In advance of the national security strategy, which will be published in the next few weeks, and following the statement by the head of MI5 about the potential threat from UK-based terrorists, I want to update the House, as I promised in July, on the measures we are taking at home to root out terrorism and strengthen the resilience of communities to resist extremist influences following the incidents of 29 June and 30 June. As everyone in this House knows, to succeed, those measures will require not just military and security resources but more policing and intelligence, and an enhanced effort to win hearts and minds.

First of all, let me thank the police, the security services and the armed forces for their vigilance, their service and their courage in facing up to the terrorist threat. The terrorist attacks in June revolved around an attempted bomb attack on a London venue where hundreds congregated, and a vehicle bomb attack on Glasgow airport. The conclusions today of the review by Lord West on the protection of strategic infrastructure, stations, ports and airports, and other crowded places, identify a need to step up physical protection against possible vehicle bomb attacks. That will include, where judged necessary, improved security at railway stations—focusing first on our 250 busiest stations most at risk—and at airport terminals, ports and more than one hundred sensitive installations.

The report proposes the installation of robust physical barriers as protection against vehicle bomb attacks, the nomination of vehicle exclusion zones to keep all but authorised vehicles at a safe distance, and making buildings blast resistant. While no major failures in our protective security have been identified, companies responsible for crowded places will now be given detailed and updated advice on how they can improve their resilience against attack, both by better physical protection and greater vigilance in identifying suspicious behaviour.

New guidance will be sent to thousands of cinemas, theatres, restaurants, hotels, sporting venues and commercial centres, and all hospitals, schools and places of worship, and it will include advice on training staff to be more vigilant. Up to 160 counter-terrorism advisers will train civilian staff to identify suspect activity and to ensure premises have secure emergency exits, that CCTV footage is used to best effect, and that there are regular searches and evacuation drills. From now on, local authorities will be required as part of their performance framework to assess the measures they have taken to protect against terrorism.

We will now work with architects and designers to encourage them to “design-in” protective security measures to new buildings, including safe areas, traffic control measures and the use of blast-resistant materials. For that advice, I am grateful for the recommendations of the hon. Member for Newark (Patrick Mercer), whom I thank for his work.

Following further work, we will report back soon on what more we need to do to strengthen security to protect against the use of hazardous substances for terrorist purposes.

Just as we are constantly vigilant about the ways in which we can tighten our security, we must also ensure that the travelling public can go about their business in the normal way. In the most sensitive locations, for example, some large rail stations—and while doing everything to avoid inconvenience to passengers—we are planning additional screening of baggage and passenger searches.

In the past few months at key airports, there has already been additional investment in new screening capacity and we have been able to review the one-bag-per-passenger rule. The Transport Secretary is announcing today that, as soon as we are confident that airports can handle the additional baggage safely, the restrictions on hand baggage will be progressively lifted. Starting with several airports in the new year, we will work with airport operators to ensure that all UK airports are in a position to allow passengers to fly with more than one item of hand luggage.

The security budget, which is £2.5 billion this year, will rise to £3.5 billion in 2011. Because of the terrorist threat, the size of the Security Service, which was under 2,000 in 2001 and is 3,300 now, will rise beyond 4,000. That is twice its size of 2001.

I can also report that we have now constituted dedicated regional counter-terrorism units, with, in total, more than 2,000 police and support staff. They are responsible for overseeing investigations into those who recruit terrorists and promote hate.

From the Home Office budget, from now until 2011, an additional £240 million will finance counter-terrorism policing, which is focused as much on preventing the next generation of terrorists as on pursuing current targets. That will include additional funding for further training of our 3,500 neighbourhood police teams to deal with radicalisation in their local communities.

The scale of our international effort is such that around £400 million in the next three years will be invested through the Foreign Office, the Department for International Development and the British Council to tackle radicalisation and promote understanding overseas. The Government will report back on action overseas with other countries to counter extremism when we launch the full national security strategy. I can also confirm that £70 million is being invested in community projects that are dedicated to countering violent extremism. So, in total, we are now investing nearly three times as much in security compared with six years ago.

In line with the measured way in which we responded to the terrorist incidents in June, we will seek only new powers that are essential to the fight against terrorism. The forthcoming counter-terrorism Bill, which will be introduced shortly, will include stronger sentences for terrorist-related offences and, where terrorists have served sentences, new powers for the police to continue to monitor their activities.

Asset-freezing is an important tool in the fight against terrorists buying weapons or using money for terrorist purposes. Sophisticated evidence gathering of financial transactions can both deny terrorists finance and locate the sources of terrorist plots. Current legislation makes it difficult for us to take preventive action, so the new Bill is intended to give new powers to ensure that we can use all available information to pursue those who finance terrorist attacks.

In addition to measures to process terrorist cases more efficiently and reduce the time between arrest and trial—including 14 new specially protected courtrooms—a single senior judge has been nominated to manage all terrorism cases. There will also be a single senior lead prosecutor in the Crown Prosecution Service responsible for cases relating to inciting violent extremism.

To ensure that we protect our borders and detect possible terrorist suspects, members of the new UK border agency will have the power, from January next year, to detain people not just on suspicion of immigration offences or for customs crime but for other criminal activity, including terrorism. Powers will also be given to airline liaison officers to cancel visas when justified.

In line with the statement that I made in July, there will be one single primary checkpoint for both passport control and customs. The UK border agency, which will have 25,000 staff in total, will now apply controls at points of entry and exit on people and goods, into and out of the UK, as well as working throughout the world. The new agency will enable us to transfer intelligence from UK operations overseas to those making visa decisions, and to check biometrics taken from visa applicants against criminal and counter-terrorism records. Further details of the new UK border agency, which has been welcomed by the Association of Chief Police Officers, are published in the Cabinet Office report issued today. This will go hand in hand with what is increasingly necessary: biometric visas for all applicants from March next year, biometric ID cards for foreign nationals introduced from the end of 2008 and a strengthening of the e-borders programme, with the contract to incorporate all passenger information awarded today.

With repatriation arrangements for foreign terrorist suspects agreed with Jordan, Lebanon and Algeria, work is under way with a number of additional countries, with a view to signing new agreements for deportations. In addition to the nine foreign nationals recently deported under immigration powers on grounds of national security, a further 24 foreign nationals are currently subject to deportation proceedings on national security grounds and 4,000 foreign prisoners are likely to be deported this year.

All faith communities in the UK make a huge contribution in all spheres of our national life. They are integral to our success as a society. And as we found, listening to all communities in and after June, the vast majority of people of all faiths and backgrounds condemn terrorism and the actions of terrorists. But the objective of al-Qaeda and related groups is to manipulate political and humanitarian issues in order to gain support for an agenda of murder and violence, and deliberately to maim and kill fellow human beings, including innocent women and children, irrespective of their religion. We must not allow anyone to use terrorist activities as a means to divide us or isolate those belonging to a particular faith or community.

To deal with the challenge posed by the terrorist threat we have to do more, working with communities in our country, first, to challenge extremist propaganda and support alternative voices; secondly, to disrupt the promoters of violent extremism by strengthening our institutions and supporting individuals who may be being targeted; thirdly, to increase the capacity of communities to resist and reject violent extremism; and fourthly, to address issues of concern exploited by ideologues, where by emphasising our shared values across communities we can both celebrate and act upon what unites us. This will be achieved not by one single programme or initiative and it will not be achieved overnight. It is a generational challenge that requires sustained work over the long term, through a range of actions in schools, colleges, universities, faith groups and youth clubs, by engaging young people through the media, culture, sport and arts, and by acting against extremist influences operating on the internet and in institutions from prisons and universities to some places of worship.

As part of our intensifying measures to isolate extremists, a new unit bringing together police and security intelligence and research will identify, analyse and assess not just the inner circle of extremist groups, but those at risk of falling under their influence, and share their advice and insights. Building on initial roadshows of mainstream Islamic scholarship round the country, which have already attracted more than 70,000 young people, and an internet site which has reached far more, we will sponsor at home and then abroad, including for the first time in Pakistan, a series of national and local events to counter extremist propaganda. The next stage will draw upon the work commissioned by the Economic and Social Research Council, King’s College and the Royal Society for Arts on how best to deal with radicalisation at home and abroad.

One central issue is how to balance extremist views supporting terrorism that appear on the internet and in the media. The Home Secretary is inviting the largest global technology and internet companies to work together to ensure that our best technical expertise is galvanised to counter online incitement to hatred. I also welcome the decision by the Royal Television Society and the Society of Editors to hold a conference on how to ensure accurate and balanced reporting of issues related to terrorism in the media. To ensure that charities are not exploited by extremists, a new unit in the Charity Commission will strengthen governance and accountability of charities.

A specialist unit in the Prison Service will be tasked with stopping extremists using prison networks to plot future activities. And because young people in the criminal justice system are especially vulnerable to extremist influence, we are making further funding available through the Youth Justice Board, the National Offender Management Service and the many voluntary agencies that work with young people to support young people who may be targeted for recruitment by extremist groups. Following evidence that some of those involved in promoting violent extremism have made use of outdoor activity centres and sports facilities, we are working with Sport England to provide guidance for the sector to ensure that, where possible, these facilities are not abused. Backed up by a new website to share best practice, a new board of experts will advise local authorities, local councillors and local communities on tackling radicalisation and those promoting hate.

We have had mosques in the UK for more than 100 years, serving local communities well. These communities tell me that mosques have a much wider role, beyond their core spiritual purpose, in providing services, educating young people and building cohesion, and the majority already work very hard to reject violent extremism. As the newly constituted Mosques and Imams National Advisory Body recognises, however, the governance of mosques could be strengthened to help to serve communities better and to challenge those who feed hate. Our consultations with Muslim communities emphasise the importance of the training of imams—including English language requirements—and the Secretary of State for Communities and Local Government will be announcing an independent review to examine, with the communities, how to build the capacity of Islamic seminaries, learning from other faith communities as well as from experience overseas.

