From which budgets the United Kingdom costs of the Kosovo war will be paid. [86530]

Within the defence budget the costs of operations lie where they fall. Additional costs arising as a direct consequence of the United Kingdom's military contribution to the international response to the Kosovo crisis are, however, being separately identified and will form the basis of a claim on the Government's contingency reserve. It has been agreed that the reserve will cover the net additional costs of those operations when my Department is unable to accommodate them without detriment to other commitments.

I thank the Secretary of State for his reply and suggest that the armed forces, which are conducting themselves with their traditional professionalism, now face a more familiar and formidable adversary than the Serb army—the British Treasury. In that context, I express appreciation for his reply, which was reassuring. Will he reiterate that the costs of that necessary and important military adventure will not be met at the expense of other armed forces activity?

The battalions of the Treasury are on the side of our forces in Kosovo, though they, like everybody else, remain professional and vigilant.

Given the scale of the atrocities that are being uncovered by KFOR, would it not be more appropriate for my right hon. Friend to say what would have been the cost of not acting in Kosovo?

My hon. Friend is absolutely right. There is no doubt at all that the cost of doing nothing, or of standing back and wringing our hands at the beginning of the campaign, would have been immeasurably greater. There will be costs and the international community will have to pay substantially for the restructuring and the rehabilitation of Kosovo, and for helping the countries of south-eastern Europe in general, but they will be nothing compared with what the costs of standing back and letting ethnic cleansing succeed would have been.

I am glad to hear that the contingency reserve will be raided for the Kosovo costs, and I congratulate our armed forces on doing an excellent job, but the Secretary of State will know that they are stretched to breaking point. I know that he is concerned about that, but is he able to guarantee that there will be no slippage in equipment programmes, or in any other programmes in his budget, to make up the costs of the Kosovo conflict?

I am grateful for the hon. Gentleman's congratulations, because I remember the letter he wrote to The Times on 13 May, but, as he is gracious enough to congratulate me on what the forces have done, I will not be so mean-minded as to remind him of what he wrote. I am conscious of the old adage, "Always forgive your enemies, never forget their names." I can tell him that, of course, considerable strains are being experienced by the forces at present and they are having to put up with considerable privations, as are the families of service people. That issue is high on our agenda and there will be no slippage in any of the equipment programmes. In the past two weeks, I have announced two major procurement decisions, giving our troops the best possible equipment for the future.

Although those contributions may be dealt with in terms of covering the current activity in Kosovo and the developments that are taking place, might it not be worth while for the international community to consider an area in which billions and billions of pounds could be involved if there were other such actions or attempts to resolve certain situations?

That question goes slightly beyond my remit. My hon. Friend should perhaps float the idea of taxing currency speculation with my right hon. Friend the Chancellor of the Exchequer.

The whole House is grateful to the Secretary of State for the insight that he gave us a moment ago into the internal workings of the Labour party or, separately perhaps, the Government. Can he reconcile the apparently conflicting reports about the effectiveness of NATO's bombing campaign? Does the number of tanks and armoured vehicles apparently retreating unscathed to Serbia undermine NATO's claims of success or emphasise that not only the air campaign, but the credible threat of invasion by ground forces capable of high-intensity warfare, persuaded Milosevic to capitulate?

The right hon. and learned Gentleman is probably the only Liberal Member of Parliament who has declared himself out of the race for leader, so I will not take any lessons from him on intra-party fratricide. He raises an interesting point about the amount of heavy armour that the Serbs clearly had in Kosovo during the past year. We may have underestimated the sheer number of tanks and armoured personnel carriers that they had—largely hidden—during the whole of the campaign. However, it was the relentless bombardment from the air that kept all those tanks hidden. So long as that bombardment went on, those tanks were not out destroying villages as systematically at the end of the campaign as they were at the beginning.

May I pick up on the last question and ask the Secretary of State whether he agrees that, when we read the reports in today's papers about the sheer scale of the armour, vehicles, and troops that are coming out of Kosovo, questions remain as to exactly how those were kept so securely away from NATO targeting and NATO aircraft? Can we not learn from some of the problems that the Secretary of State has just described? If we are not to make similar mistakes in the future, do we not need a public inquiry—as we have asked for—so that the public can be absolutely certain that if we have to engage in such an operation in the future, we shall know its real limitations?

