification that many of us went along with. I acknowledge that one of our biggest problems is the tendency to enter countries with a sharp military impact, creating long-term political problems that we do not have the interest or momentum to follow through. That is why mention has been made of Afghanistan and the Balkans.

In recent months, I visited Albania and Bosnia and Herzegovina to monitor elections. I witnessed their perspective on Serbia. I take no opinion; I simply acknowledge what I saw. One thing hit me sharply. After a day at a seminar and a dinner, our host took us to a jazz club in Tirana some time after midnight. A girl got up and started enthusiastically singing, "I wanna be an Americano". People literally stood up on the tables and cheered, which would be a little surprising if it happened in Swindon or elsewhere in the United Kingdom. Such action brought home to me the fact that America was seen by that audience as the champion of some form of Albanian nationalism, whereas in Bosnia and Herzegovina there is the problem of Sarajevo's civil war experience of the Republika Srpska and its aspirations to be part of a greater Serbia.

In a sense, we can stand back and try to find viable political solutions, but any attempt to impose them will not succeed now any more than it has in the past. Our job must be to approach such matters without arrogance, but with humility and as genuine friends who want the region to have a stable and viable future, for its sake as well as for our sake. After the shocking assassination of Zoran Djindjic, we must be concerned that that was a signal that organised crime will confront attempts to crack down on those involved and create a climate where democracy and free enterprise can flourish. We must hope that the pledge of the successor, Mr. Zivkovic, to fulfil Djindjic's dream of a European democratic, efficient and prosperous Serbia will succeed.

We must recognise the obvious disparities and tensions in the new union of Serbia and Montenegro. We have not yet observed a democratically elected president for either of the entities because of the 50 per cent. rule, which I understand Montenegro will now try to alter. My guess is that Serbia will need to do so in due course. The union needs legitimate, elected political leadership that can carry through such reforms and that requires courage and a great deal of confrontation. I am not breaking any confidence by saying that, when I visited Sarajevo, Paddy Ashdown—the United Nations high representative—made it clear that he understood fully that confronting and defeating organised crime was probably the single most important issue that had to be resolved before true democracy, free enterprise and inward investment could flourish in the Balkans. Anyone who says that has to take on board the fact that we are confronting extremely vicious, ruthless killers who are willing to take on anyone without fear or favour. It is a difficult and dangerous area in which to operate.

We must clearly acknowledge the legitimacy of a constructive engagement between members of the European Union and the Balkans. I agree that the prospect of eventual membership of the European Union—which will be a different organisation in any case 15 years from now—is crucial. The hon. Member for Manchester, Central is the leader of the British delegation to the Council of Europe, of which I have the privilege and honour to be a member. I accept entirely his remarks that, within Britain and this Parliament, the Council of Europe is perhaps not regarded as an important body. However, those of us engaged in such a process realise how important it is and that the Government must recognise the role that it plays, which is different and distinctive from that of the European Union.

Of course, the Council of Europe works with European Union institutions. We lack their resources, but we have the beacon of 50-plus years of championing human rights and democracy. That is the absolute core of the Council of Europe. The prospect of membership of the Council of Europe on reasonable and clearly understood conditions for Serbia and Montenegro is the first step towards reassuring the country that it is part of the European family. It is not—I repeat the words of the hon. Member for Uxbridge—our job to tell it what to do. Our job is to work through its institutions and ours to create a prosperous, democratic Serbia and Montenegro and a stable Balkans, which is in the interests of the entire European continent.

10.39 am

I pay tribute to my hon. Friend the Member for Uxbridge (Mr. Randall) for securing this debate. We had the benefit of his extraordinary knowledge and understanding of the area today. There have been some excellent and considered speeches, but I take this opportunity to pay particular tribute to the hon. Member for Halifax (Mrs. Mahon), whom I have come to know. She is a remarkable parliamentarian and I very much regret her decision to leave the House of Commons at the next general election.

I also wish to add to what other hon. Members have said about the assassination of Prime Minister Djindjic. It is a tragedy for Serbia and the region. My party and I send our condolences to his family at this difficult time for them and for the country. The tragedy once again brings into stark relief the problems still faced by Serbia and the great challenges still waiting to be addressed. We in the UK and the international community must continue to extend our help and support to Serbia and Montenegro at this most difficult time and recognise the great effort that Serbia is making to break with an authoritarian past and reform both its polity and its economy.

If we study the sad background to what has happened in Serbia and Montenegro, we see that in the 1990s there were terrible wars with genocide, slaughter, displaced people and destruction of property, leading ultimately to the Dayton accords. We should feel a certain amount of pride in the UK in recognising the role that we played in trying to help to stabilise Bosnia with our participation in I FOR, UNPROFOR and SFOR. We watched with horror the ethnic cleansing unleashed by Milosevic of Kosovo Albanians at the same time as we saw the Kosovo Liberation Army radicalised, coupled with an increase in cruel violence against innocent Serb civilians. We know what happened as a consequence, which ultimately led to the fall of Milosevic in October 2000.

The history of the Balkans is far too complex to provide easy answers, but the legacy is there. The economic condition of Serbia and Montenegro, with all of the displaced people mentioned by hon. Members this morning, remains a massive problem, with deep psychological scars there for all to see. I hope that, in his response, the Minister will enlarge on what we are doing and must continue to do to assist Serbs who have been displaced and remain refugees.

The role of the UK in supporting the opposition parties during the dark days of the late 1990s is equally worthy of praise. The fall of Milosevic and his subsequent extradition to The Hague and replacement by a new breed of politician marked a new opportunity for Serbia and Montenegro, which we must acknowledge and seek to build on. That opportunity must be seized.

One point has been made rather tellingly this morning; the British Government should not examine the situation on a purely country-specific basis. A broader approach is needed, designed to encompass the whole region. My hon. Friend the Member for Chichester (Mr. Tyrie) touched on that point indirectly. I hope that the Minister will talk about the wider regional angle of the Balkans' place in Europe, a point mentioned by the hon. Member for Gordon (Malcolm Bruce). Only by adopting a suitably broad approach can we truly preserve the peace that we have sought to help to rebuild.

Much has changed in Serbia since 2000, the visible evidence of which is the change in the constitutional arrangements that flowed from the end of the Federal Republic of Yugoslavia earlier this year, following last year's agreements and the replacement of the new looser union between Serbia and Montenegro. The settlement, which was brokered by the EU, provides for a larger degree of Montenegrin autonomy, although many want outright independence. The long-term future will be decided in 2006, when the two countries will decide whether to continue the arrangement. We hope that the new arrangements prove successful in meeting the aspirations. However, the changes have not proved flawless. It is important that the new arrangements will produce a better relationship between the two countries.

There are still some unresolved issues. We have heard again, in graphic terms, from the hon. Member for Halifax, about the missing Serbs in Kosovo and about the many Serbs who do not feel safe enough to return. That is still a massive problem. We must show our commitment to equality and democracy and we must show that the safety and security of Serbs in Kosovo is every bit as important to us as was the safety of the Kosovo Albanians, when they were threatened and attacked by Milosevic. The numbers of Serbs who fled Kosovo and who feel safe enough to return is still worryingly small, according to figures produced by our Government. All citizens of Kosovo—whether Serb or Albanian—must feel free from persecution and harassment.

One reason for the low turnout in elections is a sense of frustration born, possibly, from the state of the economy. The economic situation remains a problem and gives much concern. I met Serbian Members of Parliament last week and we talked about that matter. One of the factors that held back greater growth in Serbia and Montenegro, aside from the Milosevic legacy, is organised crime and lawlessness. Despite policies to counter it, it is still a massive problem; we saw that in the tragic assassination of the Prime Minister.

The Serbian Government are right in their determination to take on this insidious and destructive evil. Money goes where it feels safe and an impression of lawlessness unsettles investors, making them unwilling to invest directly into the area. The political situation in Serbia and Montenegro—its stability and the determination of the Government to reform—are vital in creating the conditions that are necessary to attract investment.

New members will be coming into the EU next year and I hope that, after a continuing process of reform, we will see exactly the same thing happening in due course for Serbia and Montenegro. The hope that that might happen is important to the people of those countries. Both countries have massive potential and I hope that that will be realised. Those points were specifically taken up by my hon. Friend the Member for Chichester and the hon. Member for Manchester, Central (Mr. Lloyd), and I agree entirely with the point about the Council of Europe.

We must help and support the reformers in Serbia and Montenegro, rather than simply criticise people. We must continue to work with those who are trying to bring about stability and prosperity after all the tragedies that they have endured, and we must encourage them to stick to a reformist course, however tough the obstacles might be. If we play our role and continue to work together—aiming to create a successful and prosperous Serbia and Montenegro—that would be an enduring legacy after the terrible tragedy suffered for far too long by the people in that region.

10.48 am

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs
(Mr. Mike O'Brien)

I begin by congratulating the hon. Member for Uxbridge (Mr. Randall) on calling the debate; it was called when the political situation in Serbia and Montenegro was somewhat calmer than it is today. I welcome this opportunity to set out the Government's policy on Serbia and Montenegro. The debate has been good and has been characterised by important contributions from my hon. Friends the Members for Halifax (Mrs. Mahon) and for Manchester, Central (Mr. Lloyd), the hon. Member for Chichester (Mr. Tyrie) and from Opposition Front-Bench spokesmen.

I agree with my hon. Friend the Member for Manchester, Central that the Balkans is of enormous importance to Europe. What happens there is directly relevant to us and to what happens here. Because the Balkans area is so close, we must ensure that we have a close eye on everything that happens in it. If things go wrong there, the impact will be felt quickly in Britain and the rest of Europe.

The situation had looked better; the Serbia and Montenegro constitutional charter had been adopted and a new president was elected. New institutions were being formed. A new team was coming together to tackle the challenges that lie ahead and to bring Serbia and Montenegro further into the European family.

That has now changed. On 12 March 2003, the Serbian Prime Minister, Zoran Djindjic was assassinated as he walked from his car to Serbian Government buildings. He had been shot twice by a sniper. He was taken to hospital where he died in the operating theatre. The entire House will wish to join me in expressing revulsion at that supremely undemocratic act and in sending our condolences to his widow and children and to the people of Serbia.

On 15 March, the then Leader of the House of Commons, my right hon. Friend the Member for Livingston (Mr. Cook) attended the funeral on behalf of the Government. It was one of his last and most important acts as Leader of the House, and I pay tribute to the work that my right hon. Friend did in that post and as Foreign Secretary in recent years. He delivered letters of condolence from our Prime Minister to Zoran's widow and the President of Serbia and Montenegro. The funeral was very moving. It was held in St. Sava church in Belgrade and hundreds of thousands of people lined the streets to pay their respects.

I wish to say a few words about Zoran Djindjic. I did not know him, but my right hon. Friend the Prime Minister knew him well, and several Members of this House met him, including my hon. Friend the Member for Manchester, Central. Many Members met him when he visited Britain in 2002. He had a vision of where Serbia and Montenegro should be going and how to get there: he was brave and visionary. He was fluent in English and German, and he was a European politician who was capable of growing in stature. His achievements were many, but I will mention the three for which he will be best remembered: organising the Serbian pro-democracy movements of the 1990s; the transfer of Slobodan Milosevic to the International Criminal Court in June 2001; and starting to tackle the organised and war criminal networks that grew out of the Balkan wars during the past decade.

I strongly agree with the hon. Member for Gordon (Malcolm Bruce) that confronting organised crime in the Balkans is the most important and difficult policy objective of the international community and the Governments in the region. It was probably the cause of Zoran Djindjic's murder because what he and other reformers strove for—democracy, the rule of law and vibrant economies—directly threatened the lifeblood of the criminal networks. Europe has lost a European leader, and the UK and Europe have lost a Serbian friend.

By 17 March, the Serbian authorities had pulled in at least 400 suspects for questioning, including the former head of the Serbian state security service. We welcome the Serbian authorities' determined efforts, and we have offered our support if and when they require it. A state of emergency has been declared and there is an increased security presence throughout the country. A working group consisting of key Serbian Ministers and the chief of the Serbia and Montenegro armed forces is monitoring its implementation. It is expected to stay in place until the end of April.

We are closely monitoring the situation. The political situation on the ground remains fluid, but it is slowly stabilising. On 16 March, Zoran Zivkovic was nominated to replace Djindjic as Serbian Prime Minister. On 17 March, Boris Tadic was appointed Defence Minister. Goran Svilanovic has been appointed Foreign Minister. On 7 March, Svetozar Marovic was elected President.

It is too soon to assess the long-term implications, but let me outline what the Government think are the key points for Serbia, the union of Serbia and Montenegro and the wider region in the coming weeks. We want to avoid Serbia descending into the hands of criminal elements. The determination with which the Serbian authorities have handled the situation so far bodes well, but this is not an easy task for them. There are testing times ahead. We will provide moral as well as practical support. The authorities must establish full cooperation with the International Criminal Tribunal for the former Yugoslavia and ensure that war criminals are transferred immediately to The Hague. Any failure to take action against organised and war criminals will be interpreted as a sign of weakness.

Together with our European partners, we will want to avoid any attempt by those opposed to the recent agreement on Serbia and Montenegro to undermine the deal. The appointment of the new Ministers will help to ensure the stability of the newly formed union. They must work together to ensure that the union makes early progress. A first priority should be the early adoption of a working and effective single market between Serbia and Montenegro, paving the way for an EU feasibility study for a stabilisation and association agreement.

Montenegro and the region suffer from the threat of organised crime. On 30 November 2002, the then Minister of the Interior, Andrija Jovicevic, ordered the arrest and prosecution of the deputy slate prosecutor for alleged involvement in people-smuggling. The Montenegrin authorities need to ensure that the case is properly investigated and that justice is done. The leadership shown in the fight against organised crime in Serbia must be replicated in Montenegro. Together with our partners and allies, we are warning off regional extremists, particularly Albanians, who may attempt to use those tragic events as an opportunity for disruption.

KFOR has stepped up its patrols. We welcome the universal condemnation of Prime Minister Djindjic's murder by politicians across the region and by the provisional institutions of self-government in Pristina. Their joint commitment to clamping down on organised crime and terrorism continues the legacy of political maturity that Prime Minister Djindjic was demonstrating in Serbia. We have requested that SFOR step up patrols in Republika Srpska. One of the chief suspects in the assassination attempt, Milorad Lukovic, is rumoured to be hiding there.

At the General Affairs and External Relations Council today, EU Ministers will consider what help we can give to the reformers in Belgrade and to the new Government at this critical time. Meanwhile, as NATO contact point in Belgrade, we continue to provide advice to the armed forces and civil society about the importance of reform and effective civilian control of the military.

The November 2002 London conference on organised crime identified organised crime as perhaps the biggest and growing threat to regional stability. Since we announced the conference, we have committed over a million pounds to crime fighting initiatives throughout the region. UK law enforcement officers have been posted to the region and neighbouring countries.