In addition to updated advice for universities on how to deal with extremism on campus, the Secretary of State for Innovation, Universities and Skills and the Minister for Lifelong Learning, Further and Higher Education will invite universities to lead a debate on how we maintain academic freedom while ensuring that extremists can never stifle debate or impose their views. We will also consult on how to support further education colleges as well as universities.

The Secretary of State for Culture, Media and Sport is working with the Museums, Libraries and Archives Council to agree a common approach to deal with the inflammatory and extremist material that some seek to distribute through public libraries, while also of course protecting freedom of speech.

We know that young people of school age can be exposed to extremist messages. The Secretary of State for Children, Schools and Families will be convening a new forum of head teachers to advise on what more we can do to protect young people and to build bridges across communities. To ensure that young people have the opportunity to learn about diversity and faith in modern Britain, we will work in partnership with religious education teachers to promote the national framework for teaching religious education in schools, including making sure that children learn about all faiths. An advisory group will work with local communities to support the citizenship education classes run by mosque schools in Bradford and elsewhere. I can announce that one essential part of this will be to twin schools of different faiths through our £2 million school linking programme, supported by the school linking network.

I am also announcing today a youth panel to advise the Government, learning from youth projects in different parts of the country which all enable young people to debate and discuss issues of concern, as does the work of the Youth Parliament, which has been running debates.

We are sponsoring and encouraging a series of national and local mentoring programmes for young people, including a business in the community Muslim mentoring programme, new leadership training, and local youth leadership schemes in Blackburn, Waltham Forest, Leeds, and in partnership with Tottenham in Haringey. After discussion with Muslim women, a new advisory group has been set up by the Secretary of State for Communities and Local Government, which will advise on the access of women to mosques and their management committees.

It is by seeking to build on shared interests and shared values that we will isolate extremists and foster understanding across faiths. Following the recent remarkable letter by 138 Muslim scholars from a diversity of traditions within Islam, which paid tribute to the common roots of Islam, Christianity and Judaism and called for deeper dialogue, we stand ready to support new facilities for multi-faith scholarship in Britain. A Green Paper will be published to encourage inter-faith groups to come together in every constituency of the country. I am also inviting the Higher Education Funding Council to investigate the idea of setting up in Britain a European centre of excellence for Islamic studies.

We will have joint work with the French and German Governments on building an appreciation of the Islamic and Muslim heritage across Britain and Europe. Arts Council England, the Tate gallery, the Victoria and Albert museum and the British Library will all be taking forward projects to promote greater understanding. And, just as the British Council is connecting young people across the world through school twinning and volunteering exchanges, I am announcing that we will finance a rising number of young people from all faith communities to volunteer overseas.

The intercept review will report in January. We believe that consensus now exists on post-charge questioning, and the Home Secretary is beginning a new round of consultations with parties and communities on detailed proposals on pre-charge detention, on which we believe that we can establish an all-party consensus. There is no greater priority than the safety and security of our people, and building the strongest possible relationships across all faiths and communities. I believe that it is possible, through the actions that we are proposing, to build a stronger consensus in Britain that will both root out terrorist extremism and build more vibrant and cohesive communities.

I commend this statement to the House.

First, let me welcome the Prime Minister’s statement. I am absolutely convinced that the terrorist threat we face today is of a completely different order from those we have faced in the past. As a nation, we need the hard-nosed defence of our liberties. The Prime Minister started by mentioning his national security approach and I have to say that we back it. We back the idea of a national security strategy and a national security committee. They were all proposed and adopted in our policy review earlier this year.

As I listened to the statement, I noted a number of good ideas—from school twinning and a mosque commission to post-charge interview—that I am glad to say the Prime Minister has adopted. We are delighted that we are providing those good ideas and that the Prime Minister is taking them on. I have to say that there is one slight difference on the Opposition side: when we have good ideas, I do occasionally allow other Front-Bench Members to announce them. Perhaps that is another good idea for him to take on.

On the broader issues of security raised in today’s statement, we have three particular areas of concern. First, on securing our borders, the Prime Minister talks about a border force. Will he confirm that his proposals do not include the police, so it cannot be a proper border police force, which is what we want to see? Specifically, can he tell us whether the new force will have new powers or will it have to rely on existing powers? Similarly, will it have new money or will it have to rely on existing budgets?

The second area of concern is counter-terrorism. As I said, we welcome the Government’s adoption of our proposal that it should be possible to question suspects after they have been charged. The Government have also agreed to our suggestion of a review into the use of telephone tap evidence in court. I know that the review is taking longer than expected, but will the Prime Minister confirm that there will be scope for its conclusions to be included in the terrorism Bill when it comes before the House?

Taken together, the introduction of those two measures—post-charge interview and the use of telephone tap evidence—should, we believe, relieve the need for holding terrorist suspects for more than 28 days without charging them. On that subject, can the Prime Minister explain what happened this morning? At 8 o’clock, his security Minister, Admiral West, said on the radio, and I quote:

“I still need to be fully convinced that we absolutely need more than 28 days”.

Those were his words. One hour later, he said, and I quote again:

“My feeling is, yes, we need more than 28 days”.

Can the Prime Minister tell us what happened this morning? People will conclude two things: first, that Admiral West was leant on; secondly, and more worryingly, will not the episode confirm in some people’s minds that when it comes to this vital and important debate, the Government are not so much concerned with the evidence as with the politics? Does not that desperately need to change?

Turning to Admiral West’s review, we welcome his proposal on security at railway stations, airports, sport stadiums and shopping centres. Given what happened on 7/7, can the Prime Minister tell us what specific steps are being taken to safeguard London underground? Can he tell us whether the cost of guarding key sites will be met from the single security budget?

More generally—this is something that the Prime Minister did not say, but I am sure that he believes it—does he agree with me that safeguarding our country against terrorism is actually a matter for all of us and not just the Government, the police and the security services? It remains the case today, as it has always been, that if we are to win against the terrorists, everyone has to be vigilant and to play their part.

In a wide-ranging statement, the Prime Minister covered a number of specific areas, so may I throw out some specific questions? On the single security budget, the Prime Minister talks about extra money for counter-terrorism policing. Can he clarify—I have asked the question before, but have not had an answer—whether the single security budget covers special branches up and down the country that will do vital work in fighting terrorism?

On asset freezes, the Prime Minister says that more needs to be done on legislation. He had responsibility for that area as Chancellor for 10 years and he often told us how much had been done. Can he now tell us in more detail about the weaknesses in the system over which he presided?

On deportations, I very much welcome the progress report on the subject. The Prime Minister spoke about the need to deport those who put our national security at risk. Does he agree that we have got to will the means as well as willing the end? If he is advised that the Human Rights Act gets in the way of deportation, will he agree to its replacement?

On mosques, does the right hon. Gentleman agree that we need to be absolutely clear that new imams coming to Britain should be able to speak English? Other countries such as Germany have taken steps to ensure that imams coming from abroad can speak the national language. Can he be specific and say whether he agrees with that?

On the new border agency, he says that the new agency will enable the Government

“to transfer intelligence from UK operations overseas to those making visa decisions”.

I have to ask him whether that does not happen already—and, if not, why not?

The final area of concern that I want to address is the battle for hearts and minds. In his article in The Sun this morning, the Prime Minister rightly talks about the need to

“isolate Islamic extremists who… seek to manipulate and divide our society.”

He is right, but will the Government recognise that in order for that to happen, it is necessary to ban extremist groups like Hizb ut-Tahrir and Hezbollah, which do so much to foment violence? Will the Prime Minister make certain that none of the £6 million of grants from the Department for Communities and Local Government made available under its preventing violent extremism programme is going to groups within the Muslim community that have extremist or separatist agendas? So that we can check that, will he put the record of the grants in the House of Commons Library?

In that context, can the Prime Minister explain why his Government have allowed extremists from abroad, such as Yusuf al-Qaradawi, Delwar Hossain Sayeedi and Matiur Rahman Nizame, into Britain? Finally, is he aware that the Irish Government recently refused entry to Ibrahim Moussawi, head of Hezbollah’s viciously anti-Semitic TV station, Al-Manar? What approach will the Government take when Moussawi attempts to enter the UK to speak at a conference in early December? I would like an answer on that.

In fighting extremism and terrorism and in securing our country, the Prime Minister will have the support of Opposition Members, but the national security strategy that we need must not only be right in theory, but effective and competent in its implementation. There is much in the statement that we support, but there is a lot of generalisation. Will the Prime Minister accept that tough action on deportation, on extremist groups and on banning preachers of hate is necessary at the heart of this strategy if it is really going to deliver?

I am grateful to the right hon. Gentleman for itemising the areas where the Opposition will support the Government in the legislative and administrative actions that we are taking. In respect of the particular named individuals that he mentioned, I will write to him specifically about them. As for grants to individual organisations, we will try to make available all the relevant information and place it in the House of Commons Library.

The right hon. Gentleman raised some specific points. On intercept, let me say that, at the request of the reviewers, the review will be completed in January. The Home Secretary wrote to her counterpart this morning about that, clarifying that the reviewers requested more time. The report will be available in January and it will then be possible for any amendments based on it to be included in the counter-terrorism Bill.

We are exactly agreed on the matter of imams speaking English. The right hon. Gentleman’s point about London underground is contained within our recommendations.

On the border agency, I have to tell the right hon. Gentleman that there is a debate about the role of the police in it. The Opposition believe that the police should be fully integrated into that agency but that raises issues which we must consider. It would create a national police force in place of local police accountability, which would change the nature of policing in this country. The Opposition should know that there is some opposition to that from some of the major police forces in this country and I believe that we should consider those issues carefully before making a final decision.