I welcome the hon. Gentleman to his new position, which I am sure he will find extremely rewarding. I know that, on his first occasion at the Opposition Dispatch Box this afternoon, he would have wanted to congratulate British troops on their achievements so far. Yesterday, the last Serb troops looked at Kosovo through their rear-view mirrors. Yesterday, the air campaign was called off and during the night the Kosovo Liberation Army signed up to a military technical agreement showing how it will demilitarise and disarm. Today, we can justifiably say that we have had a substantial success in Kosovo, and that it is down to those who put their lives on the line throughout the campaign.

What representations he has received on his Department's procurement policy in respect of United Kingdom-built aircraft; and if he will make a statement. [86531]

The MOD receives representations on its procurement policy for aircraft and their components built in the UK from time to time.

The Minister will be aware, from forceful representations made by both my right hon. Friend the Member for South-West Surrey (Mrs. Bottomley) and me, of the growing concern about British Aerospace's facility at Dunsfold, which is a centre of excellence for return-to-work contracts for the RAF Harrier. Is he aware that, although half of that work is for foreign defence forces, the other half is for the RAF, and that a cloud hangs over the future of that work, which is the prime work carried out at Dunsfold? Is the Minister further aware that the competition for that work coming from the Defence Aviation Repair Agency is not, in the view of those at Dunsfold, fair competition as the DARA is based at an RAF airfield and the costs are not appropriate? Will he ensure that the great expertise and technical skills that the workers at Dunsfold have built up over the years will still be available to ensure that Harriers of the future are as safe and effective as those in the past?

I share the hon. Gentleman's appreciation of the work undertaken by those at Dunsfold. I have had representations not only from hon. Members, but from the shop stewards committee there, which came to see me earlier this year. It has invited me to visit the site, which I hope to do some time this year. The hon. Gentleman will understand that I have been slightly distracted with other business over the past few months. I reject the hon. Gentleman's insinuation that the competition for the repair work was not conducted fairly. I am slightly surprised to hear a prominent right-wing Conservative so unenamoured of competition. Following the representations, we looked to ensure that there had been proper and effective competition, that work was being won fairly and that there is a role for both Dunsfold and for the Defence Aviation Repair Agency, which does excellent work not just at St. Athan, but at Sealand, Fleetlands and Perth. Those are excellent establishments, which all do good work. They are an important part of Britain's aerospace capability. We appreciate them and do not think that setting up competition between them by criticising one then the other is the right way to proceed.

Will the Minister accept the congratulations of both sides of the House on the fact that the Government have sought to buy British-built aircraft? Will he confirm support for a European strategic heavy lift aircraft, known as the FLA?

As my hon. Friend knows, along with our European partner nations, we are evaluating the successor aircraft for heavy lift. A strong contender is the A400M, as the future large aircraft is now known. There are other competitors, and British Aerospace is playing a key part in the Airbus military company. We hope to announce the result of that competition early next year.

Is not that an inordinately long time to have to wait for the decision on a vital strategic heavy lift requirement for the Royal Air Force, which was identified by Her Majesty's Government last July in its own strategic defence review? Is not it clear that for years the Royal Air Force has needed such a capability of its own? There are perfectly good aeroplanes, such as the C17 or the equivalent Antonov 120, which could have been evaluated long since had the Government had the will or given the matter the priority it deserved.

I welcome that criticism of the previous Government's record of delays. There is slight confusion. The hon. Gentleman is slipping between the short-term strategic lift requirement and the future transport aircraft. There are two separate but not unrelated competitions, and we hope to make an announcement on both of them early next year. That is by no means an inordinate time scale to undertake proper technical evaluation, especially with a number of partner nations.

If he will make a statement on the development of the Anglo-French European Defence Co-operation Initiative. [86532]

If he will make a statement on the Government's initiative on European defence co-operation. [86534]

If he will make a statement on the Government's policy on European defence co-operation. [86537]

The recent Cologne Council meeting set out the way forward for the European Union's common foreign and security policy, including the progressive framing of a common defence policy. That built on agreement at the NATO Washington summit, which itself had originally stemmed from the Anglo-French St. Malo declaration in December last year. Our intention is to strengthen the European capability to contribute to security within the framework of the Atlantic alliance as a whole.

I thank my right hon. Friend the Secretary of State for that response. He will be aware that the Conservative party has claimed that European defence co-operation will undermine and weaken NATO. Will he confirm that, at the NATO summit in Washington, the principle of European defence co-operation was supported by all 19 NATO countries, including the United States of America? That drives a coach and horses through the false claims of the Conservative party. Those claims say everything about excessive Europhobia and nothing about the real defence interests of this country.