I have not had the opportunity to deal with all the points raised, but I hope to write to hon. Members on one or two points that I had hoped to deal with. I should just say that the murder of Prime Minister Djindjic was not just another murder in the Balkans. It was an attack on Serbia's stability, regional stability and the Balkans partnership with the European wider community. It is a grisly reminder that, although outwardly stable, the region remains vulnerable.

Since the Dayton agreement in 1995, the extremists have been gradually marginalised. The Kosovo campaign in 1999 and the overthrow of Milosevic in 2000 have made their pernicious influence wane further. However, the assassination reminds us that they and the organised criminals and gangsters who sustain them have not disappeared. Despite the other claims on our attention at the present time, we cannot afford to neglect the Balkans.

The criminals must learn that they have had their day. We will support the Belgrade reformers at this crucial hour. They and we must continue to tackle the underlying causes of extremism and act against the gangsters, war criminals and other thugs who hinder Serbia's future. We will do that and work with Serbian reformers to create a better Serbia and Montenegro.

International Oil Reserves

11 am

I am very pleased to have the opportunity to introduce a debate today on foreign policy objectives relating to international oil reserves. Given the international situation, this short debate this morning is timely. It will perhaps constitute a light breakfast before the main meal in the Chamber later.

The central thesis that I want to put to the Minister today is that it is in Britain's interests, and should be a foreign policy objective, to diminish reliance on oil in this country's economic activity, partly for diplomatic reasons. It makes no sense, and is dangerous, to continue our present reliance. I want an assurance from the Minister that he recognises the importance of moving away from oil and towards other methods of powering the economy.

I mention first the environmental aspect of oil production. The British Government have signed up to Kyoto, which we are all pleased about. They have set themselves a tough target, which the Minister for the Environment and others say that they are on line to meet. That is good news, although it is not the case with all the world's countries; most notably, the United States and Russia are currently outside the Kyoto protocol. However, it is difficult for this country and other western democracies to argue that Kyoto is vital if we make no attempt to reduce our dependency on oil.

I remind the Minister that the British Government predict that, by 2080, 94 million people around the world will be at risk from flooding every year as a result of global warming and that, by 2025, increasing incidences of drought will mean that up to 5 billion people will lack sufficient water. Those are startling figures, which should cause concern not only from a humanitarian viewpoint but in terms of the world's stability, a central concern of the Foreign Office.

Oil is a major pollutant. Between 1978 and 1999, the Advisory Committee on Protection of the Sea recorded 12,746 oil pollution incidents. They occur every day. Yesterday, I was on the beach at Newhaven in my constituency and saw birds, covered in oil, dead on the beach. There are environmental implications of oil, on a grand and on a lesser scale. The other environmental aspect is that oil is a finite resource. It will run out, and it is rather selfish of this generation and the preceding one to have used oil in such a cavalier way, knowing that it will be exhausted before very long. That will lead to all sorts of problems for the world.

The reply that I had from the Minister for Energy and Construction earlier this year said that there are thought to be 959 billion barrels of proven oil reserves and 939 billion barrels of undiscovered resources across the world. That might sound like an enormous amount, but even that Department of Trade and Industry answer recognised that, at the present rate of consumption, we will face problems by 2030—that is the Department's date—unless we find new sources of oil, a finite resource, or, more appropriately, we move towards an alternative solution that breaks our reliance on oil. I very much hope that we will take that second course.

Oil has built up over billions of years and we, as a human race, are proposing to use the entire resource in a period of some 200 years, the bulk of it at the end of that time. The Minister will recognise that instability will flow from the increasing consumption of oil, a decreasing resource; that is happening globally at the moment. That could lead, first, to increased economic costs and, secondly, to a destabilised world in which nations fight over the remaining oil. We must try to build a system that avoids a catastrophe in 20 or 30 years' time.

In Britain, oil production has peaked and is declining. That is also the case in other western countries, such as Norway and the United States. In the years ahead, the countries that peak last in terms of production will be the most unstable countries in the world, including Saudi Arabia and I raq. We do not want a situation in which we are dependent on unstable regimes for an essential commodity such as oil.

The United States consumes over 25 per cent. of the oil produced worldwide, but US production of oil has long since peaked and is in serious decline, which makes it more dependent than ever on imports. That would be the case even if we were talking about satisfying a steady demand, never mind one that continues to increase. The Bush Administration's 2001 energy plan predicted that an increased demand for oil was inevitable, with oil imports needing to rise from 10.4 million barrels per day at present to 16.7 million barrels per day by 2020. That is a huge increase of some 60 per cent. over the first two decades of the century, yet the resource is declining. The US currently spends $100 billion a year on oil.

We know why US demand is high; it is related to the standard of living, the cavalier attitude that the Bush Administration in particular have towards the environment and the refusal to go along with Kyoto or to recognise the need to have sensible pricing regimes for, for example, fuel for vehicles. The price of gas, as they call it, is extraordinarily, artificially and irresponsibly low.

The reliance on oil that we and the US exhibit in our behaviour can have significant economic consequences, including short-term consequences. We know, for example, that oil shocks can act as catalysts for substantial damage to western economies, as they did in 1973–74, 1979–80 and 1990–91. The interplay between the economy, the environment and security of supply is an increasingly central issue to the Foreign Office, as the debate over Britain's nuclear energy and gas has demonstrated. Oil shocks damage oil-importing countries because they simultaneously depress demand and raise prices. All three shocks to which I referred were caused by, or were a catalyst for, a serious downturn in western economies.

As I mentioned, the reserves of oil are being held in the world's unstable regimes. The US relies hugely on imports from countries that cannot guarantee a stable flow over a long period of time. Venezuela, the fourth biggest supplier to the US, virtually halted oil exports to the US when the turmoil occurred there last year. Saudi Arabia may have been seen as a stable regime, in some ways, over the past 20 or 30 years, but we cannot guarantee that it will be so in the years ahead; particularly if the middle east is destabilised as a consequence of activities likely to begin shortly.

If the US and others were able to secure control over some of the remaining oil reserves in what are presently unstable regimes, it would provide a short-term breathing space. Iraq is sitting on 11 per cent. of the world's oil reserves, or 112 billion barrels, making Iraq second only to Saudi Arabia in terms of its oil reserves. There are 16 years' worth of US oil consumption in Iraq alone. The US Department of Energy recently confirmed that. In its Iraq country analysis brief of October 2002, it was stated that:
"Iraq's oil production costs are amongst the lowest in the world, making it a highly attractive oil prospect."
I am not saying that we are seeing the events that are unfolding in the world today simply because there is a drive for oil. There are clearly other factors at play. However, oil is undoubtedly a factor, because the price, availability and regular supply of oil affect the economies of the west, and the US and UK in particular. Clearly, the US Administration have signed up to deal with the oil problem, as they see it, in Iraq. A letter to President Clinton in 1998 from Donald Rumsfeld, Richard Perle, Paul Wolfowitz and Richard Armitage said:
"US foreign policy should aim at the removal of Saddam Hussein's regime from power. [If this strategy is not followed] a significant portion of the world's supply of oil will be put at hazard."
Those authors are now, with one exception, in the US Administration. Larry Lindsey, President Bush's economic adviser said in September 2002:
"When there is a regime change in Iraq, you could add 3–5 million barrels [of oil per day] of production to world supply … The successful prosecution of the war would be good for the economy."
Oil is not necessarily the only factor, but it is clearly a factor.

There is a problem with the logic being employed in some quarters. The assumption is that Iraq's capacity can be increased. That will increase the flow of oil around the world, which will lead to more competition and a more stable supply. There are two problems with that. First, as the Minister and his colleagues will recognise, attacking a middle east country has the potential to destabilise the region, particularly in Saudi Arabia where there is a clear element that is unhappy with any pro-western association. That could lead to a situation in which Iraq was gained and Saudi Arabia was lost, which would not be a sensible outcome.

Secondly, there are economic consequences to such an attack if it leads to Iraq producing higher quantities of oil. In the short term, if Iraqi production were raised markedly it would lead to a glut of oil in the world market, which would depress the price of oil. That may be seen as a good thing, but it would depress the gross domestic product and income of Saudi Arabia, which is hugely reliant on oil, and could also have a destabilising effect on that regime. It is perfectly possible that through efforts to increase oil supply, the opposite could occur.

That leads me to conclude that is not sensible for the world as a whole, and the west in particular, to rely on oil as the lubricant for the worldwide economy. We have to move away from oil and invest far more in alternatives, as BP and Shell are doing. Those British companies are leading the way in developing alternatives. "Beyond petroleum" is BP's new title and it recognises that we cannot be reliant on oil. In that sense, industry is ahead of Government. I am not just talking about this Government—I am not making a party-political point—but Governments in the west in general.

The attitude of those companies is in stark contrast with Exxon Mobil, which is doing everything it can to snuff out renewable technologies and keep the oil pumping. The Government have a key role in encouraging BP and Shell to develop alternative technologies and ensuring that the west, and the world in general, is not dependent on oil. When we look for the lubricant for our economic engine in years to come, we do not want to face a small number of countries, many of which are unstable, controlling the price at a level not helpful to us and holding us to ransom, which may engender a military response from a nation, or nations. That is not a healthy situation, and we need to avoid it. We are on the cusp of it now.

I should like to raise a further point—the environmental consequences of any oil-related activities that occur in the next month or so in Iraq. The point is serious, and I have raised it with the Prime Minister. When I asked what assessment he had made of environmental damage and what steps had been taken to prepare for it, he simply said that there was no war with Iraq. Strangely, I was aware of that when I asked the question—it had not bypassed me—but his answer did not help.

I say to the Minister that we are facing a potential environmental catastrophe, assuming that action starts. We know that because we experienced an environmental catastrophe during the 1991 Gulf war. What happened then, and what could happen again now, is the release of huge amounts of carbon dioxide into the atmosphere: something like a million tonnes a day could come out of the oil wells, if Saddam Hussein sets fire to them, as he may well do, or if they are struck by bombing from the UK or US. Huge amounts of carbon dioxide could be released. The temperature could drop by 10°, as happened last time, because of the cloud cover from oil pollution. Many birds and much other wildlife were badly affected and killed as a result of the deliberate destruction of oil wells that Saddam Hussein embarked on in 1991, and human health was massively affected as air pollution levels rocketed.

I warn the Government that there will be a serious environmental pollution problem if we have a war with Iraq. I hope that they have some scheme for dealing with it and that preparatory work has been done to ensure that damage to the environment can be prevented or, if not, will be minimised and put right as soon as possible.

Finally, I refer the Minister to article 55, which states that part of any war activity is a duty on each party to protect the environment. I very much hope that the Government keep that in mind in the days ahead.

11.15 am

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs
(Mr. Bill Rammell)

I am most grateful to the hon. Member for Lewes (Norman Baker) for raising such an important issue at this time. As usual, he spoke with great clarity and conviction. The security of international energy supplies is a matter of concern to all countries, including the United Kingdom. Energy policy is a prime example of the increasing interdependence between foreign and domestic policy.

I wish to begin by referring to the hon. Gentleman's comments about the Kyoto protocol. He rightly referred to the fact that the UK is, justifiably, a signatory to the protocol, whereas the United States of America is not. We are entering a period in which our relationship with the USA will be a matter of some debate. We are right to work with the Americans on the Iraq crisis, but there is a significant difference of opinion on the Kyoto protocol, and we will continue to offer arguments about it to our American partners.

The Government are very conscious of the need for a radical new approach to energy policy. That was clearly set out in the energy White Paper that was published on 24 February, which marks a departure by setting energy policy firmly in the context of environmental challenges, particularly those of the global environment. I welcome its clear strategy to reduce carbon dioxide emissions by some 60 per cent. in the next 50 years. That is a radical ambition, which we are right to put forward. We are encouraging the development of renewable energy in the UK and greater progress in energy efficiency, which are central to achieving that aim. I certainly concur with the hon. Gentleman's points about our need to cut oil consumption. We must do that if we are to meet the ambitious targets that have been set by the Kyoto protocol.

The policy to which we have committed ourselves is based firmly on four pillars—protecting the environment—promoting competitive markets in the UK and beyond; tackling fuel poverty at home, which is crucial; and, last but not least, maintaining the reliability of our energy supplies. Energy is vital for the world's economic prosperity and development. At present, oil accounts for some 40 per cent. of world energy consumption, mainly in the transport sector. That is why it is important that we enact the measures in the Kyoto arrangements.

To put our dependence on oil in context, as a country we have been a net exporter of energy, with significant imports and exports, for the past two decades, following the successful development of North sea oil. However, as the hon. Gentleman pointed out, that will certainly change. Forecasts vary, but it is commonly agreed that UK oil and gas production will decline significantly in coming years. On an annual basis, it is likely that the UK will become a net importer of gas by about 2006 and of oil by about 2010.

By 2020, we are likely to import about three quarters of our primary energy needs and therefore need to rethink and to respond. We value the contribution of our world-class energy companies to the successful development of our oil and gas reserves. We will continue to give a high priority to developing the UK continental shelf, and the Pilot scheme is central to that work. The Pilot scheme, which is now in its third year, is an initiative based on promoting industry co-operation with the Government to enhance the economically efficient recovery of the UK's oil and gas resources to prolong our indigenous supplies.

As well as promoting energy efficiency to help us address the challenge of climate change, consuming countries also need to explore alternatives to mitigate our dependence on fossil fuels, especially and importantly within the transport sector. Mobilising innovative science and technology is a major theme in the White Paper to which I earlier referred. We need not only to use our science and technology base but to multiply its effectiveness through international collaboration. We are focusing on that in our public expenditure priorities, particular on energy research, development and innovation. The Department of Trade and Industry spent about £40 million supporting sustainable energy-related research and technological development in 2001–02. We have already put in place a substantial renewables support programme worth some £250 million between now and 2005–06.

We are not acting in isolation. I took some of the hon. Gentleman's points about the actions of the United States of America, but there is an indication that movement is beginning. The development of hybrid vehicles, which could dramatically cut fuel consumption, is beginning to be looked at in the United States, which is welcome.

We need to put into context the fact that we will move from being a net exporter to being a net importer. Relying on imports need not be a problem. Import dependency, especially for oil, has long been a fact of life for all the G7 countries, except for Canada and the UK. Having said that, the economic health of all countries depends on the stability of the international energy markets. World population growth and economic expansion suggest that demand for oil will significantly increase over the next 20 years, so we have to get it right by seeking to create stability.

Worldwide, fossil fuel resources are large and there are sufficient oil reserves to meet projected demand for around 30 years. If we look to the development of non-conventional reserves such as Canadian oil shales and Venezuelan heavy crudes, as well as improvements in technology, oil reserves could last for twice as long.

Also, the bulk of conventional oil reserves are, as the hon. Gentleman has pointed out, located in the middle east, which currently supplies about 25 per cent. of Europe's imports; a situation that is likely to continue for a considerable time. However—I want to make this point strongly—there are also significant oil reserves in north and south America, Russia, the countries of the Caspian basin and Africa. The Caspian basin, for example, may hold as much as 5 per cent. of global oil reserves and is likely to produce 3 million barrels of oil a day by the end of this decade, which is about 3 per cent. of the world's oil needs.