I can tell the right hon. Gentleman that the border agency will have new powers, which are set out in the detailed document—the O’Donnell report—published today. It will have the funding necessary to do the job and I have already mentioned that it has a staff of 25,000. People who were doing different jobs in different areas are now being brought together and they will have additional powers to stop terrorists coming into the country. In charge of the agency will be a joint Treasury and Home Office Minister. The Home Office will be responsible to the House for the agency, but all the details are set out in the document published today.

Let me deal with the issue of Hizb ut-Tahrir, Hezbollah and other associated organisations. I said to the right hon. Gentleman in the summer that if he had any evidence to bring to bear on the matter, he should send it to me. I have looked as carefully as I can into the circumstances of those groups. Even many of those who have left the groups and feel that they should be exposed are of the view that exposing them is not the same as banning them altogether. Maajid Nawaz, who talked about the matter on “Newsnight”, said:

“My ideal scenario would be not to ban the party but it would be that through the…power of discussion and persuasion that eventually the party would fizzle out in this country”.

There are divided views on the issue, but we must take into account whether, in banning an organisation, we would win an appeal in the courts as a result of that. I will keep all those matters under review, and will be happy, as will the Home Secretary, to consider any evidence brought to bear.

I welcome the fact that there is common ground on considering the issue of intercept. I also welcome the fact that we are near to an understanding of the common position of the parties on post-charge questioning.

When the House last discussed pre-charge detention, I referred to the fact that the shadow Home Secretary had said previously that he recognised that it might be necessary to go beyond 28 days in certain circumstances. I also quoted Liberty, which has published documentation saying that it could envisage going beyond 28 days in certain circumstances. Knowing the complexity of investigations, the danger of multiple plots, that people who are arrested usually have many false identities, false passports and false bank accounts, and that the investigation into such cases can take a great deal of time before a charge can be put, the issue is: in what circumstances can there be common agreement that it might be necessary and allowable to go beyond 28 days? Contrary to what the Leader of the Opposition said a few minutes ago, I believe that there is scope for agreement on that.

Let me tell the right hon. Gentleman that on 17 July on the radio Admiral West said:

“The scale of the whole thing is quite dramatic. Looking at the complexity of this, there will be occasions when we need more than 28 days”.

According to The Times on 25 July, Lord West was backing call for terrorist suspects to be locked up, and according to The Times on 5 November, he was also saying that,

“there was a need to extend the 28-day limit on detention”.

As the right hon. Gentleman well knows, Lord West has also said today that he favours going beyond 28 days.

The debate on 28 days should take into account what Lord Carlile has said:

“I expect in the course of time to see cases in which the maximum of 28 days will be proved inadequate”.

Contrary to the views currently expressed, I believe that many Opposition Members will recognise that achieving a consensus on the circumstances in which it might be necessary to move beyond 28 days would be in the interests of the whole country. It would make no sense, however, to declare an emergency the minute that one case had to be taken beyond 28 days. That would provide oxygen to terrorism, which no one in the House would want.

A range of measures are necessary to counter terrorism, and we are considering how to take a long-term view about winning hearts and minds in this country. I hope that all Members will understand, however, that whether in relation to prisons, universities, colleges or schools, or the future of mosques and the training of imams, we must consider each of those areas to see how we can build deeper understanding in our country across communities, and together root out terrorist influences that would undermine our society.

I add my welcome to the statement. I totally agree with the Prime Minister that, as far as possible, we should proceed on national security issues on the basis of political consensus. As someone who once worked in government alongside the intelligence and security services, I have always respected their professionalism and the need for them to be properly supported.

There is already a great deal of consensus and progress on areas where we have common ground. We welcome the progress made on post-charge questioning. Many of the ideas put forward by Lord West on building design seem, at first sight, eminently sensible and worthy of support. The Prime Minister has reported the progress on intercept evidence, for which we have argued. We have also long argued for a unified border force, and share the concern expressed about the lack of integration with the police and the danger of two forces working in parallel. Perhaps he will set out what the O’Donnell report concluded on the matter, so that we can make progress.

Pre-charge detention remains our main concern, and the issue is not separate from that of confidence in the minority communities, about which the Prime Minister spoke at length, because it is of great concern to them. On the issue of all-party consensus, there is already substantial consensus that we should not proceed beyond the present 28 days. That consensus embraces both Houses of Parliament, the Home Affairs Committee, the Joint Committee on Human Rights and many bodies outside. Let me quote to him the evidence of Rachel North, one of the victims of the 7/7 bombing, who had no party political axe to grind and summarised the situation admirably:

“I have not seen anything that convinces me that longer than 28 days is needed to stop people such as…Mohammed Sidique Khan…detonating his bombs in the future…it’s fundamentally important to us as a country that we do not hold people without them knowing what they’re being charged with and why”.

Does the Prime Minister agree that the decision on the issue must be evidence-based? Is it not the case that of the 1,143 arrests under the Terrorism Act 2000, it has not been argued seriously in a single case that extended detention would have helped in their prosecution? Has not the Home Secretary acknowledged in parliamentary testimony that there has not yet been a single case that would have been helped by an extended period of detention?

Does the Prime Minister agree that comparative experience is highly relevant, and that other countries with experience of dealing toughly with terrorism do not have such long periods of pre-charge detention? The United States has, I believe, two days, Turkey has seven and Spain has five. Why is Britain so fundamentally different in those respects?

Finally, I want to ask the Prime Minister a series of specific questions, some of which are on issues that he touched on in his statement. First, on control orders, the previous Home Secretary acknowledged that the system was full of holes and that six of the controlees had absconded. Is the system to be preserved or scrapped, as it does not seem to work?

Does the Prime Minister accept the growing volume of opinion that additional plea bargaining in terrorist cases would be useful to enable a wider range of witnesses who are peripheral to terrorist organisations to give evidence in court?

Can the Prime Minister update us on the police radio issue, as there are reports that police radios still do not work in parts of the underground system and in many tall buildings? Will he indicate what progress has been made on that?

Will the Prime Minister give us a report on the review of the relationship between MI5 and MI6? Clearly, they are distinct organisations with distinct mandates, but what has been done to improve information flow and co-operation between them?

In relation to international co-operation, will the Prime Minister update us on his comments on 25 July about the co-operative work with President Sarkozy and the Germans on terrorism in Europe? Has that work advanced? In view of the crucial importance of cross-border co-operation, does he think that it was perhaps premature to have achieved an opt-out from the European treaty provisions in relation to counter-terrorism?

I am grateful to the hon. Gentleman, and welcome the fact that he has supported most of what was contained in the statement.

On control orders, yes, we continue to use them, and their use was upheld in the courts recently. As for plea bargaining, that is allowed. On the police radio, the Airwave system is now being spread out across the forces, and considerable investment has been made.

Co-operation with the French and German Governments is moving forward, and there is an attempt not just to have cross-border co-operation on immediate terrorist issues but to find a way to encourage a European Islamic scholarship across the countries of Europe.

International co-operation will form part of the greater detail of the national security strategy. As for the national border agency, a detailed report published today sets out the relationship between the immigration and customs services, and all the work being done at the moment. The most important consideration is that those who work at the single point of entry have power not just to deal with the traditional cases with which they have had to deal in their own areas, but to stop people for reasons related to terrorism and take action.

The hon. Gentleman raised, primarily, the question of the 28-day limit. I understand that the Liberal Democrats have taken a strong view on the matter, although Lord Carlile, the independent reviewer and a member of the Liberal Democratic party, has stated categorically that in the work he has done he has accepted the need for further days at some point. He says that there will be

“cases in which the maximum of 28 days will be proved inadequate”.

The hon. Gentleman raised the issue of what evidence we had. At the time of the last airline plot the police had to deal with 400 separate computers and 8,000 discs, including compact discs and DVDs. They had to deal with people with false identities and false passports who were operating from numerous addresses with numerous bank accounts. Sometimes it is difficult in the first instance to know exactly who has been arrested.

I have had the same experience as Home Office Ministers and police in relation to the freezing of terrorist assets. I did not answer a question from the Leader of the Opposition about why asset-freezing required new powers. The availability of information and the ability to use it in one’s defence in the courts if challenged has been the central issue in regard to asset-freezing over the past few years, and that has made it more difficult for us to do the things that we need to do.

I hope that, over time, the Liberal Democrats will come to accept that there are instances in which it may be necessary for people to be detained beyond 28 days. In such instances, there would be full safeguards that would include not just the approval of a judge but the involvement of the Director of Public Prosecutions before any action was taken, and a proper report to the House of Commons and a study by the independent reviewer so that people would know what was happening in each specific instance. It seems to me that in such cases the issue is not the arbitrariness of the procedure, because we are protecting against that, but whether we are satisfied that there are occasions on which either multiple plots or complex investigations will require more than 28 days’ detention.

There is one point on which I disagree with the hon. Gentleman. It is not possible to make an exact comparison between the legal and policing systems of all countries. I think the hon. Gentleman will agree that under the British system, people who are arrested are brought to court very quickly. That is not the case in other countries. When the figure of 20, 30 or 15 days is used in those countries, it sometimes relates to the time that it takes to bring people to court in the first place. Under the British system people are brought to court early, and the safeguards that we are trying to incorporate will require a judge constantly to determine whether a detention is still justified.

My right hon. Friend rightly put dealing with the radicalisation of young people at the centre of his statement. He said that there would be much more co-ordination between Departments. Given that a great deal of radicalisation takes place outside the cities of Westminster and London, can he reassure us that there will be proper co-ordination between the devolved Governments of Northern Ireland, Wales and Scotland, between local authorities and Government, and between the security services and the special branches? I consider that to be an extremely important way of dealing with radicalisation.

I am grateful to my right hon. Friend, who chairs the Intelligence and Security Committee. Both he and his Committee have made valuable proposals to which the Government have listened very carefully, and we will continue to listen to the advice that he and his colleagues give.