My hon. Friend is right in pointing to the inconsistency of the Conservative party. It was, after all, my predecessor, Michael Portillo, who signed up to the European security and defence identity at the Berlin summit. It is strange that the Conservative party should be so emphatically opposed to an initiative that is designed to strengthen NATO's capability to act in situations where NATO forces could be of use, and to build European capabilities, so that we will be able to get good value for the expenditure of European taxpayers and to contribute in situations where the United States of America and Canada may choose not to be involved.

My right hon. Friend referred to the lost Leader of the Opposition, Mr. Michael Portillo. Will he confirm that it was the last Government who signed up to the Maastricht treaty, which, among many other things, called for the framing of a progressive common defence policy? Will he identify any developments in the past two years since the election, when the Conservatives left office, or in the past two months that would justify the Opposition's current claim that a common defence policy would undermine NATO?

I felt that this was a day for generosity, which is why I thought that reminding the Opposition of Michael Portillo would be sufficient. It would, I thought, be going too far to remind them of the Maastricht treaty, in which the idea of a common defence policy had its germination.

Does my right hon. Friend agree not only that an enhanced European defence identity will strengthen NATO, but that, in the aftermath of the Kosovo crisis, Britain and Her Majesty's Government should be taking a leading role in that new defence identity? Does he also agree that, far from such a new identity costing more, it is important for us to continue to spend defence money more wisely—on, for instance, the strategic heavy lift that that lot opposite failed to fund?

I thank my hon. Friend for pointing out some home truths. We have reshaped our forces in this country, and it must be said that a good many members of all parties in the House agreed with the analysis. We simply wish our European colleagues to spend what they spend wisely. It is a fact that Europe spends nearly two thirds of the total budget of the United States on defence, but achieves only a fraction of that in military capability. That must be dealt with.

The Secretary of State will be aware of Mr. Prodi's recent observation that a European army is both the logical next step for Europe, and inevitable. Does he agree with that view, or will he take this opportunity to repudiate it?

Mr. Prodi speaks for himself in talking about a European army. I have heard no other European leaders speak of a single European army.

Does the Secretary of State not realise that that answer is entirely inadequate? It is his Government who have been promoting Mr. Prodi.

If I remember rightly, Mr. Prodi was the unanimous choice of all the European Union leaders, just as Mr. Jacques Santer was the choice of the last Administration and unanimously adopted by others. The ability to rewrite history is now becoming an art form in the Conservative party, but they cannot fool all the people all the time.

The difference is that we said that Mr. Santer was wrong.

I welcome also the hon. Gentleman to the Opposition Front Bench, and I wish him well. I also offer him one piece of advice: before asking that type of question, he would be well-advised to read the conclusions of the Washington summit. Believe it or not, that summit was held in the capital of the United States of America and was subscribed to by the Government of the United States of America. The United States Government believe that our defence initiative—which is embraced by all our European partners—will strengthen European defence, that it will strengthen—not weaken—the alliance, and that it will do well for Europe if, in future, we have to deal with situations in which the United States does not want to be involved.

Would my right hon. Friend take the advice not of the little Englanders who have taken over the Conservative party, but of the distinguished former Defence Minister, the hon. Member for Mid-Sussex (Mr. Soames)—who, last week, in the House's debate on Kosovo, said that one of the most glaring lessons of the past 10 years' experience of the Balkans was the need for a more effective European common defence and foreign policy?

The hon. Member for Mid-Sussex (Mr. Soames) is usually in so much trouble that I am loth to make matters worse for him by praising him, but, on that point, he has reality on his side. The European defence initiative—which has been endorsed by the Washington summit and by the Cologne European Union summit—is designed to supplement, not to duplicate NATO assets, to strengthen NATO, and to strengthen European capabilities—at a time when one should have thought that the desirability of that objective was self-evident.

What commitment of British forces he plans that the UK should make to the NATO or UN forces in the Balkans in the next six months. [86533]

): The United Kingdom is committed to supporting NATO operations in the Balkans. At the peak, we shall be deploying up to 13,000 ground troops as part of KFOR, with up to 7,000 more remaining ready in the UK for deployment in the region if needed. Additionally, 4,500 personnel are serving with SFOR in Bosnia. As of today, 900 Royal Navy personnel and 1,800 Royal Air Force personnel are also deployed in support of operations in the Balkans. The size of those contributions will be kept under review.

It is clear that Britain is playing the pre-eminent role in the peacekeeping force in the Balkans—for which we should be grateful not only to the Government, but to our armed forces. Will the Secretary of State confirm—as I asked him to do some weeks ago—that it is very clear to all our troops that they are part of one integrated force which is in Kosovo to ensure that Kosovo remains one integrated territory, and that Kosovo will not be partitioned among different forces?