The picture is complicated and we need to look at all its aspects. Exploring the development of diverse oil reserves helps us to stabilise the market and, crucially, to underpin the security of supply. The Government certainly regard such a development as a high priority, as we have clearly set out in the energy White Paper.

We also need producers and consumers to work together to produce an effective trade in energy products. For more than a decade, oil and gas producing and consuming countries have been engaged in a dialogue on both a bilateral and, through the international energy forum, a multilateral basis. The UK has been an active supporter and participant in that process.

The hon. Gentleman referred to the need to secure regional stability in the key oil producing areas. He flirted with the argument that the current action on which we will be voting in the House of Commons this evening is driven by the need for oil. That is the least persuasive argument in all the current debates on that subject. I genuinely and profoundly do not believe that committing ourselves to military action in Iraq, if that is what happens this evening, is about oil. I believe that it is about weapons of mass destruction and a regime that has consistently and defiantly flouted the will of the international community for the past 12 years.

If oil were the only issue, we could simply cut a deal with Saddam Hussein, as has been made clear many times, and allow him to continue to hold and develop his weapons of mass destruction in return for access to his oil reserves. I am sure that he would sign up to such an agreement within moments. The argument about oil is not persuasive.

It is worth putting into context the scale of Iraqi oil production. Iraq may be a major oil producer, but that should not be overstated. Iraq currently produces around 2.4 million barrels a day—the same as the UK—which puts the matter into realistic context. It is arguable that oil may be a stronger influence on Russian and French policy as we have seen it developing during the past few weeks, because they have a much more significant strategic interest in Iraq's oil reserves compared with the overall size of their economies. With respect, the picture is much more complicated than the hon. Gentleman suggested.

Could I put it on the record that I suggested that oil was a factor? I did not say that the situation was only about oil. I am prepared to accept that the Prime Minister is driven by a messianic zeal in his approach, but the same cannot be said of President Bush, who, with his colleagues, is steeped in oil.

The hon. Gentleman's argument about oil was not made with conviction. If he has any genuine doubt, I hope that he was reassured by the announcement made at the weekend in the Government's "Vision for the Iraqi people", in which we made it clear that we would work with the international community in the event of military action

"to ensure that the Iraqi people can exploit the country's resources for their own benefit and contribute to their own reconstruction, with international help where needed."
We suggested a UN trust to administer that. There is no vestige of credibility in the argument that we and the Americans are driven by the need for oil.

The hon. Gentleman referred to the Prime Minister's messianic zeal, but most people are coming to the conclusion that he has a sincere and genuine conviction of principle. People do not recognise principle and conviction in the somersaults of the leader of the Liberal Democrats on the issue and on the need for a second UN resolution during the past several months. They recognise opportunism during the most extraordinary and difficult situation that this country has faced for many a year.

Securing stability for oil supplies requires the resolution of the middle east peace problem. It is a credit to the Government that they have been at the international forefront in striving to achieve that. We welcome President Arafat's decision to appoint Abu Mazen as Prime Minister, which is an important step forward. We are pleased that that was followed up by President Bush's statement on 14 March reiterating his commitment to the implementation of the road map. It is clear that the British Government and our Prime Minister have pushed most strongly and passionately on that important issue.

Demand for oil is likely to increase and the role of the middle east in supplying oil to world markets will become even more important. That reinforces the need for us to move the important issue of the middle east process forward.

In conclusion, the need for secure energy supplies throughout the world is complicated and a changing picture. It is important that we get it right. That requires the development of new energy markets, growth and dependence on renewable energy, to which the Government have strongly committed themselves. If anyone was in any doubt about that, the fact that publication of the energy White Paper at a difficult and challenging time for the Government has been widely welcomed across the political spectrum underlines that. I welcome the fact that the hon. Gentleman secured this debate today to enable us to discuss those important issues.

Sitting suspended until Two o'clock.

Research Funding (Universities)

2 pm

I was delighted to win the ballot to secure this debate because it addresses the important issue of the future of our universities. Those institutions are crucial for the health of our economy, for social cohesion and for much more, and we will do our best to debate them, although events have overtaken us.

The importance of the White Paper, "The Future of Higher Education" cannot be overstated. Our nation's ability to educate and train its population at the level of higher education has never been more essential, and our ability to compete in the world and to increase our wealth will be greatly affected by the decisions made in the White Paper and the Bill that follows it.

The public debate about the White Paper has been dominated by the issues of student finance and the access regulator, which have an important effect on who goes to university and which institution they attend. The Minister for Lifelong Learning and Higher Education, my hon. Friend the Member for Barking (Margaret Hodge), and my right hon. Friend the Secretary of State have demonstrated a willingness to engage in the debate on those matters, particularly student finance.

There is a third strand in the White Paper that is equally important—the future of research funding in our universities. The Government must be scrutinised about that, and they must make their case. I wish to focus on what happens when students are studying, on how universities deliver by nurturing talent and inspiring people, and on how they contribute to our economy by doing those things and much more.

I am probably the least qualified participant in the debate, because I do not have a university degree, although, because of the Government's widening access agenda, I do have a qualification. I do not, therefore, enter the debate with any baggage that I might be accused of having if I had worked in certain institutions. I would not accuse my hon. Friend the Member for Norwich, North (Dr. Gibson) of having any baggage—or not much, anyway.

Research is the lifeblood of many of our universities. Good universities should be the generators of ideas. Research provides stimulation, attracts attention and makes a vital contribution to the quality of teaching which the Government have too readily dismissed. By 2005–06 public expenditure on science and research will have increased by £1.25 billion per year compared with 2002–03. That increase is widely applauded, but there are serious concerns about the further concentration and allocation of those resources. If we are truly trying to widen access, do we really want to create such a super-elite, which would lead to so few working-class young people being exposed to research?

Already, we have the most concentrated research funding anywhere in the world, with 75 per cent. of funding going to 25 institutions. The Government argue that only by concentrating research further will we be able to compete. They say that that is the way forward, and often refer to the United States. However, the top deciare of institutions in that country received 43 per cent. of federal research and development funding in 1997; in 1980–81, the figure was 47 per cent. Rather than increasing concentration, the United States is spreading funding across a greater number of institutions, albeit that there is a smaller amount in percentage terms.

That is not happening in the UK. We are moving towards a position in which 80 per cent. of research funding will go to a few universities. The Select Committee on Education and Skills yesterday took evidence from Sir Richard Sykes, the rector of Imperial college. His assessment was that in future only five or six institutions would conduct leading research. If that is not the Minister's vision, I hope that she will explain why this afternoon. What will be the impact of continuing in the direction in which we are moving? I am not sure that the Government have had the opportunity to describe in detail the consequences, good or bad, of policies for which they are arguing and which they are already implementing.

I am worried that on research funding, unlike student finance and access, the Government are already ploughing ahead with changes. The previous research assessment exercise began in 2001 and is intended to run until 2006, yet those with a level 4 rating have recently had £30 million sliced from their budgets; that money has been passed to those with a 5* rating, which, we presume, will become the 6* rating of the future. That change was forced on HEFCE—the Higher Education Funding Council for England—by Ministers. Sir Howard Newbury told the Select Committee that his advice had been contrary to what Ministers wanted. We have not heard from the Minister why she took a decision that went against HEFCE's advice. What was that advice, and what would its impact have been? The purpose of the debate is to scrutinise the Government, so I hope that the Minister will tell us why she took that decision.

I should like the Minister to understand the message that she is sending out to people working in research. In 2001, one could have gone through the research assessment exercise in good faith and been awarded a level 4 rating in accordance with the rules, but £30 million has been taken off the budget in 2003, even though a review of the RAE is currently being conducted. Is that any way to carry on?

Would the hon. Gentleman also consider the overtly political point that it seems bizarre that a Government who make so much of their commitment to involving the access student are, in the same breath and the same White Paper, bent on making the research funding system more elitist?

I shall come on to that; it is an important point. We want working-class youngsters to have access to research. Equally, I want the Eton graduate to feel able to attend a university such as Greenwich.

At the heart of my concern is the damage that the proposals may do in preventing new research from taking place and preventing departments from developing to international standards. Not all departments begin their lives with a 5* rating, but many achieve that; it is about developing infrastructure. There are examples of departments that have been assessed as level 3a, 3b or 4 achieving research breakthroughs. Those institutions have been outside what we call the golden triangle.

What do the following have in common: the first-rate adaptive heart pacemaker; total hip replacement; the portable defibrillator; the contraceptive pill; the relationship between babies' sleeping position and sudden infant death; liquid crystal display; the motorway signage system; strained quantum lasers; and genetic fingerprinting? They were all invented or discovered at universities outside the golden triangle, many at departments that were rated at level 4 or below when the RAE was introduced. Many universities with lower ratings have gone on to gain a 5* rating. My great concern is that we will stifle that much-needed development in our universities.

The Minister has been a great supporter of the collaboration between Kent university, Greenwich university and Mid-Kent college in the Thames gateway area, and I thank her for all the practical assistance and financial support that she has given. I should like to mention a research programme in the university of Greenwich, which has a campus in the Medway towns. It has taken 17 years for that research team to develop its infrastructure and its capability to carry out international research and provide life-saving solutions that have considerable relevance to the matters being discussed in the main Chamber.

Since 1989, Greenwich university's school of computing and mathematical science, led by Professor Edwin Galea, has been developing a suite of human behaviour and evacuation models, aimed at helping designers of buildings, aircraft and ships to save lives. It has developed software to model people's behaviour in various conditions in which evacuation is necessary, and what happens when fire and smoke are introduced to that situation.

The list of clients is impressive and includes Airbus, Boeing, and the Sydney Olympic stadium. Most recently, Greenwich has been asked to assist the Beijing Government with evacuation designs for the Olympic games that will be staged in China. On that occasion there will be millions of spectators and tens of thousands of competitors. Getting evacuation right, especially in today's climate, is essential. That research has been developed over the past 17 years in Greenwich, one of the new universities. Greenwich has already won its gold medal; indeed, last year it was awarded the Queen's anniversary prize because of its research.

Returning to my point about developing research, the unit is now rated level 4, but when it went through the previous RAE, it was level 3a. That trend can be found throughout the sector. In 2001, the RAE found that 55 per cent. of research-active staff worked in highly rated departments compared with 31 per cent. in 1996. There is immense improvement throughout the institutions, but, if today's rules had been applied in 1996, it is unlikely that the team at Greenwich would have been able to develop the expertise that they have. The £30 million cut means that the unit has lost £150,000 in funding; that means fewer PhD students, and members of staff will have to be cut.

Does the hon. Gentleman consider that such matters are especially unfair? So many university research departments were led to believe that, if they improved the quality of their research, they would receive more money. As a result, many universities put more money into research, only to find that, in a sense, some of it was wasted, not because the research was not good, but because their efforts to ensure that they would receive more money under the new RAE were fruitless due to the goalposts having been moved.

I agree with the hon. Gentleman; that is an important point.What were the rules in 2000 and 2001 when universities applied for research funding? Now, two years later, level 4 institutions, which are meant to be the bedrock of research, have had £30 million lopped off their budgets, and that is not to mention the effect on 3a and 3b-rated institutions. I have been advised that academics are withdrawing applications from institutions that are not level 5. That is not surprising, given that they are witnessing changes in the funding rules. The notion is that to stay alive the institutions must be level 5. Who will put their career behind an institution whose future and funding is in doubt?

Professor Galea will obtain another job easily, but a team of 25 people that has taken 17 years to develop cannot simply be picked up and put in another institution; its infrastructure has been damaged. It takes a long time to develop such expertise. The detrimental effects of the Government's decisions are being felt now. Students at institutions such as Greenwich need to have an opportunity to be exposed to research.

One of the many examples about which I was advised was a final-year undergraduate who took on a project about hospital evacuation for non-ambulant patients. The student's research led to a journal paper and several conference papers. If the research establishment were not at Greenwich, that young working-class student would not have been able to take part in the research. If we are to have a widening agenda, it is also important for us to be aware of what happens when youngsters go to university. There should be equality of opportunity at all our institutions, including exposure to research.

The Government want to encourage collaboration on research between different institutions, but for that to work, people need to feel that they are equal partners. That need is not unique to universities; it is common to us all. A great deal of collaboration has been taking place for many years, and the removal of funding from level 4 institutions puts that collaboration in jeopardy.

The Education and Skills Committee heard from Professor David Eastwood, Vice-Chancellor of the university of East Anglia, whom my hon. Friend the Member for Norwich, North will know well. Professor Eastwood told us that there was collaboration not only between institutions, but between units at the university. One might have one unit, as he does, rated 5* and another rated 4* which is losing its funding, and that jeopardises both projects. Yes, there should be collaboration, but one must be aware of the relationships involved. It is not always possible to collaborate, and the future of so many of our institutions should not depend on the need to work with others.

Much in the White Paper is brave and right, and I applaud it, but since the Select Committee embarked on its inquiry, I have become alarmed at the proposals. That alarm has been heightened because changes have been implemented against HEFCE's advice, without consultation, and there is already a review of the RAE. That is having a profound effect on many research departments in universities throughout the country. I hope that the Government will pull back and ensure that they do their own research so that they fully appreciate that effect and the likely consequences of any further concentration.

2.22 pm

I congratulate my hon. Friend the Member for Chatham and Aylesford (Jonathan Shaw) on securing this important debate. Discussion of this issue will no doubt continue until Christmas. The window is now open on higher education, which is excellent. At last, we have a Government who are examining the problems and advantages that higher education brings to this small island.

The first question that I asked myself was "Why does research take place in universities?" After all, we could set up research institutes, free from the clamour of undergraduates and without all the administration and support necessary for undergraduates and postgraduates. People could get on with research 24 hours a day, seven days a week. However, the young people who carry out most of the research in this country enjoy working in a university environment. They can work with younger undergraduates and produce a generation of future scientists. That system has served this nation well.

The debate is not only about Nobel prize winners, although they were also once young people with their bottoms hanging out of their jeans and long army coats who spent their time in pubs talking about the issues, getting excited and using their brains. They moved on to leading research teams because they were inspired and enthused by our university system. The reasons for conducting research in universities have been well proven over the years. As someone who has spent a lot of my active life acquiring grants from research councils, charities, the United States and many other sources, I can tell hon. Members that it is a hard business in which one is turned down many times, and has to come back again with new ideas. There is nothing like being in the ghetto to make people fight to get out of it, even in science. People in universities have done that to acquire research funding.