My right hon. Friend referred to the devolved Administrations. When the Cabinet organisation that deals with emergencies of this kind convenes, it will normally include representation from the devolved Administrations in Scotland, Wales and Northern Ireland. In particular, when we are dealing with the need for co-operation in both policing and other areas connected with terrorism, the involvement of those Administrations is not just important but essential. That will continue to be part of what we do.

The Prime Minister talks of achieving consensus on the 28-day limit, and I could not agree with him more. He talks of a series of sensible precautions that would be taken if the limit went beyond 28 days, and I could not agree with him more. The fact remains, however, that if we do go beyond 28 days, whatever the realities of the situation, our enemies will brand it as internment. We will be passing them such a powerful tool. May I beg the Prime Minister to look at the lessons of history, and not to walk into this ambush?

I thank the hon. Gentleman for the work that he did alongside Lord West in identifying some of the areas in which protective measures must be strengthened, and will be strengthened as a result of that work. He identified not only the London underground, which has already been mentioned, but the way in which, particularly in new buildings, we can design out some of the flaws that we have detected when examining what has happened in relation to some terrorist incidents.

The hon. Gentleman raised, with some passion, the issue of the 28 days and the message that we send to other countries. I could not agree with him more that our ability to defend our liberties when faced with a terrorist threat is crucial both to the message that we send to ourselves about the health of our society, and to the message that we send around the world that we will not be blown apart by terrorist activity in our country and will not give in to it. I must tell the hon. Gentleman, however, that proposals even from his party envisage our going beyond 28 days in certain circumstances.

The issue for me, which I think will increasingly be the issue for everyone, is this. I believe that if it is possible to protect against arbitrary treatment of individuals in the context of complex and sophisticated investigations by ensuring that the police are responsible to the courts and perhaps even to the Director of Public Prosecutions, that Parliament is involved at some stage, that there is a report on individual instances from an independent reviewer or any other body chosen by the House and that every instance in which we go beyond 28 days is properly investigated and analysed, in a sense we will design out the arbitrariness in the system, and also send a message about the importance that we attach to people being treated fairly even when they are suspected of terrorist offences.

This is a debate that we will continue to have. I do not believe that the issue is one of principle, because the Opposition have already conceded that there are circumstances in which we may have to go beyond 28 days. The issue is whether we can secure agreement on the individual detail of the circumstances in which, with proper protection, that would be justified.

I hope that my right hon. Friend and the Home Secretary will find time to read the evidence that Rachel North gave the Home Affairs Committee yesterday. As a survivor of 7/7, she is very much opposed to any extension of the 28-day limit.

Does my right hon. Friend agree that one of the most essential things that we should be doing is exposing a notorious lie propounded by the hate merchants and racists—a very small and unrepresentative section of the Muslim community—who say that Britain is the enemy of Islam? Did we not go to war in 1999 to stop the ethnic cleansing of Muslims, a war that was very unpopular in some quarters but was fully justified? Is it not a fact that, time and time again over the last 40 years, we—certainly Labour Members—have fought against any form of discrimination against our fellow citizens, whether they are Muslims, blacks, Hindus or Sikhs? Is that not something of which we should be proud?

Before the Prime Minister answers, I remind Members that there is a time limit on Back-Bench speeches in the debate later today because so many Back Benchers wish to speak. I do not expect speeches now; hon. Members must put questions to the Prime Minister.

My hon. Friend is absolutely right. He asked me to look at the evidence that was given to the Home Affairs Committee yesterday, and I will do so as we continue our debate on the very issue that he raised. As for the links between us and the Islamic religion, we should take the most recent statement by Muslim scholars very seriously indeed. That showed a determination to find common ground between the Islamic faith, Christianity and Judaism. I believe that those scholars requested that there be a proper dialogue between the faiths. That would yield a far greater understanding than exists at the moment. Over time, that would have a huge influence, particularly on young people in our country and other countries. I hope that we can join together in that activity.

If and when proposals are brought forward to extend pre-charge detention, will the Prime Minister ensure that the mistake that was made last time is not repeated? Neither the police nor the Government or anyone else made out the case properly for the extension that was required. While many of us know that there are some pressing arguments in favour, to set against perfectly proper libertarian ones, unless and until those are fully explained, as the Prime Minister is starting to do now, they will not be acceptable to the House.

It is precisely for the reasons that the right hon. Gentleman suggests that people must be sure of the evidence, the ground on which the proposal has been considered and the detail of it, in so far as how it protects the civil liberties of the individual. I have been anxious that there be a proper debate, both here and outside the House, on that very matter. In the interests of a common front in the fight against terrorism, I am anxious that, wherever possible, we can find consensus on that issue. There is new evidence about the sophistication, the complexity and the international nature of those cases. No one looking at, for example, the airline plot or at other investigations, including even the June investigations, is under any illusion but that we are dealing with contacts with large numbers of people in different continents. No one is under any illusion, either, but that we are dealing with sophisticated technological evidence that would have to be analysed in great detail. The question is whether we can provide sufficient safeguards so that individual liberties are protected and arbitrariness is avoided in circumstances where it may be necessary—I think that that is acknowledged in principle, although people are worried about the effect in practice—to go beyond 28 days. Therefore, I thank him for his question because that is exactly the way the debate should happen.

I thank the Prime Minister for his statement. I had a consultation with members of the Muslim community in my constituency a few weeks ago and their messages were clear. First, they revile terrorism and all those who promote hate within our communities. They welcomed the perceived change of tone by the Government towards the Muslim communities over past months. I believe that there is much in the statement today that they would welcome. However, they continued to voice concerns about pre-charge detentions. May I urge the Prime Minister to continue to have dialogues with real members of the community, not organisations that purport to represent them, so that we can work together towards the common aim of peace and security in this country?

It is because of the points that my hon. Friend has raised that the debate about pre-charge detention must go beyond the House and into the communities, where people will want to take an attitude and a view on that issue. There have been five regional seminars already where those issues have been aired. The debate on that will continue over the next few weeks and months. I hope that, in her community as well as in others, people will see that we are determined to protect the civil liberties of the individual.

Many of us on the Conservative Benches who might well be persuaded were evidence to be provided about an extension of pre-trial detention are bemused by the way in which the Government have gone about initiating—that is the word that is used—that debate. We have seen absolutely nothing that suggests the reason why, in the Prime Minister's words, there is a need for a debate, let alone for an extension. He talked about computer problems, checking on finance and all those other things, yet in no single case has there had to be an extension beyond 28 days. Will he please now stop the ludicrous discussion and put on the table the specific cases where we needed to go beyond 28 days?

It is not lawful to go beyond 28 days. Therefore, it is not possible to detain someone beyond 28 days without declaring a state of emergency in this country. It is hardly surprising, therefore, that no case has gone beyond 28 days before the charge has been made. In the next stage of the debate, I will be happy to put forward some of the evidence that has been available to me, but I ask the right hon. Gentleman to look, as he would wish to do, at the more sophisticated, complex and internationalised nature of the investigations that police have to conduct. Ken Jones, president of the Association of Chief Police Officers, said:

“Investigators are facing an unprecedented international dimension in terrorism cases and the necessary enquiries to ensure public safety have a time dimension to them that is not catered for within the existing timescales.”

That is only one of the senior police officers who have made their views known. Lord Carlile, the independent reviewer, made his view known.

I warmly welcome the proposals, which serve to protect the public and prevent terrorism. Is the Prime Minister satisfied that centrally there are the mechanisms that will benchmark the delivery agencies? On 28 days, the Government’s approach has been open and transparent. The Select Committee on Home Affairs has not completed its investigation. If there is any further evidence that Ministers have that perhaps the Select Committee does not have, will he share that information with the Committee, so that we can better inform Parliament of our decisions?

Of course. I welcome the fact that my right hon. Friend’s Committee has an open mind on those issues and is looking at the evidence that is brought before it by many people, including a large number of people from the Muslim community. Of course we will endeavour to furnish him with what information is available, but at some point, of course, we will have to reach a decision.

Why did the Prime Minister’s Security Minister, Admiral West, say on the “Today” programme this morning that he would need absolute proof before supporting any extension of the 28-day limit, and then completely change his mind an hour later?

Lord West was asked whether he was convinced of the need for more than 28 days’ detention, to which he replied:

“I am personally convinced there is…I personally absolutely believe that within the next two or three years we will require more than that for one of these complex plots.”

That was in the interview on BBC News 24 this morning.

I thank the Prime Minister for his statement and ask him to consider a couple of points from an Irish dimension. The Cabinet Office report “Security in a Global Hub” describes the current situation in relation to the common travel area. Will he assure us that there will be best engagement, with both the Irish Government and the Northern Ireland Executive, on how people travel and how they are treated in comparison with other citizens of these islands? That is a matter of sensitivity to everyone, north and south.

Will the Prime Minister also assure us that the Government are learning the lessons of the counter-productive effects of counter-terrorism legislation in the past in this country? He rightly says in his statement that al-Qaeda will try to manipulate humanitarian and political issues. The form and length of detention is one of the things that it will try to manipulate. It will also try to manipulate the impression that some people in the Muslim community are being ghettoised and others are being patronised. I ask the Prime Minister perhaps to consider how he presents the community, schools and youth measures that he has talked about today.

The Prime Minister: That is exactly why the Home Secretary and the Minister for Local Government are trying to reach out to communities with a number of initiatives that will involve Muslim women, young people, schools, madrassahs and mosques in discussing the very issues that the hon. Gentleman is talking about. We are determined not just to root out those who are extremists but to build understanding between young men and women of the different faith communities in this country. While the individual measures that we have outlined today may in each of the different areas seem specific, taken together, they amount to a strategy to prevent people from falling prey to terrorist influences in this country.