All the understandings and agreements have been driving precisely at achieving the objective, which the hon. Gentleman shares, of one unified force for one Kosovo: we are not interested in the creation of a new Berlin wall in any other part of the European continent. The Russians' acceptance of one unified command inside Kosovo, under General Mike Jackson of KFOR, underlines that clear line of command.

Given the sustained progress that we have seen in implementing the Dayton accords in Bosnia, is now the time to consider switching some of our troops from that province towards Kosovo, where their services are more clearly needed?

My hon. Friend is right to point out that we have a considerable commitment to SFOR in Bosnia, and that the record there is extremely good. The circumstances may well lead to some force reconfiguration. We will be looking to reduce our numbers in Bosnia, and I have made that clear on a number of occasions to the Supreme Allied Commander Europe. The commitments that we have taken on in Kosovo—which are serious and demanding—require us to ensure that all of our commitments are matched with our capabilities.

In giving those sombre figures, the Secretary of State has announced, effectively, something close to a commitment similar to that in Northern Ireland. The implications of a further unaccompanied tour obligation for our armed forces are profound for them, and for their families. If we are to sustain this commitment, and if we are to ensure that the implications for families do not have a serious impact on recruitment, we must look carefully at all the implications of this major new undertaking.

I always listen with great care to the right hon. Gentleman, who held the position that I hold now. He knows the weighty responsibilities that are involved, especially in deploying troops. He was in a similar position to me now when he deployed some 52,000 troops to the Gulf during the conflict in that area. At that time, he—like me now—could not have stood back from our obligation to do the right thing at the right time. He and I must keep uppermost in our minds the reality of what the strain means for the individuals who are on the front lines in Northern Ireland, Bosnia, Kosovo and the other parts of the world where we send them. We have an obligation to think of their families, especially at this time. There will be a great deal of satisfaction and relief that so much has been achieved so far. However, it is not over, and there are still huge risks and dangers in Kosovo for those involved in mine clearance, boobytrap clearance and some other troublesome elements.

Since the Government came to office concerned about the problems of overstretch in the armed forces—quite rightly—will the Secretary of State give an undertaking to monitor in the months ahead the rising divorce rate among serving soldiers, as that is the best indicator of overstretch there is?

We are looking carefully and seriously at the problems affecting families during long-term commitments overseas. Clearly, the divorce rate is one of the symptoms of what can be a growing problem. We established a service families task force last year, which came out of the strategic defence review and the people policy that was part of that. We are looking at all the factors that we believe are impacting on families and, therefore, on retention in the armed forces.

Following the highly pertinent question from the former Defence Secretary, the right hon. Member for Bridgwater (Mr. King), will the Secretary of State tell us which is the most likely—that the commitment will last for my lifetime, for my right hon. Friend's lifetime or for that of the youngest among us?

It may last a long time and we will have to be there for however long it takes. That is the reality that we undertook when we got involved. On the other hand, there are signs, such as the agreement with the KLA last night and the speed with which the Serb forces left Kosovo, that suggest that we might be able to reach an accommodation between the different elements, as indeed we have been able to do remarkably well in Bosnia. We will hope for the best, as ever, but prepare for the worst. My hon. Friend might have offered a word of apology on this subject.

The Secretary of State is right to talk about the professionalism of our armed forces, for which the House is always grateful. We owe a debt of gratitude also to the families of our service personnel, who have a very special relationship with us because of what their loved ones are expected to do on behalf of the state. Does he accept that politicians have a duty to do as much as possible to ensure that those families are not undermined in any way by circumstances brought about by policy?

No doubt, when the hon. Gentleman gets into the reading for his brief, he will read the strategic defence review and our analysis of foreign policy and will take note of the outcome and the recommendations, which are being implemented even as we speak. We set out to deal with the overstretch and the shortfall in manning that we inherited. That is why the Regular Army is to be increased in strength, especially in its specialist arms, by an extra 300, and why we proposed and are implementing a sixth deployable brigade, which will help to get the tour intervals back to the length that was always intended.

How many representations he has received on the future of the Royal hospital, Haslar. [86535]

Since 14 December 1998, my Department has received about 500 representations on the future of the Royal hospital, Haslar. That figure includes letters and petitions from hon. Members and members of the public. Together with my noble Friend the Parliamentary Under-Secretary of State for Health, I have also had a meeting on the subject with the hon. Gentleman, as well as with my hon. Friend Member for Portsmouth, North (Mr. Rapson), the hon. Member for Portsmouth, South (Mr. Hancock) and the right hon. Member for Fareham (Sir P. Lloyd), plus local representatives.