We should consider the record of work done in universities in this country, especially our citation index—the papers that are quoted across the world. Many scientists have had accolades, and many have headed school science labs. Last Friday I visited Totnes in Devon to help an ex-student of mine who runs a science lab and had acquired special science status. The enthusiasm engendered in that person, who, I might add, is somewhat older now, was generated in university teaching and research. She remembered the research project she undertook during her third year at university. That added value to her teaching, because she questioned and argued about things, which is what research is all about. That is also what universities are all about: students challenging what they are taught, knowing that there is more to discover. The literature is littered with people whose ideas and publications were not understood, or were rejected, but who won Nobel prizes after other facts were discovered. They have excited others to take up the cudgels and develop the research.

As far as I can tell from my experience, this is the first Government who have reacted to that situation. Since 1997 they have put billions of pounds into infrastructure, supporting research councils and generating more excitement and activity in research in universities and the UK research complex. However, there is still more to be done. How do I know that? The Department for Education and Skills has produced a paper called "The Future of Higher Education", which acknowledges the need for research in all areas, from writing books and creative writing, right through to science and the wealth of knowledge that is formed in the UK. That makes us a great nation in research fields compared with others.

The last 10 minutes of my lectures were always about current research. I would refer to the textbooks and prepare a good lecture, but I would suddenly talk about someone who disbelieved what I had just taught and had not yet been quoted, and about continuing research. Both the young and the mature students picked up on that. They would say, "Cor! If we had just read the textbook, that would have been it. We could have passed the exams, but now we are excited about this idea—tell us more about it." Research is all about students wanting to get their hands dirty and get involved. That is true for school science and university research.

There have been many other reports in addition to "The Future of Higher Education". The research assessment exercise has taken place and the Select Committee on Science and Technology, of which I am Chairman, has made a few friends through its publication. We have challenged the research assessment exercise, primarily on the basis that Jim Watson and Francis Crick would not have got a level 3 rating if they had followed the procedure. They grew up in an environment in which they exchanged ideas. We are celebrating the 50th anniversary of the publication of the DNA paper.

Harry Kroto, another Nobel prize winner, would also have found it difficult. Work done by such people as Sir Paul Nurse does not go on in universities. They spend part of their lives in a university and continue in research institutes. The network that we have built up in this country is superb, and is envied by people in the United States. The research assessment exercise was an attempt to engage excellence and to relate money to that base, to ensure that people got the support. I can be critical of it—our report is critical of it—but out of that has come a real review of the whole exercise, which I think will now have a lighter touch. Sir Gareth Roberts is already touring the Corridors of the House talking about the options. I welcome that and so does the scientific and research community.

This is not just about science: it is also about the arts getting the money. We concentrate on science because much more of the money goes into that field. I welcome what is being done, and I welcome the acknowledgement that academics are playing a few tricks. After all, they are probably the smartest people in the country, and if they cannot beat the system who else can? That is what we train them for. One of the purposes of the report is to ensure that they do not manoeuvre within the system, but it is also to ensure that multidisciplinary research takes place.

Our universities are still departments in silos. I was at a Downing street meeting the other week at which my right hon. Friend the Secretary of State for Education and Skills spoke. The vice-chancellor of Warwick university said that departments merely undertake administrative manoeuvres in a university, and that it is the whole university that teaches and carries out research. What he meant was that there ought to be more interaction between departments on research. He is absolutely right.

I can tell a story about that. At the university of East Anglia, people working on atmospheric chemistry in the school of environmental sciences and people in the chemical sciences department were doing similar work, but because of personality differences they never got together. It is in such situations that a tough vice-chancellor should say, "Look, let's find a way to do this together, so that we'll access more research money". Breaking down boundaries in universities is about good university management and exciting people to work together. That will help.

Levels 1 to 5 are merely a way of apportioning the cake, and there is now more money going around. That system is also about trying to recognise excellence, but it is fudgy at the edges, and not only because of the situation of such people as Watson and Crick. A headline in a local paper on Friday read: "Arts School has Designs on Extra Research Cash". An article below that reports on the Minister opening a fame academy for budding ballerinas and others, which seems rather appropriate. The arts school concerned is the Norwich school of art and design, which has a level 3 rating. A 3,000 per cent. increase in its research money was announced last week. Members may argue that, like people on low pay, the school did not start with very much anyway, which is true. It started with only £4,000, but suddenly, because it became a level 3b, it has some £144,870 and has to submit details of the art and design research that it intends to carry out.

If I were at the Norwich school of art and design I 'would be rather excited about that, despite the gloomy news that we often hear from universities. The Minister is trying to induce me to table an early-day motion on that subject, just to show how good departments can emerge from a rotten system, which is fine. There will be other good news stories. The principal is very pleased, as one might imagine. Things are certainly getting better for that school, which is producing some very bright young people in the artistic and design world.

Such people are interacting with people in universities. I dined with Antony Gormley, who designed the Angel of the North, and his wife the other night. They are very keen to do artwork in university science departments. The connection between arts and science—which correlates with what I said about university departments—is really beginning to happen. There are imaginative, innovative individuals out there who want to undertake that work, and we must find and encourage them, from whatever class or background they come, and ensure that it takes place.

There was a cross-cutting review of science and research in March 2002, which was very interesting. I think that the Treasury requested it, to see how money is used for research in universities. It makes some interesting points. It discusses the dual support system—the money given directly to universities by the Government for research and the money from research councils for applications and peer review research—and the third leg funding scheme, which involves money from charities and sources such as endowments and conferences that can be used for research. The review points out that there is deep tension among academia, Government, business and other research funders on the funding of science and technology and, in particular, on the failure of funding processes, which has led to a serious gap in university research funding.

The review mentions the need for state-of-the-art infrastructure and buildings. Most of the 1960s universities are crumbling. They may have been well designed by the architects who built festival halls that looked wonderful in the 1960s, but rain and time have turned them into shoddy buildings, and they are not that safe because the cement is crumbling. Much more money must be put into universities to allow the research to be done. I used to work in a lab in which the rain came through the roof. When I was a young student at medical school in Edinburgh I had first-hand knowledge of pigeons' nitrogenous excretion falling on lab benches—that would have made a good research project. It is not on for science students, scientists or academics to work in such conditions, and much more money needs to be put into that area.

The dual support system has worked well, but we must ensure that it is clear whether the money is for blue-skies research or whether it is for research that will be of use to society. A friend of mine in academia got a grant for squashing the testicles of grasshoppers. I used to say to him, "What is the use of squashing the testicles of grasshoppers?" Academics are especially good at being articulate, and he gave me a one-hour lecture. A friend of mine, who was not helped by me, sent a letter to the newspapers asking that question. The academic replied that, "It is not much use, but it is damned interesting. It might be useful to humans." No doubt the individuals who committed the atrocities that we have been hearing about learned what to do by squashing grasshoppers. There are serious problems trying to justify research in universities. They must talk more about their research in order to win public support.

There is also a funding gap in universities, and a creative accountancy model is currently used. For example, research councils do not fund the whole of a research project, so people have to find money from other sources. Universities will not turn down grants from charities. I had lunch with Sir Paul Nurse, who said that he was not going to use money from cancer charities to pay for toilets in universities. The management of money in universities must be more subtly tailored to grants. There are big gaps, and there is evidence that money is sometimes taken from teaching pots in order to pay for research that is not funded.

The Select Committee on Science and Technology is examining how framework 6 and, eventually, framework 7 European money is accessed by people in this country. One reason why many people who could get that money do not apply for it is that they would have to find 20 per cent. of the funding from other sources.

Does the hon. Gentleman agree that one historical problem has been the poor level of internal accounting in universities? When departments achieve 5* ratings and receive significant research funds, sometimes not all the money is allocated to them, but is put into the general pot rather than rewarding excellence.

That is true, but the Government and the various councils have instituted a transparency review. We have identified where such cases have happened, which is the first time that proper accounting has been introduced to justify the use of money in universities. I remember having to learn what a spreadsheet was—these days, one does not become the manager of a department without learning how a spreadsheet works in order to be able to see the flow of money in a continually updated format. Universities have smartened up their acts, but they have some way to go in justifying themselves, at least to the public.

The funding gap has been identified. The research councils are examining the model used by the Wellcome Trust, which provides all funding in grants. It provides sufficient money to ensure that its grant is fully operated, so that universities do not have to take money from other sources.

The cross-cutting review identified the issue of academic pay, and we will never get good research in universities until we address that problem. I shall not go into how far academic pay has fallen behind that in industry. People work in universities because they love the work, the teaching and the articulate environment. Sadly, some of them like the senior common room a little too much, but in general there is excellence in our universities for which people are paid a pittance, which is why that issue is being addressed.

A great deal of research is conducted by research staff who are on contracts of one, two or three years. The Select Committee considered that. For example, some young women, who become old women after 20 contracts, live on six-month or one-year contracts. That is not on if we want the best people to stay in universities and carry out research. I make no apologies for that.

The White Paper "The Future of Higher Education" makes the point that we will have to concentrate our research much more in certain universities. I believe that Richard Sykes, who is at Imperial college, said in a Select Committee yesterday that we need only five top-class universities in the country. I do not agree. We have to resist that temptation, because there is excellence in all our universities. The university of Dundee, which is an institution of some excellence now, was founded on one man's discovery of protein for sporulation, from whence have come spin-off companies, cancer units and so on. Dundee is becoming one of the top universities for research.

We should encourage such thinking in every university, and we should find mechanisms to recruit people from the United States or from this country, where many of them have been trained, who want to work in Britain. We have done that for stem cell research; Britain leads the world in that area, and we have people queueing up to come back and carry out research in this country. Members of this House and the other place were very much instrumental in bringing about the regulations that allowed that to happen. We should pat ourselves on the back for what we did in this Parliament and the previous Parliament to make research and its funding top notch in the stem cell field.

Other good work is being undertaken, including Beagle 2 landing on Mars, the Open university and the construction of new joints for people with damaged bones. We had a meeting last Thursday that was full of good news stories relating to science, because science is being backed in this country and industrial relations with universities have been made to work so that they benefit our people.

I want to talk about excellence. I was brought up in a very Scottish way and hated Oxford and Cambridge. I did not need to go there to get a blue in football. I preferred to play for the team that I played for in Scotland rather than to get a blue from Oxford or Cambridge. Some people were tempted to go to Oxford and Cambridge, because there was a feeling that they were the jewels in the crown and the glittering places to go. Given the Scottish culture, going to England would have been a huge step at that time and was something to be resisted. At university, I heard about the magic of Oxford and Cambridge and a few places around London—the so-called golden triangle. I never believed what I heard, because my teachers were superb. My teacher is 90 this year and there will be a big do for him up in Edinburgh. It will be full of glittering past students, such as Professor Stephen Jones, all of whom passed through a small department, talked and argued together, and were cultured as a result of the teaching and research. Edinburgh university was not bad either, even though it was not part of the golden triangle.

Money is predominantly going to the universities that make up the golden triangle, and we should ask whether that is the best way it could be spent. Given my culture, hon. Members will understand what I am about to say. I am not an envious person, but when I see the election of the chancellor of Oxford university getting the coverage that it has had in the papers over the past few weeks, I ask myself, "Who gives a fig? Why is it so important?" There were three aged blokes and a token woman—there has not been a woman chancellor in the 800 years that the position has existed and I bet that there will not be one in our lifetimes.

The network that controls grants spins out into the scientific and academic establishment in this country—I am not envious, because I have benefited. It decides the subject areas that will be funded. I am writing a piece on that, and there is plenty of good evidence about the people in question. They are no better than people elsewhere in the country. We must break that elitism, otherwise we will not break the elitism surrounding access to universities. We also need an access regulator to examine where the scientific research money goes, who is on the committees that decide who gets it and so on. There is a correlation. I was part of the inner network and knew how to access that money. I might have gone out of the room when my subject was being discussed, but my mates were still there, and I was in there when theirs was being discussed.

We must provide transparency and openness in the funding of research in this country. The story of the election of chancellor of Oxford university shows how important a chancellor of a university in one part of the country can become. Who is chancellor anywhere else? Jeremy Paxman would never ask that question on "University Challenge". He might ask about the chancellor of Oxford university, but he would not ask who the chancellor of Dundee university or the rector of Edinburgh university are, or where the Chancellor of the Exchequer went to university or which university he was rector of. Hon. Members know what I am getting at.

There is concentration on Oxford and Cambridge. When the Government say they are going to concentrate on certain universities, I fear that we will miss out on the excellence found in universities in Greenwich, Dundee, Norwich or Manchester. Some of us were involved in the debate about the siting of the synchrotron in Oxford. That may have been the right place, but it left people in the north-west of the country feeling angry and undervalued. I welcome the fact that the Government responded to the protest by investing money there.

Research funding is important for the creation of wealth in this country and for the future. It is also important that we ensure that it is spread around, and that mechanisms are used to allow access for all people in this country who want to carry out research. Research is exciting; it blows the mind. It can be boring, too. One can carry out research for a long period, and not understand what has happened. Sometimes the best discoveries are made on a Friday afternoon after going to the pub. People try to repeat the discovery on a Monday, and wonder what they did right or wrong. Sometimes it is an accident that brings about discoveries. We have to create that environment and not expect those people suddenly to turn something up in five minutes, or even five years.

I welcome the debate. Much more will be said about all aspects of higher education. We have a great opportunity to build on the paper presented by the Government. There will be ups and downs in the arguments, and I welcome that. The research funding issue is a good place to start. We must ensure that we provide more funding, and encourage all those who want to carry out research to give us more of what we have had in the last 200 years.

2.47 pm

I am slightly hesitant about following the hon. Member for Norwich, North (Dr. Gibson), as I have to admit that I did my first degree and my second—not that I ever achieved it—at Oxford. That makes me one of those who has absolutely no right to speak in the debate—according to the hon. Gentleman, that is. I tend to agree with a great deal of what he said about the recent election of the chancellor of Oxford, about which he was pretty well spot on, and I had to agree with much of what he said about Oxford being an elitist institution. There is no question but that it needs to come into the modern world in some ways. Having said that, I should also declare an interest.

One of my sons is about to start a research degree at university, so university research funding is at the centre of my thinking. Two of my other sons are at university as well, and they are being taught by people who are involved in university research and teaching. I have a personal interest in the matter, quite apart from my spokesmanship, and I am delighted that the debate has been secured and to have a chance to participate.

The first thing I would like to say—it should appeal to the Government if nothing else does—is that research has clear economic benefits for our country, and the rate of return on even basic research is thought to be as high as 40 per cent. Even if there were no other reasons, that is why we should fund university research properly.

Secondly, research involves pushing back society's intellectual boundaries—knowledge for its own sake, although the Government are less keen on talking about that in relation to our universities. It seems that the push is to ensure that universities meet the economic needs of the country, but they are also very much about meeting our country's social and cultural needs as well as enabling our young people to get the best out of themselves and to give the most of themselves to society, thus benefiting us all. If Britain is to have researchers not just in universities but throughout its economy, they must be trained to do research. That is an important function of university research departments, and everyone who goes into research almost certainly starts by doing a research degree at university.