The hon. Gentleman’s first point was about the relationship with the Irish Government on issues related to that. I can assure him that a strategy is being worked out with the Irish Government on those issues.

The Prime Minister is well aware of the speedy and effective response to the Glasgow airport attack by the Scottish Government and law enforcement agencies. I think he is aware that both the Scottish National party and Plaid Cymru are continuing discussions with the Home Office on the detention issue. On today's report, will the Prime Minister confirm that, for the plans to work north of the border, they will have to include specific efforts by the Scottish Government, the Justice Department, the Scottish police, the Scottish Crime and Drug Enforcement Agency and the Scottish Environment Protection Agency? Will he give a commitment that the Westminster Departments will continue to work effectively with the Scottish Government and their agencies to help to combat and to deter attacks and to provide the security and safety that we all want?

Of course we will work with all the agencies in Scotland and every part of the United Kingdom that have a role to play, but I should remind the hon. Gentleman before he runs away with himself that terrorism and counter-terrorism is not a devolved issue; it is an issue for this United Kingdom Parliament.

On the 28 days question, the Prime Minister refers to the views of Liberty in a way that will surprise many, not least the organisation itself. Is it not the case that Liberty’s precise view is that in the unlikely event of there being multiple—three or four, perhaps—terrorist attacks on the mainland, the Government do not need new powers as they already have the necessary powers for that remote set of circumstances? Is it not the case that Liberty remains adamantly opposed to any extension of pre-charge detention beyond 28 days, both on principle and for the pragmatic reasons that have been raised in the House?

But I have to tell my hon. Friend that the difference between us is not that Liberty says that there are no circumstances in which we might have to go beyond 28 days. There is not a disagreement in principle on that. The issue is that if we had to go beyond 28 days Liberty suggests—as does the Conservative party—that we would have to declare a state of emergency. I do not believe that it would be a good thing for a terrorist group to be given the oxygen of publicity by us having to declare a state of emergency in order to investigate it. It is not an issue of principle that divides us on this matter. The issue is this: in a case where the police might need more than 28 days, what are the practical circumstances in which Parliament could accede to that without declaring a state of emergency and subject to the protection of the civil liberties of the individual, reporting to Parliament and going through an independent judge?

May I offer the support of my colleagues and myself for many of the measures attempting to thwart international terrorism that the Prime Minister has outlined? I ask him, however, to do two things. First, will he have discussions with the First Minister in Northern Ireland and the Prime Minister of the Irish Republic in order to prevent access to the Irish Republic by international terrorists who would use it as a base to launch attacks in mainland UK? Will he also ensure that the travelling public in Northern Ireland are able to continue to go about their business in a normal way—that people will continue to be able to travel between Northern Ireland and Great Britain as between Scotland and Wales and the capital city of London?

The hon. Gentleman is absolutely right. We want the maximum freedom of movement. I will continue my friendly discussions with the First Minister in Northern Ireland, and I have already raised these issues with the Taoiseach.

Has the Prime Minister observed that often a precursor to support for terrorism is a sense of grievance, and does he agree that crucial to overcoming such a sense of grievance in minority communities is the creation of a culture of respect for basic human rights such as fair trial, free speech and habeas corpus? Will he therefore resist the siren calls of the right hon. Member for Witney (Mr. Cameron) to abolish the Human Rights Act 1998?

My hon. Friend is right. The message we should send out to the world is that our country wishes to protect the civil liberties of the individual. That is contained in the Human Rights Act, which was passed by the House of Commons and implements in British law the European convention on human rights. Whatever debates we have on the 28 days issue, I hope that there is a determination among all Members that, in the face of the threat of terrorism, we will not succumb but will defend the liberties of the individual.

In relation to that answer, will the Prime Minister accept that the whole question of the protection of the public from terrorism is often jeopardised by judicial interpretation of the Human Rights Act and European law generally? Does he therefore accept that to achieve his aim of the protection of the public we need British law for British judges and British judges for British law?

I think that the hon. Gentleman will find from the information that becomes available at the end of the year that whatever his doubts about European law might be it has not prevented us from deporting up to 4,000 people from this country, and nor has it prevented us from deporting a large number of people to within the European Union.

I understand the point that has been made about local police looking after their own interests, but we already have a national police force: the British Transport police. It deals with railways and ports. Should we not discuss whether to extend its powers so that it takes over airports as well?

My hon. Friend raises an important point about the engagement of the transport police in these matters, but the national borders agency will bring together customs and immigration staff and there will be a policing presence on the board of the new agency and strong links with the transport police.

Cutting unnecessary delays at airports is vital, and we all welcome additional screening equipment. However, twice while passing through Heathrow in the recess I was held up, as were many others, because existing screening equipment was not staffed. Will the Prime Minister take that into account and ensure that his new equipment is matched with properly trained staff? That should have been, but was not, done in the past. Will he promise that it will be done in future?

We will take on board all the hon. Gentleman’s comments. In particular, I will pass on to BAA his desire for proper staffing at Heathrow to make it easier and more convenient for people to undertake their journeys.

On a point of order, Mr. Speaker. Yesterday, the Secretary of State for Children, Schools and Families said in respect of school funding:

“Leicestershire is 34th out of 149 local authorities over the next three years.”—[Official Report, 13 November 2007; Vol. 467, c. 563.]

Actually, it is 149th—for every year. I believe that I am now allowed to say that it seems to me that the Secretary of State was misleading the people of Leicestershire. Can he be asked to come back to the Chamber and, having checked his facts, to rectify that statement?

Members should not use a point of order to extend a debate. [Interruption.] That might be a fact, but this is not a point of order or a matter for the Chair. The hon. Gentleman must rebut that comment in the customary fashion, and he knows how to go about that as he has been a Member for a long time.

I inform the House that I have selected for debate the amendment in the name of the Leader of the Opposition. Standing Order No. 33 provides that on the last day of the debate on the motion for a Humble Address to Her Majesty the House may also vote on a second amendment selected by the Speaker. I have selected the amendment in the name of Dr. Vincent Cable for that purpose. The vote on that amendment will take place at the end of the debate, after the amendment in the name of the Leader of the Opposition has been disposed of.

I beg to move, as an amendment to the Address, at the end of the Question to add,

‘but humbly regret that the Gracious Speech fails to set out a clear vision on the future of economic policy, contains no measures to develop Britain’s competitiveness, includes proposals that will damage enterprise, and does not contain any measures to reduce youth unemployment and to make significant inroads into the number of people on benefits who could work; condemn the absence of measures to ensure real improvements in the public services to give people power over their lives and generate greater value for money for taxpayers; and further regret the absence of measures in the Gracious Speech to tackle the pensions crisis to which Government policy has contributed.’.

This is the last day of the Queen’s Speech debate and the first occasion on which the new Chancellor has taken part in it in his new role, and I want to begin by reviewing his first four months in office. He has presided over the first bank run for 140 years; he turned his own pre-Budget report into a political disaster; he has downgraded growth and revealed a £16 billion hole in borrowing; he has hit pensioners with another £2 billion tax raid; he has announced a catastrophic plan for capital taxes that has the Prime Minister briefing against him, and he has managed to cede the entire intellectual agenda on the economy to the Opposition. What an amazing start—congratulations.

I fear the story of this Chancellor is set to be a classic political tale of someone who rises from nowhere and disappears to nowhere without having been anywhere in between. I grant that he has taken one difficult decision. I have to hand a report from The Times:

“Alistair Darling has reluctantly agreed to use Dorneywood because it would otherwise be given to lower ranking functionaries”.

Bad news: he is forced to spend weekends at Dorneywood. Good news: the Prime Minister thinks there are lower ranking functionaries. The question we ask today of the current Chancellor is simple: can he up his game and provide the leadership and vision required in these times of economic uncertainty?

Let us look at three key areas that a Chancellor must command: tax, spending and, most importantly, economic stability. On stability, it is not the Government’s fault that the global credit markets froze on 9 August, but it was only in Britain that those international problems triggered a run on a high street bank. The collapse of Northern Rock is not just a tragedy for the many thousands who work for the bank; it has done serious long-term damage to Britain’s reputation for stability.

Last week, we fell to 46th place in the World Economic Forum’s latest rankings for economic stability. The whole point of the tripartite arrangements created by this Government a decade ago was that they would stop people queuing in high streets trying to withdraw their deposits, yet when the moment of reckoning came, no one was in charge—the Financial Services Authority did not have the authority, the Bank did not have the final say and the Chancellor did not have the strength of leadership.

I do not blame the Chancellor for the system of oversight; I blame his predecessor. As one of the original Monetary Policy Committee members, Professor Buiter, told the Treasury Committee this week,

“responsibility…must be laid at the door of the man who created the arrangement—the former Chancellor and current Prime Minister, Gordon Brown”.

The fact that the Government are bringing forward legislation on deposit insurance in this Queen’s Speech is, in itself, an admission of failure.

I wrote to the Chancellor more than a month ago offering cross-party support in preparing that legislation—not that he has ever bothered to reply. As we consider the Bill, we will insist that there is a balance between protecting the saver and not shielding managements from the consequences of their decisions. It is just a pity that neither the Chancellor nor his predecessor introduced the legislation before the crisis, because we know that that is precisely what Mervyn King was urging him to do. Had he or his predecessor listened to the Governor of the Bank of England, the run on Northern Rock might not have happened.

Before Parliament is asked to fix a problem, we must be clear what went wrong in the first place. We still do not know all the facts. I welcome the fact that the Treasury Committee is holding its inquiry. This will be one of its most important reports of the Parliament. Let me just give the House one example of something that we do not yet know about the events leading to the collapse of Northern Rock. On the crucial day before the run started, the Governor of the Bank of England wrote to the Chancellor of the Exchequer setting out the conditions of the rescue. The Governor then told the Select Committee that he was happy for that letter to be published, but the Chancellor refuses to publish it. There is a disagreement between the Governor and the Chancellor. Why is the Chancellor refusing to publish this letter, which the Governor is happy to see published? What is he trying to hide?

When will we hear about the future plans for Northern Rock? We learn more from press leaks than we do from the Chancellor, even though this bank has borrowed more than £20 billion on the public account, which is more than the entire Home Office budget. His excuse is that the decisions about the future are for Northern Rock’s management—indeed, the Prime Minister has said during Prime Minister’s questions that this is commercially confidential—but it is an open secret in the City that the Treasury is conducting the negotiations, and it is the taxpayer who is exposed.

This is not about commercial interest; it is about the public interest. We know, for example, that the Treasury has hired Goldman Sachs to advise it on the sale of Northern Rock and we hear the ominous news that Baroness Shriti Vadera is getting involved, presumably on No. 10’s instructions. If the Prime Minister does not have the confidence in his Chancellor and his Treasury Ministers’ ability to solve the problem, why should we?

Let the Chancellor at least confirm today the reports from Northern Rock’s investment bank that the Bank of England facility could still be in place in three years’ time, which is a great deal longer than the weeks or months he told the Select Committee in September. Let him assure us that at the end of the chaotic process, the taxpayer will not be left with a huge bill. Although we welcome the broader review of the future of the tripartite arrangements, let him tell us when he and the Prime Minister will take a decision on the reappointment of the Governor of the Bank of England. Dangling the sword of Damocles over Mervyn King while allowing officials in the Treasury and Downing street to brief against him may satisfy the vanity of the Chancellor and the Prime Minister, but it does nothing to restore confidence in the independence of the Bank of England. They should have the strength to make the decision about his future and the foresight to ensure that future Governors are not treated in this way by adopting longer fixed terms in the way that we propose.

Stability is the first priority for any Chancellor, but tax is the next area that he must command. In an age of intense global competition, when capital and business can move with ease, we need a low and competitive tax system. That is the lesson from not only Ireland but other countries, such as the Netherlands, which are now reducing their corporate taxes. Yet Britain has a Chancellor whose first tax change is an 80 per cent. increase in capital gains tax. That was one of the few tax measures in the pre-Budget report that was not inspired by the Conservative party, and it is universally regarded as a self-inflicted political and economic disaster.

Will the hon. Gentleman confirm that the Conservatives opposed taper relief when the Prime Minister introduced it when he was first Chancellor?

When taper relief was introduced it related to a 10-year period, rather than the two-year period that applied until the Chancellor abolished it in the pre-Budget report. The system that the Government inherited from the previous Conservative Government had retirement relief—[Interruption.] I do not know why Labour Members are chattering, because they are reintroducing a single rate for capital gains tax. When it was announced a month ago, they said that they would not have retirement relief, but the Prime Minister is now saying that they might. If they reintroduce indexation, we will be virtually back to where we started.

The Conservatives are against the changes in the pre-Budget report. If they make their way into the Finance Bill in April, we will oppose them, for these are exactly the wrong tax changes to make in the face of a new economic revolution that puts a premium on enterprise and risk taking. That is why all the major business organisations come together to condemn the tax rise as damaging to long-term investment and likely to set back the growth of the economy.

The Treasury should be familiar with that analysis because it used to share it. Six years ago, the former Chancellor published a report that said that the tax change now being proposed by the current Chancellor

“rewards the short-term speculator as much as the long-term investor”.

In fact, it has been difficult keeping the Government’s advisers off the airwaves in recent weeks, as they queue up to attack the proposals. Lord Bilimoria, the Chancellor’s small business adviser, says:

“Investment in small businesses and entrepreneurship has been penalised.”

Sir Ronnie Cohen, who by happy coincidence combines generous support for the Government with unexpected appointments to Government taskforces, said this weekend:

“So much protest has followed the measure that I hope they will listen.”

What about the newest and shiniest adornment in the ministerial trophy cupboard? I am, of course, referring to the great Lord Digby Jones of Birmingham, the Labour Minister who does not trifle himself with such insignificant baubles as Labour party membership. He says that

“medium-sized businesses, in particular, think this

—tax rise—

“is a terrible thing.”

To be fair to the Chancellor, throughout this hail of criticism from friend and foe he has refused to budge, or to countenance a U-turn or concession. There is something admirable about the Minister who sticks to his guns, but when his guns are spiked by his own Prime Minister, admiration turns into humiliation. The Chancellor told us at that Dispatch Box that there would be no concessions because this was

“the right thing to do.”—[Official Report, 18 October 2007; Vol. 464, c. 954.]

Four days later, the Prime Minister told a newspaper editor over breakfast that it was the wrong thing to do and that there would be concessions on retirement relief. What did the Treasury and the Chancellor know of that prime ministerial U-turn? They knew absolutely nothing.

If the Government see fit to reintroduce retirement relief, what will the Conservatives’ attitude be?

We would certainly welcome any concessions on this. We oppose the whole change that is being put forward, but if all we are going to get is some concessions, we shall seize them. We shall take concessions that we secure, campaign on them in places such as Solihull and no doubt win those parliamentary seats at the general election.

What did the Treasury and the Chancellor know of this prime ministerial U-turn? They knew absolutely nothing about it. When his great Department of state was asked to confirm the story, it answered, “We don’t know. This did not come from us.” Can one imagine the former Chancellor, who is now in No. 10, ever standing for such shabby treatment from his superiors—not that he thought he had any? I am sure that the new Treasury team was grateful for the helpful explanation provided by Downing street. Again, I have the report here:

“Supporters of Gordon Brown say that it does not really matter that Darling has emerged as an insignificant and weak Chancellor. They even make a virtue of the fact, insisting that the nation ought to be grateful that such an experienced and respected figure as Gordon Brown is keeping such a wary eye on events at his old shop.”

We know that the Chancellor is not in charge, but when he replies in this debate, will he clear up the confusion, to which I have just alluded, for thousands of small business owners who are wondering whether to sell up before next April? Is the retirement relief, briefed by the Prime Minister in private, now a firm commitment? Will it be £100,000 or perhaps more? Are other concessions on the way, such as indexation? I would be happy to give way to the Chancellor so that he can clear up what the Prime Minister said. We cannot all wait to be invited for breakfast at No. 10 to find out what is going on at the Treasury—[Interruption.] For a second there, I thought that we were going to get an intervention, but it appears that we will just have to wait.

Of course, these days, one can do even better than breakfast at No. 10 by coming to the Conservative party conference to discover what will be in the next Labour Budget. We proposed a levy on non-domiciles, and the Chancellor accepted it. We offered a cut in inheritance tax, and he followed it. With the Liberals, we argued for an airline tax on pollution: he spent six months attacking it, and now he is introducing it. Well, no one ever promoted him for his originality. We have had reforming Chancellors and iron Chancellors, and now we have the xerox Chancellor. I am not offended, as imitation is the sincerest form of flattery. But while he is following our ideas, why does he not cut the corporation tax rate by simplifying the system? Why does he not reverse the small company tax rise, set for next April, by scrapping the complex allowances that he is introducing? And why does he not adopt our plans to take millions of first-time buyers out of stamp duty altogether? Why does he not do all those things that we propose? He should not worry, because we will still let him hold up the Red Box on Budget day.

My hon. Friend is making a great speech. Has he noticed how the Chancellor slipped through a substantial increase in petrol tax at a time when oil prices were rising, so that he now takes more than 65p a litre from everyone who buys petrol to go about their business? That has led to a spike in inflation so that we have to pay twice, first in oil taxes and second in higher interest rates because of the inflationary consequences. Is that not also a blot on his record?

The ways that the Chancellor finds to raise revenue do not surprise me at all. Of course, the remarkable thing about this Government is that even after a decade of stealth taxes and the highest tax burden in peacetime history, we still manage to have the largest budget deficit in Europe—a formidable achievement.

Before the hon. Gentleman took the intervention from the right hon. Member for Wokingham (Mr. Redwood), he reeled off a string of tax cuts that he thought would be in the interests of the British economy, and I understand his position, although I do not agree with it. Would he care to say what spending cuts there would be if those tax cuts went through or, alternatively, what other mainstream taxes he would raise?

Well, I—[Interruption.] I was about to say how much I like the hon. Gentleman, because we have served together in Committees on Finance Bills for many years. I was about to say, before Labour Members started chirping, that the hon. Gentleman normally pays close attention to what other people say, so I shall repeat what I just said. I asked why the Chancellor does not cut the corporation tax rate by simplifying the system. Why does he not reverse the small company tax rise by scrapping the complex allowances? Those are revenue-neutral changes to the tax system. The hon. Gentleman is right: the proposal to take millions of first-time buyers out of stamp duty altogether is a tax cut, but it would be paid for by the increase in taxation on non-domiciled taxpayers. Those proposals are all fully funded.

Will the hon. Gentleman give way?

I cannot resist giving way to the man who so successfully organised the coup against Tony Blair last year.

The hon. Gentleman has raised the issue of taking first-time buyers out of stamp duty several times. That sounds attractive, but has he thought through the detail? This may seem a silly question, but how does one decide who is a first-time buyer? Does it include a couple with one partner who has bought a house already and one who has not? If he does not have a proper answer, can he tell the House why it would be fairer to provide an exemption from stamp duty for people who might or might not be wealthy, rather than deliberately providing support to the poorest in society?

The proposal will apply to couples if both are first-time buyers. It is not an insurmountable problem, because it has been introduced in Australia and the nationalist Government in Scotland have a different scheme, which involves public subsidy, but they are also looking at first-time buyers. Many other countries are doing it. I am sure that the hon. Gentleman would not want it to be the case that first-time buyers living in the Chancellor’s constituency were helped, but those living in his constituency were not.