Research enables Britain to benefit from research done in other parts of the world. Only some 5 per cent. of research is done in this country, but researchers who work at the leading edge of their particular subject are best placed to use research done elsewhere. People who are not working at the leading edge of their subject may not even understand it. One has only to think of the number of people who do not use high-tech equipment simply because they do not understand how it works. The more that people in this country are at the leading edge of research, the more likely that Britain can make good use of research done overseas. Therefore, research is worth while. It is beneficial in purely financial terms to this country.

We must encourage more of our most talented people into academia, and, obviously, allowing them to do research at universities is one way to do that. Academically talented students are deterred from staying on in academia to study for PhDs, however, and there is a recruitment and retention crisis in our universities. In the past two decades, staff-to-student ratios in UK universities changed from 1:9 in the early 1980s to 1:18 at the turn of the century. Forty per cent. of those in the profession are over 50. The Association of University Teachers says that an extra 17,000 university teachers are needed to replace those who are due to retire by 2010. An important aspect is that there are particular problems in core subjects such as science, maths and engineering, which are precisely the areas in which we have problems getting enough teachers in our schools.

According to an AUT survey released this month, 27 per cent. of academics—the equivalent of more than 40,000 staff—are seriously considering leaving the profession, mainly because of the growing work load and, of course, poor pay. According to the same survey, only 36 per cent. of academics said that they would recommend work in higher education to an undergraduate. If an undergraduate does not get a recommendation from someone who already works in the profession, they are unlikely to become involved themselves.

Let me say more about pay, which is, clearly, a key factor. During the past 20 years, academic pay has increased in real terms by only 5 per cent. while average pay in the community has increased by some 45 per cent. Despite the 2002 pay agreement, salaries are still well below those of counterparts in other sectors. The Liberal Democrats believe that it is essential to pay academic salaries that will attract new, high-quality recruits and we are committed to freeing up the resources needed to meet the Bett salary recommendations, updated from 1999 levels to equivalent 2003 levels. We would do that now, and we have pointed out in our alternative Budget precisely how it could be done.

Top-up fees, which are yet another tax on students, will not bring in the funds needed to pay university research staff properly until 2006 at the earliest. Universities need money now to fund the pay increases that researchers and academics must have if they are to be encouraged to enter and stay in universities.

It is also important to mention student debt, which has been much discussed recently inside and outside the House. It is noteworthy that 81 per cent. of academics oppose the introduction of top-up fees, according to the AUT survey. If someone wants to become an academic, they must have a PhD. That means relying on the relatively low graduate stipend for several years, probably until the age of 26 or 27, and putting off even further the repayment of graduate debts. Academic salaries are pitifully low and the effective 9 per cent. marginal tax rate is very difficult for people to cope with.

The 2001 British Academy report on graduate studies in the humanities and social sciences found that the UK is failing to attract sufficient of the best British students to take up PhDs in the arts, humanities and social sciences. An increasing proportion of postgraduates are recruited from other EU countries and overseas. I was told recently that not a single British student is studying for an economics PhD in this country—they all come from overseas. The same report concluded that debt—that accumulated from undergraduate study and prospective debt from postgraduate study—is a major deterrent to potential PhD students.

A good point that has already been made is that universities have also been criticised for excessive use of short-term contracts and denial of employment rights to research staff. Almost 50 per cent. of university employees are on short-term contracts and numbers have increased rapidly since the early 1980s. Most are employed on post-doctoral research in science departments where, as with junior doctors, they are expected to do all the hack work, while their seniors claim the credit and write up the results.

Researchers are generally paid less than tenured lecturers, although they are linked to university scales, and employed for only limited periods of perhaps six months to two years. That makes it difficult to obtain a mortgage, for example, as their employment prospects are variable and uncertain. Many universities refuse to employ people on a second contract to avoid liability for redundancy payments.

Talented researchers have often gone on to become tenured lecturers, but there are often 10 applications for every post and it is difficult for them to move on in that way. Sadly, salaries are not high enough to attract some of the best and most highly qualified candidates, who might otherwise opt for academia.

Pay, work load, lack of adequate career structure and debt are fuelling a damaging brain drain of academic talent to overseas, and creating incentives for people to opt for a career in the private sector and to opt out of a career in our universities.

The third reason why research is important is the link with research teaching. Traditionally, university teaching has been distinguished from further education and other post-19 teaching by the fact that academics in those institutions have simultaneously undertaken research. That may not be so true now that more and more research takes place in further education institutions, but there is still a lot of truth in it.

Teaching benefits from people working on research for a number of reasons—it keeps them up to date, they must actively follow the literature to contribute in that area and they tend to be more able to talk about their research and how it links up with their studies—but the White Paper makes the extraordinary statement that
"the connection between an institution's research activities and its teaching is indirect".
Very few people working in universities would agree with that. The vice-chancellors, as represented by Universities UK, and university staff are at one in disagreeing with the Government. According to the AUT survey, 86 per cent. of academics believe that the research-teaching link should be retained. Universities UK says that it cannot understand the White Paper's assertion. It says:
"Teaching at undergraduate, taught postgraduate and research degree level relies fundamentally on research work, and the best teachers are attracted to universities by research opportunities."
Liberal Democrats believe that, far from being indirect, the research-teaching link is integral to what universities do. Students benefit immensely from teaching grounded in a research environment because that facilitates a more active engagement with the subject at the very frontiers of the discipline and because of the thinking and research skills that are imparted. Academics also benefit because teaching allows them to test their ideas and arguments.

In contrast, the Government's proposals imply a two-tier higher education system with elite research institutions—Oxford among them, no doubt—at one end of the scale and others relegated to being teaching-only institutions. In the latter case, high-quality staff will be lost as they seek, understandably, to work in a research university.

I turn to the Government's proposal to concentrate research funding. The White Paper states:
"The Government intends to improve the position of research further by focusing resources more effectively on the best research performers",
arguing that "larger, more concentrated units" are justified on the ground of "economies of scale". It continues:
"We will ask HEFCE … to identify the very best of the 5* departments which have a critical mass of researchers—a '6*'—and will provide additional resources to give them an uplift in funding over the next three years. At subject, as well as at institutional level it is critical that we focus our resources on the strongest, who bring us the best returns."
In fact, research funding is already being concentrated in that way and the trend is to move even further in that direction, which will benefit the top 10 research universities. There is a real risk not only of a two-tier university system but of damaging the institutional diversity that is a strength of our higher education system.

In the briefing circulated to hon. Members for this debate, Universities UK notes:
"There is a risk that the net effect of the research proposals in the White Paper could be a more rigid hierarchy of institutions with only a relatively small number having access to significant research funds. There could be a substantial reduction in the capacity and potential of UK research if departments graded 3 or 4 are no longer funded, or are funded at a, reduced level."
That is a particular kick in the teeth for those departments that have worked sc hard to raise their rating in the research assessment exercise. Science, engineering and maths research could be at particular risk—precisely those subjects in which we face important shortages.

Plans to concentrate research in only a few research universities are deeply flawed. When economies of scale in scientific research have been claimed, it has been proved that they do not exist. There is no evidence to support such a contention, except in rare cases involving very large pieces of equipment such as telescopes or synchrotrons. What is required to stimulate innovative and productive research is work in the specific sub-field in which the researcher specialises within a group of five or six people with whom to test ideas.

Evidence of economies of scale is not only unconvincing but there are obvious dangers in shutting out the unorthodox and restricting research in ways that damage British universities' international reputation for research excellence and innovation. That will also damage our economy.

The key issue is concentrating research funding in the hands of only a few research-intensive universities and the danger is that such an approach might stifle diversity and creativity. Britain's dual system of funding research has rightly been called the jewel in its research crown, precisely because it has always allowed for the serendipity from which so many of our most creative scientific breakthroughs have emerged. The Government would be foolish to throw that away, but their policy pronouncements have raised a real worry that that is what they intend.

3.3 pm

I congratulate the hon. Member for Chatham and Aylesford (Jonathan Shaw) on having the good fortune to secure this debate and on the characteristically modest but thoughtful way in which he introduced it. He made some valuable points.

At the same time, I commiserate with the hon. Gentleman for his ill fortune in having been given this moment for his debate. I sense that the mood of the majority of the country, as well as hon. Members, will be focused on the main Chamber rather than here. However, I can offer some comfort: Winston Churchill's memoirs of the second world war record that the great man found time in the middle of conducting global warfare to attend, by minutes to his colleagues, to such matters as the state of the Admiralty flag and the future of British bloodstock.

The latter of Churchill's concerns is analogous to the serious matter that we are considering—a jewel in the British crown which we are all anxious to preserve. That has been the theme of all of the speeches so far and, to anticipate the Minister, of her speech as well. We are all on the side of British research, and broadly on the side of British universities, but although we are distributing compliments, it is fair to say that we recognise the tensions. The first one is that, almost inevitably, there will be elements of a zero-sum game between the various interests involved. The access universities will be at one end of the range, and the Russell group at the other, and they will all be finding ways to devise or modify existing formulae or practices to secure greater advantage. I heard elements relating to that in the speech of the hon. Member for Norwich, North (Dr. Gibson).

I assure the hon. Gentleman, by way of declaring an interest, that although I began life as an Oxford classicist, I spent time on a science research council. I am not sure what qualifications I had for the post, but it was educative—perhaps I was chosen because I had run a small science research charity. One of the most interesting developments that we produced, which eventually became intellectual property, was due to somebody, whom we were sponsoring, in the department of electronics and electrical engineering at Sheffield university working in conjunction with a colleague who was a zoologist. That led to some interesting ideas on marine biofouling. If two departments are not in the same place, or they are not talking to each other, such opportunities will be lost. [Interruption.] I am pleased to hear the Minister acknowledging that that is a great strength of the university system.

I should like to talk about the huge diversity of research funding. The hon. Member for Norwich, North was right to remind us of the European element, but, in domestic funding, different streams are coming from the HEFCE research selectivity exercise and from research councils, charities, non-governmental organisations and others; finally, there is contract, commercial research. All of those are to be welcomed and drawn on, and we must recognise that complexity. That range of streams must continue; no one stream should be dominant or calling all the shots.

An important point about the university portfolio which has been acknowledged—I hope that the Minister will acknowledge it too—is that universities are not there to conduct one-shot exercises of a highly specialist nature, and it would be contrary to the definition of a university for them to do so. I feel strongly that in almost all cases there should be some coincidence between teaching and research. Being invited as a first term undergraduate to a seminar given by the doyen of Oxford classicists—a Nazi refugee who had arrived in London unable to speak English and was therefore required to lecture in Latin in his first year—was a remarkable cultural experience. The man was also very good at his job. Whatever institution one is in, there must be opportunities for such exposure to people of excellence.

I shall also mention my local university college in Northampton. I do not grade it below Oxford—they are equal in my affections. It is doing an excellent job as a regional university college, and because of the local boot and shoe trade, it has the National Leathersellers Centre—a world centre of reference for expertise in that industry. We should not have the kind of tidy-mindedness that compartmentalises universities into those that solely teach and those that solely conduct research. We must recognise strengths. I hope that Ministers will reflect on some of those points when they consider their detailed plans on collaboration. The matter is much more complicated than a superficial reading of the White Paper suggests.

I want to highlight three points of particular concern relating to the White Paper which the Minister may like to consider. The first relates to the degree of selectivity. The Universities UK briefing asserts that under the new system that the Government are devising, which will have a level 6*, we will have a more selective system than that applicable in any other country in the world. That was also explicit in the remarks made this afternoon. The Minister must deny that, and explain why it is not the case, or justify it because I do not believe that the Government have done either of those things. The matter needs to be thought about.

The hon. Member for Chatham and Aylesford referred to consultation and to people being caught without a chair when the music stops—if I can use such a phrase in relation to a research selectivity exercise. As the exercise has been set up on a quinquennial basis, it is unfortunate that it should be altered in the middle of that period. The fact that it is being altered, apparently without consultation, is greatly exercising the universities. The Minister must explain the degree of consultation and understanding involved. No one should necessarily mind having to adjust to a new regime for the next period, but to find that a legitimate expectation, as lawyers would call it, is being frustrated in the middle of the process is unfortunate. I leave that point with the Minister.

I come now to the practical consequences of such action. One matter to which the hon. Members for Chatham and Aylesford and for Newbury (Mr. Rendel) referred, and about which I am concerned, is the present situation of teaching staff and the impact of changes. The withdrawal of money from an institution, especially when that money is not lavish, will have an impact, with likely consequences for teaching staff and research groups. In the White Paper, the Minister forgot about the support staff and the technicians—important people who make research possible in our universities. The matter needs to be treated with great sensitivity because an intellectual resource is likely to be thrown away. I have strong sympathy with those who want to make changes, but I am not in favour of changes made hastily, especially in the overly tidy-minded, compartmentalised way of Ministers.

The White Paper is almost silent on the Bologna process. The Minister was kind enough to give me a response this week by way of written answer, but the inference among European rectors and in the European university process is that universities are about teaching and research. An institution that was, for example, simply teaching would not prima facie qualify as a Bologna-acceptable university. I think that the Government must pause on that point, too.

Issues about how research should be configured have been implicit in the debate. However, a point that has not been made clearly concerns knowledge transfer. I have kicked it around a bit, but I am still not clear where knowledge transfer fits in between teaching and research. There is an important economic point to be made about knowledge transfer, and I do not argue against that, but it is not entirely clear how it is to be delivered and what is its relationship with teaching and research. To put it another way, if all the money from research will go to institutions with a 6* rating, will not there be a gap in fun ding for institutions achieving the lower ends of knowledge transfer? I happen to think that both research and knowledge transfer are extremely important.

Universities are, and should be, protean organisations, reaching out in all directions, and receiving, bringing together, disseminating and transmitting excellence of all sorts. Naturally, there will have to be concentration on funding. There have to be formulae—we have always understood that—but the balancing of funding must be done sensibly.

When I was the Minister responsible for higher education nearly a decade ago, we did our best to offer development funds for research in the new universities. We tried not to destabilise the existing system, and, in general, we tried to make haste slowly. There are big research teams, which need a lot of kit and high capital investment. I do not resile from that, and it may be sensible to concentrate on those cases. However, there are institutions and smaller-scale research teams that are doing excellent work, and in the humanities there will still be lonely scholars in garrets who are thinking important thoughts about philosophy, history or whatever, perhaps without a lot of support.

I conclude by paying the Minister a compliment. I am delighted that the long process of establishing an Arts and Humanities Research Council has reached fruition. Such processes always take a long time. This one started about 10 years ago, but we have got there. That is welcome, and it may act as a counterbalance. However, we should also celebrate the university sector in all its diversity, and I think that we have done that. We should recognise that things cannot be put into narrow boxes or compartments and, above all, that the sector needs a system that is broad-minded and sensitive enough to cater for excellence wherever we find it.