The hon. Gentleman clearly does not understand about stamp duty in the Rhondda, but very few people pay any stamp duty there.

The hon. Gentleman cannot hold me responsible for the failure of this Government to regenerate the Rhondda.

I was talking about the Chancellor’s weakness on taxation, but I shall now turn to the third key area that a Chancellor should command—spending. Last month he announced the results of the comprehensive spending review. We were told, “Just you wait. This will be the great moment when the Brown Government finally sets out its vision.” But the spending review has sunk without trace.

Of course, I am delighted that the Government are now committed to our policy of sharing the proceeds of growth, but tighter spending plans are not enough. The public want value for money. They will not get it from the European Communities (Finance) Bill, which we debate here next Monday. I understand that the Chief Secretary will lead off for the Government. It is a Treasury Bill, and it is the most expensive piece of legislation included in the Queen’s Speech. I say “included”, but for some reason it was not mentioned in Her Majesty’s actual speech and it was not referred to at all by the Prime Minister in the debate later. But the European Communities (Finance) Bill will sign away more than £7 billion of the British rebate in return for absolutely nothing. It contains no commitment to CAP reform, or even a European budget that the auditors can sign off—something that they refused to do again this week.

We know that it is a bad deal because the Prime Minister, when he was Chancellor, went around telling every journalist that he could find that it was a bad deal. He said it was all Tony Blair’s doing, and that he would never have signed it. In the heat of the negotiations, one Treasury official put it like this:

“We have ended up giving away much more than we expected and with precious little to show for it in return”.

In case anyone missed the point, someone described as a

“senior aide to Gordon Brown”

helpfully explained to the papers what it meant, saying that

“it will inevitably lead to reduced public spending. There is no other way to achieve it.”

The former Chancellor was right about that. If we had kept the rebate, we could have paid for 27,000 more police officers or 31,000 more teachers, and still been able to do up Lord Malloch-Brown’s apartments in the Admiralty.

Now the Prime Minister is asking his new Chancellor to introduce it and us lot to pass it. Well, he will not have our help in doing so. There is a broader point. No one doubts that the Government are spending large sums of public money. But the entire country is asking where all the money has gone. In the last month, we have had some answers—£500 million on literacy programmes that have not made any difference to literacy rates; £885 million on truancy, but truancy levels continue to rise; and £84 billion in total spent on a welfare-to-work programme that the first Minister to have responsibility for it described this weekend as a “failure”. When the Prime Minister says “British jobs for British workers”, Labour Members blush, because they know that borrowing slogans from the National Front is no substitute for a proper welfare-to-work policy. [Interruption.] I should be amazed if anyone were prepared to repeat the slogan that the hon. Member for Vale of Clwyd (Chris Ruane) has just uttered from a sedentary position.

Then there is the £19 billion that the London School of Economics calculated might have to be spent on identity cards. We know what the Chancellor really thinks about them because he once made the mistake of telling us. Identity cards, he said,

“are unnecessary and will create more difficulties than they will solve…I do not want my whole life to be reduced to a magnetic strip on a plastic card”.—[Official Report, 2 March 1992; Vol. 205, c. 70.]

If that is the case, why did he take the job as the Prime Minister’s Chancellor?

Not only the individual projects waste money, but an unreformed public service is failing to get money to the patient and the parent. Slowly but surely, just as we predicted, the roadblocks to reform are emerging under this Prime Minister: giving local education authorities greater control over academies, cancelling hundreds of millions of pounds of private sector contracts in the national health service and the backsliding on the Freud report on welfare. A strong Chancellor who cared about value for money would be dismantling those road blocks to reform, not helping to erect them. However, he will not dismantle them because he is incapable of challenging the Prime Minister’s policy of throwing taxpayers’ money at any problem without any proper regard to how well it is spent.

The Queen’s Speech was supposed to be the moment when the Government drew a line in the sand, but instead it was the moment when they dug a hole and kept digging. Now they drift from one crisis to another, buffeted by events, lacking any clear vision about what they are planning to do in the next week, let alone the next year. Back in the glorious days of June, the Prime Minister promised us a Government of all the talents. In one sense, he has delivered. We have exceptional naivety at the Foreign Office, fantastical incompetence at the Home Office and exceptional weakness at the Treasury. The job of the Chancellor of the Exchequer is to be the rock in the storm, yet this Chancellor’s indecision and poor judgment have contributed more than most to the heavy weather that the Government now find themselves in.

At a time of financial instability and a period of great economic change, Britain needs a strong Government and a strong Chancellor to guide us through. We have neither. The sooner the election comes that will bring about the real change this country needs, the better.

There was a time when the Queen’s speech was an opportunity for the Government to set out their programme for the coming Session and for the Opposition to set out their vision, too. When I saw the amendment that has been tabled by the Leader of the Opposition, which criticises us on the vision for the future economy, competitiveness and a range of other measures, I thought that the shadow Chancellor might be telling us his vision for the economy over the next few years and setting out the measures that he would put in place to make us more competitive in the future. However, we heard absolutely nothing.

The other thing that is striking is that it is the second major speech that he has made, after his conference speech, in which he has not mentioned once what he would do to tackle the major problem of child poverty here and abroad. One would have thought that the shadow Chancellor would have a view on whether poverty should be abolished or whether he was going to do anything about that pressing problem, but there was nothing on that, nothing on climate change and nothing on how he would help to deal with the competitive challenges that we will face in the future.

I understand why the hon. Gentleman cannot do that. Over the past few weeks, he has got himself into a position where he has made promises on tax and spending that he knows he cannot possibly afford to deliver. In the space of just a couple of days at the Tory party conference he made promises on tax that amounted to some £6 billion, yet he can scarcely point to £500 million to pay for the proposals. When he knows that he has that black hole in his spending and that he is in no position to make any commitments on health, education and tackling child poverty, it is no wonder that he has completely avoided addressing any of those issues of substance. They affect each and every one of us as we enter an undoubtedly uncertain time, when we will see rapid economic change. This country will have to compete with growing economies in China, India and elsewhere in the world. Those are the big challenges that we face, yet the hon. Gentleman had nothing to say about them.

The Chancellor is talking about child poverty. Does he believe that poverty is absolute or relative? If it is relative, how can it be abolished?

I know this—I know poverty when I see it. I represent a pretty prosperous part of a pretty prosperous city in Europe. However, I remember when I entered the House of Commons 20 years ago that parts of my constituency in Edinburgh had nearly 25 per cent. of people out of work and a second generation of people who had never worked. The hon. Lady ought to remember that. The Conservative Government of the 1980s and 1990s damned an entire generation to failure because they allowed poverty to grow. In 1997, we had the worst record in Europe for child poverty. We are putting that right, in relative and absolute terms, and I am determined to continue to do so.

Does the Chancellor disagree, therefore, with the right hon. Member for Birkenhead (Mr. Field), who conceded recently that the number of children in poverty, not including housing costs, went up in the past fiscal year by 100,000?

Some 600,000 children have been taken out of relative poverty, while 1.8 million children have been taken out of absolute poverty since 1998. I should have thought, as I seem to have stirred an interest among the Conservatives on the issue of child poverty, that the question should be about what we are all doing, together, to end the scourge of child poverty. We are committed to that, and I hope that the Conservatives would be, too—yet the shadow Chancellor has had opportunity after opportunity to say something about it and has said absolutely nothing.

We share the ambition of abolishing child poverty, but in my constituency problems such as the fact that we have the highest water bills in the country prevent the Government from hitting their targets on tackling child poverty. Does the Chancellor agree that we need more than a one-size-fits-all approach, and that specific issues have to be tackled in specific areas, such as water bills in the south-west?

I agree that a range of issues have to be dealt with in order to help people on low incomes. Of course, one of the major things that we have done to help people on low incomes is to introduce child tax credit, of which Liberal Democrats in some parts of the country have been critical. To be fair, they are in favour of it in other parts of the country, depending on which way the wind happens to be blowing at the time. The main point is that all of us, in all parties, ought to be committed to ending child poverty. It has no place in one of the richest countries in the world. We are on the way to achieving our ambition to eradicate child poverty within a generation. I intend to do that.

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I shall give way to my hon. Friend the Member for Livingston (Mr. Devine), who has been very patient, but then I want to make some progress.

The shadow Chancellor has described the state of the economy as a tragedy. The tragedy was 3 million unemployed, 15 per cent. interest rates, 12 per cent. inflation rates and record numbers of house repossessions. That tragedy affected the people of this country, and the Conservatives were in power.

I agree with my hon. Friend, who represents an area that was on the receiving end of some of the neglect of the Conservative party’s policies in the 1980s, when the mining industry declined and there was absolutely nothing in the place of it. Now, I shall give way to my old friend, the hon. Member for Surrey Heath (Michael Gove), who I remember meeting on a picket line in Aberdeen many years ago.

I am grateful to the Chancellor for giving way, and for the solidarity that he showed me when we were comrades in struggle all those years ago. Talking of comrades, the Secretary of State for Work and Pensions and I attended a recent conference held by Barnardo’s to discuss child poverty. The Secretary of State was asked why the £3.8 billion that could have been used to meet the child poverty target by 2010 was being used to cut inheritance tax, and he said that the Government had to appease middle England. That is calculation, not conviction. Will the Chancellor explain why he chose to follow the path of calculation, rather than the path of conviction that he is attempting to persuade us that he would rather follow?

On this occasion, I cannot stand shoulder to shoulder with the hon. Gentleman as I did against the wickedness of the then press barons of the north-east of Scotland.

We are able to devote considerable sums of money to reducing child poverty, although we have other obligations as well. The hon. Gentleman’s comments are a bit rich since, as well as our other differences on inheritance tax, he wanted to spend even more money on a tiny minority of the wealthiest estates in the country.

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I shall give way once more, but then I want to make some progress.

I am grateful to my right hon. Friend for his generosity. May I correct him? The hon. Member for Tatton (Mr. Osborne) did set out a vision today. It was a vision of tax cuts—inheritance tax cuts, tax cuts for small business, corporation tax cuts and stamp duty cuts. The hon. Gentleman’s vision is to take the country back to 1992 when in five years the national debt doubled because there were unfunded tax cuts. His vision is to take us back to economic instability. His vision is a complete failure to confront the global challenges that the country faces.

My hon. Friend is right. The Tories are getting into the business of making promises to cut taxes. I did not mention earlier that during the two or three days of the Tory party conference a few weeks ago they also promised more money for the Army and for schools, more money to combat MRSA, more money for stroke drugs and more money for high-speed railway lines. They even rivalled the Liberal Democrats in fiscal incompetence; there is no way that anyone can make those promises if they do not have the money to fund them without getting into the very difficulties that the Tories were in during the 1990s.

Will the Chancellor give way?

Perhaps later on, but it would be a good idea for me to make progress—[Interruption.] I will happily give way to the hon. Gentleman later.

As I said earlier, the objective of the Queen’s Speech is to help us meet the aspirations of the British people and to prepare for the rapidly changing new world we face. I agree with something that the shadow Chancellor said in his conference speech: we face a real competitive challenge from the emerging economies. Asia now out-produces Europe. China alone produces half the world’s clothes, half the world’s computers and more than half the world’s digital electronics. China’s and India’s share of world trade has more than doubled in less than 10 years and both are looking to compete at the top of the market, not at the bottom.

The pace of change will define our world in the future. Globalisation, which is transforming the scale of the challenges we face, means that at home in the UK and across the world we must prepare and equip our country for the future. The changes are an opportunity for us. New markets for trade are opening in the emerging economies and new jobs will come from new technologies. Britain is well placed to seize those opportunities, because we have a strong and stable economy and we can make the right investments for the future.

In the face of such changes, people rightly look to the Government whom they elect not to stand by—as Governments have done in the past with disastrous consequences—or to stand against inevitable change, but to stand with them, on their side, preparing and equipping individuals, as well as the country, for the changes ahead. That is what the measures in the Queen’s Speech do. Along with the measures that I set out last month in the pre-Budget report, they will help us to meet those challenges in the future.

The difference between us and the Tories is that we are prepared to make the necessary changes and we have the money necessary to back up the reforms—crucially in education and skills, which are essential for the future, but also in transport infrastructure. We are introducing measures to ensure secure and cleaner energy supplies and to deal with housing. We have legislative proposals on those and other things, yet the Conservatives and the shadow Chancellor have absolutely nothing to say about them.

At a time when we need to make fundamental changes to face the challenges ahead, we would have thought that the Conservative party might have something to say; but no—absolutely nothing.

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I will give way to the right hon. Gentleman. Whatever else one might accuse him of, he sometimes has some forward thinking, although we may not always agree with it.

I am grateful to the Chancellor for his kind words. Will he tell the House which account the £23 billion to re-finance Northern Rock came from and how it will appear in the Government accounts?

I shall come to Northern Rock shortly, because some pertinent questions were asked and I want to try to deal with them. The money to which the right hon. Gentleman refers, which was lent to Northern Rock, comes from the Bank of England.

At this time, it is important that the Government use their strength and influence to ensure that each and every one of us and all our businesses can respond to the future. That is why we have increased the amount we are spending on science and why we are ensuring that UK invention and innovation can be converted into goods and services that we can sell. That is why we are putting so much more money into universities. The situation is completely different from that of past decades, which is why, to meet our big ambitions in education and transport, we are putting in resources. The Conservatives cannot do so because they know that their promises on tax and spending are unfunded, so they could not meet the commitments that we are entering into.

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I give way to the Liberal Democrats.

The Chancellor talks of the importance of preparing for a difficult future. From his experience at the Department of Trade and Industry he will know that the North sea sector is going through a period of transition. While world oil prices are high, the sector might be seen as attractive for investment, but the reality is that in many of the North sea fields oil is mixed with gas so the real price of oil is about two thirds that of the world price, and the costs of production are going up dramatically. Does the Chancellor recognise that we face a much more challenging time in the North sea and that we need a sophisticated approach to ensure that we maximise returns in the long run?

I am aware of the difficulties faced by the North sea field. I am particularly aware of the fact that, as gas prices have fallen, there has been pressure on some of the North sea producers. As ever, we shall do whatever we can to make sure that we get as much as we possibly can from the North sea. The hon. Gentleman and I both realise that the resources are finite, and I think we both agree that it is absolute madness for the Scottish National party to pretend that Scotland could live off the North sea. I see that the SNP leader is now claiming the entire assets of the North sea, including those that in any view of their division would not come to Scotland. However, it is important that we do everything we can to extract every last drop of commercially viable oil and gas.

I share the Chancellor’s disappointment that the long-term challenges that the country has to face have not been dealt with by other parties today. As he is aware, a few weeks ago the Treasury Committee produced a report on globalisation that indicated that we need to get on the front foot in terms of education and science, and that if we do not the UK’s high-tech and professional jobs could be threatened. We have asked the Government to look into the possibility of holding an annual debate in the Chamber on globalisation in order to make us and the country aware of the challenges that we face and of the need for adequate public policy responses.

I agree. Many Members have visited China and India and I am sure that each and every one of them—no matter where in the Chamber they sit—was struck by how fast the economies of those countries were growing. There is a thirst for education and knowledge in China and India and, as I said, they want to compete at the top end of the market, not on low costs and low expectations. They want to do the same things as us. Time is not on our side, which is why it is so important not only to maintain investment in education but to make the changes that we need to improve and increase our skills standard. I absolutely agree with my right hon. Friend about that.

The foundation for all those things is a strong and stable economy. Stability matters for individuals because it keeps interest and mortgage rates down; it also means that we can maintain high employment and that we do not return to the double-digit inflation of the past. Stability matters for the country, too; it is necessary for the economy to grow. That is why, as I have said time and again, we shall take no risks with stability. What risks stability is getting into a position of making promises that cannot be afforded. That will result either in increased taxes elsewhere or, more likely, increased borrowing, which puts pressure on interest rates. That is the last thing we need, especially at this time of international uncertainty.

Our economy will grow this year. We and commentators believe that it will grow the fastest of all the developed countries. Inflation is around target. Of course, inflation is half what it was in the 1980s and 1990s. Employment is at records levels, and unemployment is at historically very low levels. So the difference between now and 10 or 15 years ago is that we now have a strong and stable economy, and that stability has allowed us to deal with the Asian economic slow-down in the 1990s and the problems in America in the early part of this decade. That stability, too, will enable us to deal with the current international uncertainty, which started in the American housing market and has now spread around the world—including here in Britain, of course.

I am grateful to the Chancellor; he is being very generous in giving way this afternoon. He has said two important things: first, the long-term stability of the economy is important; and secondly, we need to be a high value-added economy rather than a bargain-basement economy. However, to ensure both of those things, do we not need to ensure that we have a far more robust means of protecting our intellectual property rights, because that is where Britain will make its money in the future?

I agree, and the Prime Minister commissioned a report by Gowers last year that made a number of proposals. Not only is it important that we protect international property rights here, but it is crucial that we ensure that countries such as India and China make sure that they have corresponding rules. Great improvements have been made in both those countries. I hope to visit China in the new year, and I am quite sure that, in the year or so since I was last there, strides have been made, but if we are to achieve the breaking down of barriers to trade and greater exchange of goods and knowledge, we must ensure that intellectual property is protected.

I said just a few moments ago that I would say something about Northern Rock. I shall preface my remarks by saying that I made a statement to the House on 11 October. I subsequently appeared before the Treasury Committee at a hearing, half of which was devoted to Northern Rock, and I shall continue to keep the House informed as and when there are developments. The Select Committee is due to complete its report in January, and I told the Select Committee a few weeks ago that, thereafter, I intend to publish proposals to reform some of the present arrangements in the regulatory system. However, I want to say a couple of things today, since the matter was raised by the shadow Chancellor.

The information in today’s newspapers appears to have come from advisers to Northern Rock; it is not the Government’s policy. I can tell the House that we will very shortly issue a statement of the principles that will govern our approach to any bid to acquire Northern Rock, and when we do that, we will make them public. We shall of course be doing that because, owing to the support offered by the Bank of England and the guarantee made available to the depositors, the Government have a very real interest, and anyone seeking to acquire Northern Rock or any part of it would want to know where the Government stand. I want to make that absolutely clear. I will make sure that, as and when there are developments, I will report to the House, by either written or oral statement, as seems appropriate, because it is important that I keep the House fully informed.

I do not know whether the Chancellor is about to leave the subject of Northern Rock—I apologise if he is about to deal with this—but I wonder whether the Government’s guarantee of Northern Rock’s liabilities extends to the £11 billion of medium-term notes, which have maturities of up to six years and are held almost exclusively by professional investors and traded in public markets, where they could easily have been left to trade at a discount. I believe that those notes are covered by the Government’s guarantee. Is that true? If so, why?

The terms of the guarantee have been published. I wrote to the Chairmen of the Treasury Committee and of the Public Accounts Committee to set out the terms, which are intended to protect the depositors and are deliberately precise. The House will recall that the objective in my issuing the guarantee was to put it beyond doubt that, for people who were worried about their money in Northern Rock, the money was there and available if they wanted to withdraw it, and I thought it necessary to issue that guarantee to clarify the matter.

As I told the Treasury Committee, Northern Rock is owned by its shareholders. Their directors are accountable to them. We have allowed the directors a breathing space to decide on the strategic options for Northern Rock. That is what they are doing, and it is best that they be allowed to do that, because it is in everyone’s interest that we try to find a satisfactory solution.

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