3.16 pm

I join other hon. Members in congratulating my hon. Friend the Member for Chatham and Aylesford (Jonathan Shaw) on securing the debate. It is regrettable that it should be taking place on a day when there is a momentous debate in the Chamber. I know from conversations that I had last night that several hon. Members would have contributed here today if they had not wanted to participate in the main debate. I hope that we will discuss this subject again because I agree with hon. Members that it is a vital part of our White Paper and our higher education policy, and that it has not so far received adequate attention.

All hon. Members present agree on the importance of research. I share the view of the hon. Member for Daventry (Mr. Boswell) that we are all on the side of British research. I also agree with my hon. Friend the Member for Chatham and Aylesford that it is the key driver of economic growth and productivity, as do the Secretary of State and everybody in the economics Departments—the Chancellor and people in the Department of Trade and Industry. We have given it such prominence in our White Paper because it is so important, and that is why it was also given prominence in the funding plans of the Chancellor and the Government.

When we talk about research, we often talk about science, but we should never forget the important research that takes place in the arts and humanities, which is why I am delighted that we will be able to establish a council in that field. Some of that work creates economic growth and productivity; the cultural industries a re a good example of that. Other kinds of work—such as community development research—help to strengthen community cohesion, which is an important function of research. However, some research work simply enriches our lives, and we should never forget that one purpose of much of the activity that takes place in our universities is to foster great enrichment in the life of every individual in our society.

Global competitiveness means that there is a growing concentration of research resources throughout the world. In the United States of America, only 200 of the 1,600 higher education institutions have the power to award postgraduate degrees, so there is a history of concentration and differentiation in the USA that is not a part of our education system.

I recently returned from a visit to China. The Chinese Government are focusing massive research investment—much more than we are capable of investing, simply because of the size of China's population and economy—on the country's most research-intensive universities. We should look forward to the capacity that we will have in five or 10 years to compete with China, particularly in science research. If we do not focus our research, much less of it will take place in this country, and we will not be able to have the growth and productivity that comes from research.

Does China have the widespread research base that this country has" Where is it starting from?

It is true that China is starting from a lower base, but it is an enormous country with a huge population, and it is increasing its higher education budget by 20 per cent. per annum over the five-year spending period. If one focuses such resources on a very few institutions—as China is doing—one can quickly build up enormous capacity. I saw new laboratories in China's leading institutions, and my hon. Friend the Member for Norwich, North (Dr. Gibson) would be deeply envious of the equipment available there. Because of China's size, it can skip a generation and can quickly overtake us on research.

Some hon. Members mentioned a tension between our agenda for widening participation and our research agenda. I do not agree that there is a tension. First, we want to achieve excellent teaching for all in all our universities. I hope that that ambition wins through in the White Paper. Excellent teaching will provide a lot of opportunity. Secondly, we want fair access to our most prestigious universities. Those two policies combined mean that there is no conflict or contradiction between our widening participation agenda and our research agenda.

I think that we all agree that the UK's research record is unrivalled. We have had many Nobel prize-winners because of our traditional and historic investment in research. We have only 1 per cent. of the world's population, but we produce 8 per cent. of scientific publications. Most interestingly, in 15 of the 20 main fields of scientific research, America comes top and we come second. We are proud of that record, and we are determined to maintain and build on it. That is why, in this comprehensive spending review, our investment in research capability is the most generous ever. By 2005–06 we will have increased investment and research by 30 per cent. That will help to ensure proper funding for research, an issue raised by my hon. Friend the Member for Norwich, North, which the transparency review identified as one that we need to address.

The hon. Member for Newbury (Mr. Rendel), representing the Liberal Democrats, failed to say how his party, were it ever to be in Government, would tackle his massive agenda. He has not said what would be his party's priorities or how it would fund them. All that I have ever heard from the Liberal Democrats is that they would fund everything by cutting student funding to two years and forcing people to go to local universities. That is not a route that I want to take.

We have always concentrated research funding. In the following examples, I have deliberately taken the 2002–03 figures rather than the 2003–04 figures that came out last week. In 2002–03, Cambridge got nearly £68 million in research funding, but Anglia polytechnic university got £369,996. Oxford got nearly £65 million, while Oxford Brookes got just over £2 million. Imperial college got over £60 million, but London Guildhall university got £200,000. Although I do not agree with Richard Sykes that we will end up with a concentration on just five or six institutions, I think that a limited number of institutions will compete in the global economy. Many more departments will play a role on the world stage.

There are accusations about a golden triangle. I draw to the attention of all hon. Members the important collaboration that took place last week: the merger of Manchester and UMIST. That will, I hope, enable us to start breaking down the concentration of research funding, which I accept exists in the golden triangle.

My hon. Friend the Member for Norwich, North raised the matter of academic pay, which is critical. If we are to keep our best researchers in the UK, we must pay them well. All the evidence that we had on the average salaries for the top professorial posts in the UK led to the finding that there was a brain drain, and too many of our best researchers were leaving and going elsewhere. If we do not tackle that problem, a threat may emerge from places like India and China, so academic pay requires a concentration of funding in future, or we will be in danger.

On the link between research and teaching, I regret the comments made by the hon. Member for Newbury, who said that universities were being relegated to teaching-only institutions. At the heart of the White Paper is our effort to raise the status and importance of teaching in our universities. It is as important to us to build the capability among individuals as it is to provide the research base to fuel the economy and enrich our society.

Let us consider the distribution of money last week by HEFCE. I use Greenwich as an example, because it was raised by the hon. Member for Chatham and Aylesford. He was correct in saying that Greenwich lost some £615,000 of its research funding. However, it gained money in its teaching grant. That was done deliberately, so that we can start getting our universities to focus more on what they do best and thereby concentrate our research resources. People often ask me about the evidence for that. In 2000, HEFCE commissioned a report on the interaction between research, teaching and other academic activities; it took evidence from 40 universities and colleges and concluded
"that not every teacher needs to be engaged in 'research' as a narrowly defined activity but might be expected to engage in scholarship to inform their work as teachers."
I have often said, in the Chamber and here, that the last RAE determined the distribution of quality through a peer review exercise. It was never supposed, nor intended, that it should determine a distribution of resources. It was always a relative quality exercise, never a resource-distribution exercise. I am delighted that Sir Gareth Roberts is engaged in reviewing the RAE—various hon. Members have talked about the way in which he is doing that. Perhaps the academic community will feel more comfortable with the outcome of that peer review.

I accept that change is difficult. It is difficult for us to achieve the greater focus on mission that lies behind the White Paper. I accept that, a year after the last RAE, some institutions have found change especially difficult. However, to put it bluntly, we could not have afforded to wait until 2008—the time of the next RAE—to start instituting some of the changes that we wanted.

People talk about a greater concentration of research funding. Let me tell hon. Members what happened. Between 2002–03 and 2003–04 there was a 1 per cent. increase in the proportion of money that went to the top 25 universities. That is not a massive shift, but it is important and it moves in a direction that we believe will best conserve the best research in the UK. Much of the stress in the White Paper is on concentrating and building collaboration between universities and between departments in universities. That is why we talk about collaboration and consortia; such things reward talented researchers and offer better funding for postgraduate research places. All that is intended to build capacity and ensure fluidity in the system so that we can grow good research.

I say quickly to the hon. Member for Daventry that I accept that the money that comes under knowledge transfer will have to be focused primarily on the non-research intensive universities, to enable some redistribution in that direction.

The White Paper provides the basis for ensuring that we can fund the best research properly—that is critical to the nation's economic growth and prosperity—and fund emerging research and capability in certain institutions, to ensure that we grow new research in our universities.

Wapping Station

3.30 pm

I am very pleased to have t ie opportunity to draw to the Government's attention the future of Wapping station. It is incredibly important for my constituents and for me, and I am particularly grateful that several of my constituents have made the journey to Westminster today. Obviously, that journey would be much more difficult for many of them if they did not have a station in Wapping. We are desperately hoping to avoid any threat to it.

I should like to mention a tiny bit of history. Anyone who has any association with Wapping is proud of its history. I do not know whether people are aware that Wapping has a long history associated with forward-thinking transport endeavours. What do I mean by that? Sir Walter Raleigh's ship was equipped in Wapping before he sailed from Limehouse to Guyana in the 16th century. Young James Cook lived in Wapping and Captain Bligh of the Bounty lived there for many years. I say that merely to point out that Wapping's residents have long travelled far and wide from its shores, in many directions. We should not wish, at this point in our history, to see any difficulties arise in access to transport. I shall return to the problem of access to transport in a moment, because we must consider issues relating to the Disability Discrimination Act 1995.

I should like to thank the many constituents who have contacted me and, in particular, the Wapping pensioners group, led by the highly esteemed Sybil Yates. I am slightly worried to see that she has come here notwithstanding a rather nasty altercation with a lorry. We wish her well, but that is all the more reason—

Order. I appreciate what the hon. Lady is doing, but strangers do not exist here. This is part of the Chamber, so they should not be mentioned.

I did not realise that strangers do not exist, but my point relates very directly to the future of Wapping station. We are concerned that more and more constituents could have rather unpleasant altercations with cars and other vehicles if they do not have access to their station in Wapping. I hope that you will forgive me if I make that point, Mr. Deputy Speaker.

Order. The hon. Lady misunderstood me. It is perfectly in order for her to make that point, and she was in order making her point earlier, but mentioning people who might be in the environs, but who are strangers, is out of order.

Right. Thank you for your direction on that point, Mr. Deputy Speaker. I should mention that many so-called strangers are with me all the time in my mind because they just do not stop contacting me on this issue. That is why I am so grateful for the opportunity to raise the future of Wapping station.

I shall outline some of the more near-term history that has led us to the situation that we are in at the moment. In November 2002, I started to receive letters from constituents expressing concern about rumours that Wapping station might be closing. They were angry and frustrated at the lack of information. I then contacted the Strategic Rail Authority and London Underground. The SRA said:
"We need to ensure that stations on the extended East London line comply with modern safety standards given the significantly increased number of passengers expected to be using the line. Wapping presents particular challenges in ensuring safety compliance. No final decisions have been made. We need to look at the options including closure."
There seemed to be a reluctance to talk more specifically about the case, perhaps due to jeopardising the valid and important business case for the East London line extension. I shall return to that.

I then wrote to the Mayor, Ken Livingstone, and received a similar response. On 14 December, more than 300 local residents turned up at a public meeting accompanied by local councillors Denise Jones, Richard Brooks, Shafiqul Hague and Michael Keith. Also present was the other Member of Parliament for Tower Hamlets, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick), and the GLA Member, John Biggs, who deserves credit for presenting a petition to the Mayor signed by 880 people. In January, I tabled a parliamentary question asking about the station's future and at the beginning of this month I had a constructive meeting with Ian Brown, on behalf of Transport for London, who is the managing director of London Rail.

Before turning to the technicalities we discussed, I want to put the situation in human terms. Wapping tube is a vital lifeline for residents who are hemmed in by the river on one side and an extremely busy road—the Highway—on the other. If the tube station closes, Wapping will be isolated, as it was during the 1990s when the tube was closed for repairs. The situation is not acceptable because there is no reliable alternative public transport. The 100 and D3 buses are, sadly, unreliable. The wall of traffic that can build up on the Highway often blocks them and it is a further 20-minute walk to Tower Hill or Shadwell.

I received many letters previously—before the current issue arose—from constituents who were concerned about the service provided by the 100 bus route. London Transport acknowledged the less-than-adequate service and cited problems with driver recruitment. I am concerned about that, but I am more concerned about my constituents having access to the station they need. I must also draw the attention of my hon. Friend the Minister to the fact that there are two primary schools in the area and that recreational facilities in Shadwell basin attract children. We need a safe, clean way to get in and out of Wapping.

I hope that Members recognise that Wapping tube is a vital link to south London and that, without it, it takes more than an hour to get there. We must also consider the congestion charge. Wapping is on the edge of the zone and the tube is a vital link to east London, the City and the west end, without resorting to a car or a taxi. Has the SRA carried out surveys to discover how many people use the station? I know the answer to that question, but I would like the SRA to bear it in mind when doing such surveys that there have been problems with the reliability of the service provided at Wapping station, which have led to some people not using it when they might otherwise have done so if they thought that they could rely on it. Local people need to know the evidence and the results of the feasibility studies carried out by the SRA and how decisions are made on the future of Wapping tube. They need to know that those decisions are transparent.

Turning to the technicalities, there are three main problems at Wapping: gradients, curvature and station platform width. TFL estimates that bringing Wapping up to the required safety standard could cost £100 million. Everyone who lives in Wapping, as well as myself, is astonished by that figure. Having had a detailed meeting with TFL, I realise why it has arrived at that figure, and I shall briefly go into the matter.

I will quote from the Wapping station engineering summary. It states that Wapping underground station is sited at the northern end of the Thames tunnel designed by Sir Marc Brunel. Upon completion, the Thames tunnel became the first underwater tunnel in the world. The tunnel is now scheduled as a grade 2 listed structure. The station is substantially as it was when originally constructed in 1869, so it includes very narrow steps, narrow stairs down to platform level and a narrow and curved platform with no secondary means of escape during evacuation of the station.

Obviously, I recognise that we have to be concerned about safety. The station is adjacent to the River Thames and consequently has a very high water table. It operates with a significant volume of water ingress and continual pumping. What has the SRA done? It has come up with an engineering and safety feasibility study. The options include relocating the station or reconstructing it on the existing site. The most advantageous option is to redevelop the existing site with a new ticketing hall and station entrance. The proposed new station development will not be a fully compliant facility in terms of the network rail standard or mobility-impaired passenger access. However, it would—this is significant—be a great improvement on the existing station.

On the technical complexities to which I referred and the high water table, the SRA has a computer model of the soil structure and engineering design of Wapping station, which it has developed to analyse the impact of works on adjacent buildings and the operation of the underground railway. The results show that the ground would lift upwards by as much as 220 mm. I know that that is rather technical, but the point is that we must understand the technicalities if we are going to come up with a solution. The construction risks include flooding, movement, cracking and movement in adjacent buildings, the possible collapse of the existing railway tunnel because of ground movement or arch collapse and a prolonged construction duration, which would close the site for one year.

The estimated cost, which I mentioned, relates to an initial adjusted budget estimate of £54 million. Possible measures needed to prevent the lifting of the ground would cost £13 million. The risk, which the Treasury insists, probably rightly, is built into any project in accordance with the Green Book, is £33 million, which brings us to the £100 million total. What are the possible ways of avoiding that spend? The most obvious, although not the most satisfactory, is derogation from the Disability Discrimination Act and in respect of the Health and Safety Executive. In some respects, that has already happened. Wapping station has a Health and Safety Executive derogation and its history is relevant, which is why I have mentioned it.

After all, something built in the 1860s will never comply with our 21st-century standards. We recognise that, but we are concerned that we might move backwards. There could be regression rather than progress, because people who had access to transport would no longer have access to it.

One of my constituents, Mike Smith, has battled with access problems at the station because he is a wheelchair user. I know that Mike would never argue that if he cannot have access to Wapping station then neither should any of his neighbours. I would argue that provision must be made to keep Wapping station open and to ensure that Mike and other wheelchair users have access, even if it is not the full and unfettered access that they should be given under the law.

Will the Minister let me know whether derogation can be looked at as a possible solution? Will he also write to me outlining how we might improve the current access for wheelchair users?

Now I will move on to the general issues relating to the East London line extensions. I appreciate that the SRA and TfL have been working extremely hard on options to keep Wapping station open, and no final decisions have yet been taken. They are considering a range of options, but it is crucial that Wapping station has a secure future.

It is also crucial that the consideration of options for Wapping is seen as a separate exercise from the planning for the East London line extension. Nothing should detract from that extension because it will bring major transport and regeneration benefits to some of the most deprived areas of London. In Tower Hamlets, for example, it is estimated that the scheme would boost approximately £1 billion of regeneration initiatives. For London as a whole, the figure is £10 billion. I ask my hon. Friend the Minister whether he can also tell us when we might expect a decision on the business case, which would allow construction for that vital scheme to proceed.

Finally, can the Minister confirm that TfL intends to keep Wapping station open, if it can? Will it actively work to deliver that outcome? No other outcome is acceptable to me, or my constituents in Wapping. We know that there are problems, and we know that it is difficult, but we also know that an answer must be found.

3.46 pm

I congratulate my hon. Friend the Member for Bethnal Green and Bow (Ms King) on securing the debate and on presenting her case so forcefully, as usual, on behalf of her constituents. She has had much correspondence with the Department, and has taken a great interest in this subject. I congratulate her on taking this issue up so assiduously. My hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick) has also taken a great interest in this matter.

I was grateful to my hon. Friend the Member for Bethnal Green and Bow for her short but interesting history lesson about Wapping. I thought that the great voyages of the world only started in Plymouth, but I can assure her that it is difficult for people in my constituency to come here for a day out. I will be seeing some of them in a few minutes, after the debate.

I recognise that there has been some speculation about closure, and I would like to make it clear from the outset that no final view has been taken by anyone regarding the closure of Wapping station. Should there be such a proposal, there would be a statutory process to follow, and we cannot anticipate what might happen in that process. Having said that—and I have to be candid—the business case for the East London line extension project currently before Ministers is predicated on the closure of the station, partly for the reasons that my hon. Friend explained. That assumption is based on safety considerations and engineering feasibility. I should emphasise that the business case for the project is based on a prudent assumption. It is not a determinant of future decisions, nor is it cast in stone.

As I have intimated, the closure of a railway station is not done lightly, or without good reason. A thorough statutory closure process must be undertaken, which gives all the interested parties, especially those most affected—such as m y hon. Friend's constituents—the chance to voice their opinions. Given the importance of the project, the No. l priority has to be to ensure that it can be delivered. The project would underpin regeneration of some of the most deprived parts of the capital by improving links between north and south-east London, and between the national rail network and the London underground network.

The extended line would pass through 25 per cent. of the most deprived areas of London. It would provide improved travel choice for around 330,000 people. The project would provide a range of benefits for Londoners, including additional network capacity to accommodate increasing demand, and the improvement of public transport accessibility to areas such as Hackney, Lambeth, Lewisham, Southwark and the docklands, which are currently poorly served. It would facilitate a future orbital rail service between north and south London, providing congestion relief to central London rail terminals and on major roads into central London, particularly the A10, the A23 and the A205. There would also be better integration with other modes of transport, including buses and light rail.

Critically, the project would bring frequent metro-style rail services to parts of east London that have been without any rail links, which would act as a driving force for regeneration in some of the most deprived boroughs in the United Kingdom. I am sure that my hon. Friend wants to see such regeneration—as do we all. Future travel on an extended East London line is forecast to increase by more than 200 per cent. in passenger journeys and by an even greater level in passenger kilometres. It is also estimated that some 2 million car trips per annum would be taken off the road, with people switching to rail.

We are talking about an increase in passenger numbers. Currently, Wapping has 10 trains per hour. If it stays open and the East London line extension goes ahead, that will increase to 16 trains per hour. I would welcome that, but does the Minister accept that we cannot ask people to divert their transport patterns if there is nothing for them to divert to?

Yes. I hope to come on to that point. In order for the extension to take place, the stations along the line will, of course, have to meet safety standards, and that is the problem with Wapping. The safety requirements are likely to be significant. They will include the provision of greater space for passengers on platforms and at entrances and exits, the upgrading of the secondary access and the creation of proper access for visually impaired and disabled passengers, older people and those with small children.

My hon. Friend asked about a derogation with regard to people with disabilities. That is always done with reluctance, and it would be up to the Health and Safety Executive to make a recommendation on that point. It is possible, but there are other difficulties beyond that. Wapping station may have to be proposed for closure because of the challenges it presents in complying with safety and accessibility standards, given its age and present configuration, and the major impact that those challenges would have on the viability of the whole project. For example, if the necessary modifications extended beyond the current footprint of the station, a new transport and works order would be required, which would take several years to conclude, and that in turn would make the project extremely high risk.

There are technical constraints, too. My hon. Friend has a detailed knowledge of the station. As she said, it is right by the riverside to the south and hemmed in by converted warehouses on the other quarters. The station's close proximity to the adjacent buildings and the listed Thames tunnel limit the scope for extensive modifications. Similarly, the proximity to the Thames and the consequent high water table in the area present extremely complex engineering difficulties that, I am afraid, may not be resolvable. Certainly, I am advised that no viable engineering solution has yet been identified. Currently, the station operates with a significant volume of water ingress and requires continual pumping. Any major engineering work undertaken could introduce the risk of flooding not only to the East London line but to other nearby parts of the underground system.

I should remind the House that, as my hon. Friend said, Wapping station is situated on the oldest tunnel under the Thames, which was started by Marc Brunel in the first half of the 19th century, with the station itself opening in 1869. The tunnel was originally constructed for horse-drawn vehicles. Of course, various alterations have been made to the station since that time, but even today it is substantially as it was when it was originally constructed.

The platforms are narrow and can be accessed only by negotiating a narrow flight of stairs after leaving the lifts, and there is no secondary means of escape during an evacuation of the station. The station operates under a derogation from the Heath and Safety Executive, and were it to be built now, it would not meet current standards. The station was never intended to cope with the number of passengers who are expected to pass through it when the extension project is completed, and upgrading the line raises serious safety issues.

My hon. Friend will agree that safety must be paramount in all our considerations. London Underground counts some 2,660 journeys a day starting or ending at Wapping, with trains every 10 minutes or so.

I hope that the Minister will forgive me for returning to this point. My constituents find it difficult to understand why a service that they are able to use now should be closed in the future. Why cannot the standard of service remain the same as it is, even though it is not up to 21st century standards, rather than become worse?

The simple answer is that the Health and Safety Executive will want the whole of the new service to meet new standards of safety. One must also consider the length of the trains. At present, the length of the trains that can pull in at the station is limited. Some of the trains that are expected to run on the line may be considerably longer than can be accommodated at the station. Therefore, following the planned upgrades, stations on the former East London line, which will be served by dual voltage overground trains at a much higher density, will be designed to accommodate eight-car trains. Although some stations can be altered, the engineering difficulties are very great at Wapping station, as I indicated to my hon. Friend. Quite simply, passengers on a full high-density train would not be able safely to get in and out of Wapping station as it is configured at present. That is the difficulty that we are facing.

There may be a way forward for my hon. Friend and her constituents. The Strategic Rail Authority and Transport for London are discussing the problems with engineering specialists and health and safety authorities to ascertain whether a solution can be proposed that takes full account of the risk to passengers, surrounding property owners and users of the national rail network. It is important to note that any decision must fully address the impact on the current station structure and take into consideration its heritage, adjacent structures and physical obstacles and risks, such as the Thames, the community that it serves directly and indirectly through the railway, the project itself, and linked infrastructure and services, such as the Jubilee line. I assure my hon. Friend and her constituents that discussions and deliberations are ongoing and that no conclusions have been reached.

On the Minister's point about train length, I understand that the service will operate with a four-car service at first. Therefore, Wapping station would not present a problem. Will he write to me on that point?

I shall deal with the matter in correspondence with my hon. Friend, because we will not be able to cover all the points in the debate.

If no satisfactory solution can be found, the operators will have to consider closing the station. However, that will be the very last resort, after all other options have been carefully considered. I believe that my hon. Friend's powerful points in the debate today will also be taken into account. A station closure is subject to a lengthy, detailed and public statutory process. I assure her that, if initiated, the closure process will be public and transparent, and her constituents will have a full role in the discussions.

Before any closure can take place, the station operator—in this case, London Underground Limited—must submit an application for closure to the London Transport Users Committee, which is a statutory body made up of independent representatives of the travelling public. The station operator must advertise by means of notices displayed in the relevant station and in the local press that an application to close the station has been submitted. The application must include a statement of reasonable closure, which must show exactly why the closure has been proposed.

I understand why my hon. Friend and her constituents are worried. I am grateful to her for giving me the opportunity to discuss the matter further. If I can pick up other points in correspondence, I shall be happy to do so.

Colin Skellett

3.59 pm

Notwithstanding the momentous debate taking place elsewhere in the House, I am grateful for the opportunity to raise the handling by the City of London police of the case of Colin Skellett.

Colin Skellett is a constituent of mine, and at the beginning of the saga was the non-executive chairman of Jarvis plc and chairman and chief executive of Wessex Water, whose headquarters are also in my constituency. On 22 August last year, Mr. Skellett was arrested and accused of fraudulently accepting a bribe of £1 million to influence the sale of Wessex Water to a Malaysian company. I want to state at the outset that neither I nor Mr. Skellett have any criticism to make of the principle of fraud investigations when there is sufficient evidence to justify them. I am 'worried about the insufficiency of initial evidence, the way in which the investigation was conducted and the impact that it has had on my constituent, his family, Wessex Water, Jarvis plc and the Malaysian company.

I shall describe the background to the case. Wessex Water was owned by Azurix, a company partly owned by Enron. Following the Enron scandal, Azurix, with the help of Schroder Salomon Smith Barney—SSSB—sought to sell Wessex Water. All decisions on the sale were made by Michael Anderson of Azurix, with advice from SSSB, and had to be approved by the Enron creditors committee. In January 2002, four final bidders were selected, including the Royal Bank of Scotland and the Malaysian company, YTL Power, which was part of the YTL Corporation.

Colin Skellett and the Wessex Water team preferred the RBS bid, but on 24 March last year, they were told by Michael Anderscn that an agreement had been signed with YTL. Following that announcement, Colin Skellett said that, while he would oversee the transition to the new owners, he was not minded to stay with Wessex Water in the long term. However, over the following few months, numerous discussions took place and eventually he agreed to a deal whereby he would complete the transition period and then move to a part-time chairmanship role, spending more time to help the development of YTL's wider business interests in Europe and Malaysia. An agreement for that consultancy work, including the payment of £1 million over five years, was drawn up by Slaughter and May and signed on 6 July, nearly three and a half months after the sale of Wessex Water was agreed.

Later in July, Mr. Skellett informed his bank, Barclays of Stoke-on-Trent, where his family had banked for many years, that he would shortly be paying into his account £920,000, which represents £1 million, less Malaysian tax at 8 per cent. All his dealings were open and above board. He was not responsible for the decision to do the deal with YTL. Indeed, he had preferred the RBS bid. His agreement with YTL over the consultancy arrangements came months after the sale decision and the money that he had received was placed not, for example, in some hidden offshore account, but in his family bank account with tax paid and the bank having been notified in advance. Nothing could have prepared him for what was to follow.

At 6.30 am on Thursday 22 August 2002, seven police officers turned up at Mr. Skellett's house with a search warrant, saying that they believed that he had, in effect, been bribed with £1 million to influence the sale of Wessex Water in favour of YT L. Though handled professionally and courteously, the search was extremely upsetting for Mr. Skellett, his wife Jennifer, who had just been battling with ca ricer, and his 90-year-old father. He asked the police if they had carried out basic checks on the allegations before making the dawn raid. Had they, for example, talked to Enron, Azurix or SSSB, which had handled the deal? Had they seen the sale documents? Had they seen the consultancy arrangements? They admitted at they had not. It seemed that no basic inquiries had been made. As The Guardian put it much later,
"It involved Enron, a Malaysian company and you put two and two together and get five."
Mr. Skellett then learned that seven additional police officers were standing by to search Wessex Water headquarters. Bearing in mind the commercial implications and therefore the need for sensitive handling of such a police visit, with which the police initially concurred, he arranged for his personal assistant to rush to the headquarters to ensure smooth access to his office. An 8 am meeting time with the police was agreed.

What actually happened was that the police arrived at 7.40 am and served the search warrant on the first person they met—the head of information systems. So much for commitments to sensitive and discreet handling. Despite that, the police confirmed to Keith Harris, the director of finance and regulation, who had arrived soon after, that they were conscious of the need to keep a low profile. They were, they claimed, aware of the possible impact on the finances of Wessex Water, Jarvis and YTL, if news of the searches and planned arrest of Colin Skellett got out. It is strange that keeping a low profile meant issuing a press release, a copy of which I have here, and offering an officer for media interview. Journalists have subsequently reported that the police even rang media outlets to tell them about the press release. Interestingly, although the press release did not mention which senior Wessex Water official was arrested, I am told that Colin Skellett's name was given "off the record".

While all that was going on, at 10.30 am Colin Skellett was arrested and taken not to the local Bath police station but, bizarrely, to Staple Hill in Bristol. With nothing to hide, he had no big-shot City lawyer to call on and happily accepted the services of Joan Hughes, the duty solicitor. When people, bcluding Nick Hood, the former Wessex Water chairman, rang Staple Hill to see if Mr. Skellett was there, they were told he was not. He was not allowed to phone his wife until 5 pm. She did not know where he was, and as a result of the police press release she was besieged at home by journalists and film crews. Although interviewed for part of the time, for most of the day until his release, on bail at 11.15 pm, he was held in a police cell. The duty solicitor still believes that he was held for an unnecessarily long time and with inadequate evidence against him.

Of course, having been driven to Bristol on his arrest, there was no offer of a lift back on his release. The following day, on 23 August 2002, Mr. Skellett was again interviewed and released on bail. Despite the case then dragging on for months until 4 February this year, when it was officially dropped, that was the last direct contact he ever had with City of London police. Indeed, even when over five months later all charges were dropped, he heard it first not from the police but from a friend.

The case dragged on and had many worrying elements, which clocked up enormous and needless expense to taxpayers. A few examples will suffice to illustrate that. Two police officers drove from London to Bath and back to return two mobile phones taken during the initial searches. Mr. Skellett, who is frequently in London, would happily have picked them up. Police officers made the same trip merely to ask the owner of Woods, a Bath restaurant, who had paid for meals long after the YTL deal—at which Mr. Skellett was present. A simple phone call would have elicited the information. Police officers flew to and subsequently stayed longer than necessary in Houston, Texas to interview staff at Azurix. The key player, Michael Anderson, who was coming to the UK anyway, had offered to be interviewed over here.

On several occasions police officers coming to interview Wessex Water staff in Bath came and stayed overnight for interviews that commenced about 10 am and were often over by 2 pm, hardly justifying the cost of overnight stays. For two months the Crown Prosecution Service discussed the possible wording of a statement to be used when the charges were dropped. It then extended the bail period because it was awaiting information from the Federal Bureau of Investigation in America which had initially gone missing and was then apparently held up in a snowstorm. It eventually turned out that the FBI had never had it.

While the cost of those and other unnecessary activities to the taxpayer was significant, many others have lost out, too. Jarvis plc, already battered by allegations following the Potters Bar crash, suffered a fall in share prices. As a result, Colin Skellett resigned as non-executive chairman, with inevitable personal financial loss and question marks over his reputation. Senior staff at YTL were, in effect, banned from travelling to the United Kingdom to meet the Wessex Water team, for fear of being arrested. Perhaps worse, the reputation of YTL was badly dented. If evidence were needed, it is worth noting that when charges were dropped YTL's shares rose by 5 per cent.

Wessex Water was for a long time unable to go to the capital markets, and development plans had to be put on hold. Martin Bushnell, who had been involved in negotiating the consultancy deal between Mr. Skellett and YTL, offered to help the police with their inquiries and was promptly arrested, which did nothing for his reputation. The impact on Colin Skellett, his family and friends is incalculable. Fortunately, they—and the board of Wessex Water—remained convinced that he was innocent all along. Indeed, he displays in his office the furry red handcuffs given to him by colleagues, and a teddy bear, like the one I have here, which was given to him by the chairman of YTL.

That support should not mask the effects on Mr. Skellett, who lost his job at Jarvis plc and had his reputation placed in jeopardy. Dropping the charges does not wipe that away. His arrest led to acres of media coverage; the dropping of the charges led to far less coverage, as the press cuttings files before me show. Hon. Members can see the difference between the two. There is a thick wodge of press cuttings from when he was arrested, and a very small number from when the charges were dropped. That is hardly surprising, as on his arrest there was a police press release and detailed background briefings, but when the charges were dropped, there were no such briefings and no one was available to comment. No wonder, then, that there are 270 press cuttings covering his arrest and just 48 covering the fact that the charges had been dropped.

As Anthony Hilton said in the Evening Standard on 5 February, the story of the dropping of the charges
"was clearly intended to make no more than a couple of downpage paragraphs, which just shows how unfair these things are. Everyone sees the arrest; no-one sees the dropping of the charges."
From the beginning, with the failure to carry out the most basic checks before the dawn raid, the handling of the whole business has been inept. It was prolonged for an inexcusable time—five and a half months. It has wasted huge amounts of taxpayers' money. In the end, there was not even an apology.

Huge questions remain about how such cases are handled, the accountability of the City of London police, and the support offered to those wrongly accused. Colin Skellett is not a vindictive man. He has gone out of his way to make it clear that he accepts the need for fraud investigation, and despite all that has happened to him he has no intention of suing anyone or seeking compensation. Despite all that has happened, Dato Hong Yeoh, the chairman of YTL, has demonstrated his forgiving nature by making generous donations to charities and events in Bath. We are delighted that he is already playing an active role in the city after initially being denied access not only to Bath but to the UK.

Colin Skellett is hugely respected in Bath and plays an enormous voluntary role in the life of the city and the surrounding area. He is also an active supporter of the charity WaterAid. Indeed, even during the dawn raid on her house, Jennifer Skellett, ever hopeful of donations, handed out WaterAid leaflets to the police. I hope that, if nothing else comes of raising this issue today, the City of London police will offer a full apology to Colin Skellett and will make a donation to WaterAid out of their own pockets.

4.14 pm

The Parliamentary Under-Secretary of State for the Home Department
(Mr. Michael Wills)

I congratulate the hon. Member for Bath (Mr. Foster) on securing this debate. I fully understand the importance of the matter to him, his constituent and his constituency. These matters are never easy or pleasant for anyone involved. We all understand that.

Before I deal with the substance of the hon. Gentleman's remarks and his account of the case, I should say that the actions and decisions taken by police officers in the course of their duties are, constitutionally, the responsibility of the chief officer of the force involved. Ministers do not have the authority to intervene in operational matters, or powers to act as an avenue of appeal against decisions by chief officers. In formulating my response to the hon. Gentleman's speech, I hope that he understands that I will give the police account of how the investigation was carried out. I hope that that will at least provide some background to and clarification of the reasons why matters proceeded as they did.

It is important to understand the background to the sale of Wessex Water. That private company was owned by Azurix, which was a subsidiary company of Enron Corporation. In November 2001, before the announcement of the now well-known problems associated with Enron, Azurix had decided to put Wessex Water up for sale. At that time, Azurix provisionally appointed a merchant bank to facilitate the sale. According to police investigations, Mr. Skellett was not given the task of facilitating the sale; that was to be undertaken by the merchant bank. I think that the hon. Gentleman referred to that. Later that month Enron went into bankruptcy, so the sale was supervised by the Enron creditors committee.

In December 2001, the merchant bank approached some 50 companies in Europe, the United States of America and Asia that it believed might be interested in purchasing Wessex Water. That was the start of a two-stage auction. The first stage was bidding based on limited information, and the second stage was bidding involving a reduced number of serious bidders, who would be provided with briefings and all the appropriate information.

Four companies participated in the second stage, and bids were concluded on 1 March 2002. The leading bidder—the Royal Bank of Scotland—was confident that it would succeed, but the merchant bank, on behalf of Azurix, negotiated a better deal with YTL, the Malaysian company to which the hon. Gentleman referred. Again, according to the police investigations, Mr. Skellett was not involved in that and was in no position to sign a deal with the Royal Bank of Scotland. On 22 March 2002, the leading offer by YTL was accepted.

On 3 July 2002, the City of London police were made aware of a transaction that appeared to be suspicious, which I shall describe. On that basis, the police conducted an investigation into the sale of Wessex Water and, in particular, the part played by Mr. Skellett. I should make it clear at the outset that, as a result of the investigation, the City of London police are now satisfied that Colin Skellett was unable directly to influence the outcome of the sale, but he had been involved in giving management briefings to prospective bidders during the second stage of the process, and he had knowledge of matters that could have been valuable to prospective purchasers.

In April 2002, an offshore company, which I need not name but which the police inform me is a legitimate company, was informed of an impending deposit of £1.2 million into its bank account. In compliance with money laundering regulations, the company inquired into the source of the money and was told that it was payment in respect of consultancy and associated services, and that a large percentage of it was to be paid to a United Kingdom resident employed to assist.

On 17 May 2002, the company received unsigned documents from YTL purporting to be an invoice and agreement in respect of the purchase of Wessex Water. On 27 May, the company was advised that £1.2 million was expected in the next two days. Also received was an unsigned agreement, dated 10 January, between Mr. Skellett and the second manߞthat is, before the second stage bids in respect of the sale of Wessex Water.

The company required the documents to be signed, but was told that that would not be possible, as it had been a "handshake deal". The money had been sent by YTL. Police inquiries later established that £1 million was intended to be forwarded to Mr. Skellett, and the remaining £200,000 was for the second man, for his part in facilitating the payment.

On 29 May the company was advised by e-mail—I quote loosely—that
"there was a problem with Skellett receiving the advisory fee via the draft agreement as he is a director of Wessex Water and has to report to them in the accounts … Mr. Skellett did not want his fellow directors or the rest of the company to know that he was to receive the money and that Mr. Skellett was the only person who could get done what needed to be done."
The company was asked to re-draft the agreement to show that the fees were for a fictitious transaction in south-east Asia, but it said that that would not be possible.

Having become suspicious about the true nature of the transaction, the company refused to conduct a transaction without sight of signed and appropriate agreements and said that the money should be returned—it subsequently was. The police were satisfied that all their information came from a legitimate source. On 9 or 10 July 2002, Mr. Skellett contacted his branch of Barclays and informed them that he was about to receive a substantial sum from Malaysia. On 11 July, £919,994 was credited to the account. That was later found to represent £1 million, less 8 per cent. Malaysian tax and bank charges.

Initial inquiries revealed that market commentators were surprised that YTL was the successful bidder. Inquiries were made via the FBI, to establish whether the officers investigating the collapse of Enron could find any legal purpose for the payment of the funds to Mr. Skellett—for example, whether the sum was a retention bonus. They were unable to find any trace of such a payment. In view of all the attendant circumstances, the suspicion remained that the £1 million was associated with criminal activity. Having exhausted covert investigations and in order to further the inquiry, the police found it necessary to embark on overt investigations. In order to reduce the risk of potential evidence being destroyed or concealed, it was decided to mount an arrest and search operation on 22 August. On that date, two officers went to secure potential evidence from the offices of Wessex Water and from Mr. Skellett's home address.

I shall now deal with the release of information by the police, because that matter greatly concerns the hon. Gentleman. Wessex Water is privately owned, but it is a public utility company. Consequently, it was inevitable that the police investigation would arouse public interest and give rise to intense media speculation. The presence of police officers at both locations would almost certainly lead to information about the arrest coming to the attention of the public and the media. In order to allay consumer fears, and so that the normal operation of the company and its ability to provide water would not be jeopardised, it was important to emphasise publicly that Wessex Water was not directly the focus of a fraud investigation.

On the morning of 22 August, the City of London police released a press notice to the effect that fraud squad officers had arrested a senior official of Wessex Water Ltd., who was suspected of receiving a corrupt payment of almost £1 million in respect of the recent takeover of Wessex Water by a Malaysian company. The offences were being investigated under the Prevention of Corruption Act 1906. The press notice said that a senior official was being held at a police station of the Avon and Somerset constabulary and that he would be interviewed later that day. It made it clear that the investigation was focused only on the suspected payment to the official, and that there was no suspicion of general mismanagement within Wessex Water.

Later that day, the City of London police issued a second press notice to the effect that a second man, who had no direct connection with Wessex Water, had been arrested after voluntarily attending a City of London police station in connection with the arrest of a senior official from Wessex Water. The second man—I shall continue to refer to him as the second man—was to be interviewed in relation to a questionable payment of almost £1 million allegedly received by the senior official. The police released the information about the arrest with the knowledge and agreement of Wessex Water to prevent any media speculation that could damage the company.

I have been studiously trying to avoid intervening, but the Minister has raised many points with which I have a problem. Will he confirm that the police informed him that Wessex Water agreed to the issue of the press release?

My information is that the police released the information about the arrest with the knowledge and agreement of Wessex Water. I understand that Wessex Water also issued its own press notice to that effect. I am given to believe that at no time did the police reveal the identity of either man. However, during the afternoon it became apparent that the press had discovered that Mr. Skellett was being interviewed at a police station near Bath. Later, following his release, I understand that Mr. Skellett gave a wide range of TV and press interviews.

Having put on record my understanding of what happened as far as the police were concerned in relation to the release of information, I return to the question of the investigation. At his house, Mr. Skellett produced a copy of a contract dated 3 July 2002, which he claimed was a contract between him and YTL for "the provision of services" and that the £1 million represented five years' payments in advance. The contract clearly stated:
"YTL should pay the consultant (Skellett) subject to the receipt of appropriate invoices, a fee of £200,000 per annum. The fee shall be payable calendar monthly within three days after the end of the calendar month to which it relates".
However, attached to the contract was a short letter dated 8 July. It stated:
"As discussed, we are agreeable at your request to make payment of the £1,000,000 fees payable under the Consultancy Agreement in one lump sum. The payment will be subject to 8 per cent. Malaysian withholding tax in respect of which we will in due course provide you with certificate issued by the Malaysian inland revenue for your tax purposes. Kindly acknowledge receipt once the payment has been credited into your account."
The letter was signed on behalf of YTL.

The police still doubted the veracity of the contract, but thought that the letter fundamentally altered a crucial element of the contract rendering it invalid. In response to police questions, Mr. Skellett admitted not having engaged a lawyer to assist in the drafting of the contract or its amendment, although the police felt that, as an experienced businessman, he would normally do so. Later that day, officers made contact with the second man who had just arrived in London and asked him to attend Wood street police station, where he was arrested. As with Mr. Skellett, he was taken to Staple Hill police station on the outskirts of Bath and Bristol.

Examination of the second man's laptop computer revealed attempts to purchase properties apparently in an effort to pay Mr. Skellett in kind by providing him with a flat in London, which could later be transferred into his name. Inquiries with estate agents have established that the second man viewed properties for that purpose.

The police inform me that, in interviews, Mr. Skellett only mentioned the successful payment into his Barclay accounts and made no mention of the attempts to make the payment to him via the second man's offshore route until he became aware that the police had evidence of that. He amended the dates of the attempts to transfer money each time the police proved that they were aware of an earlier involvement, and did not volunteer any information about the attempt to reward him with the purchase of a property until the specific evidence was presented to him by the police.

Faced with the suspicious nature of attempts to transfer money via the offshore route, what appeared to be efforts to hide payments from his fellow directors and what appeared to be a lack of forthrightness in the interview, the police had no alternative but to continue with a thorough and extensive investigation. I hope that the hon. Member for Bath can now see that it was not simply a case of making inquiries of Mr. Skellett's bank—the investigation needed to be wider than that.

The police wish to make it clear that Mr. Skellett was in custody for two periods—12 and a half hours on the day of his arrest and two and a half hours the following day. A significant percentage of that time was spent out of the cell being interviewed by officers. The police released him at the end of the first day precisely to prevent his having o spend the night in a cell.

On the question of checking with YTL, the police wanted to investigate the chairman of YTL who had authorised the payment and engaged the second man. They spoke to him over the telephone, but he declined to attend the UK for formal interview. The police inform me that the constraints of cost and time required to obtain authority through legal channels for officers to visit Malaysia prevented that course of action. However, the chairman provided his version of events through his UK lawyers.

On completion of the investigation, the police concluded that the payment to Mr. Skellett was not a bribe relating to the sale of Wessex Water, as was originally suspected, and no other criminal offences were revealed. City of London police issued a press release on 4 February this year to the effect that, after discussion with the Crown Prosecution Service, the fraud squad was satisfied that no criminal offences were committed in relation to the payment received by the official, and that the Wessex Water senior official and the second man had been released from police bail without charge. They went on to say that the investigation was extensive and thorough, and involved the assistance of financial regulators and international law enforcement. Despite the initially suspicious nature of the payment, City of London police state that it did not constitute a criminal offence in this or any other country.

Everyone accepts that the City of London police fraud squad has a duty fully to investigate any reports of suspected financial irregularities. The hon. Member for Bath mentioned wasting money. Of course, all police officers and public servants have to operate cost-effectively and efficiently. In relation to the return of the mobile phone—

It being half-past Four o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.