But I wonder whether the Minister is being well advised on this subject. Members of the defence medical services will of course do their duty, but I would not be doing mine if I did not point out that there is a widespread and profound view in those services that the closure of the last remaining military hospital will result in a loss of skilled personnel that will take a decade or more to reverse. He has said that there is no plan to review that decision, but the only way ahead for civilian and military personnel in the Gosport peninsula is a reversal of that decision. The failure to review the decision is looking less like courageous determination and more like obstinacy.

I recognise the hon. Gentleman's commitment to the provision of medical services, for both the civilian and military population in Gosport, and that of those who joined him in making representations to the Department. I am sure that he will also recognise that among those people and the medical staff at Haslar there was a widespread recognition that matters could not continue as they had in the past. The facilities that were necessary to advance medicine for the military and civilian sides were not in place and we were not able to recruit the right number of energetic young people to medical provision in the services. That was one of the reasons why the review that we announced recently included the opening of a new centre for defence medicine.

Order. I remind the Minister that this is a specific question.

Given the appalling neglect under the previous Government of the defence medical services, and given the £140 million extra expenditure planned for four years, does my hon. Friend agree that the defence medical services, including those at Plymouth Derriford hospital, are safe only in the hands of a Labour Government?

I believe that there needs to be a hard look at how we can make better medical provision for our military personnel. That is why that additional resource has been earmarked for that investment in the years ahead.

What recent representations he has received concerning the present circumstances and future prospects of Royal Ordnance, Bishopton. [86536]

In addition to the representations concerning Royal Ordnance, Bishopton made personally by my hon. Friend and the recent inquiry by the Defence Select Committee, Ministers have answered questions in this House and received letters from hon. Members, representatives of the trade unions and members of the public, including employees of Royal Ordnance. My right hon. Friend the Secretary of State for Defence met a delegation from the trade unions at RO Bishopton earlier this year, and my right hon. Friend the Minister of State for Defence Procurement met a similar delegation last year.

Might I offer my compliments to my hon. Friend and his colleagues for the positive response that they have made to the Defence Committee's report on the Royal Ordnance plans? There is now a real prospect of a constructive and stable relationship between the Ministry of Defence and the RO and the possibility of a link with Rheinmetall of Germany. Does my hon. Friend agree that the time is now right for British Aerospace to be equally positive in its response by, among other things, reprieving RO Bishopton?

I thank my hon. Friend for that question and for his representations during the discussions on the issue. We are pleased that discussions between MOD officials and RO management on the company's future prospects are nearing completion. We are considering the possibility of a long-term strategic partnering arrangement, which would see the company becoming the preferred MOD supplier for certain types of ammunition. Recommendations on that are expected to come before Ministers shortly.

In joining in congratulating our forces on their professionalism in Kosovo and in thanking their families, I would add the 400,000 individuals employed in the defence industries in this country and the scientific and industrial civil servants who have supported our forces in the background. However, it is a bit hollow for the work force at Bishopton to hear that. Now that the Government have decided that they will no longer buy British ammunition for British forces, will war stocks of ammunition be adjusted upwards to reflect the inevitable reduction in security of supply?

That is not a new policy. The hon. Gentleman should reflect on the policy of previous Administrations.

If he will make a statement on the current security situation in Kosovo. [86541]

As at 18 June, some 18,000 KFOR troops had deployed to Kosovo. KFOR has been successful in maintaining a large measure of stability in very difficult circumstances.

Will my right hon. Friend join me in warmly welcoming the agreement reached with the Kosovo Liberation Army on disarmament, and in paying tribute to all involved? Does he agree that that is a very significant step towards creating a peaceful and stable Kosovo, and that a vital part of any peace-building process is enforcement in a consistent and even-handed manner for all groups and individuals threatening violence? Does he further agree that, once again, the British armed forces have surpassed themselves and demonstrated why they have an international reputation for dealing evenly and justly with all those involved in a potential conflict?

My hon. Friend is right, and her words will be heard with great respect, including in theatre. The necessity to act even-handedly and impartially is absolutely critical if Kosovo is not to suffer another exodus, which might be smaller but would be equally sad. General Sir Mike Jackson made it absolutely clear on his first day in Kosovo that he would act with firmness and determination, but even-handedly. I believe that that message is getting through.

Some 13,000 British troops will be used to maintain the security of Kosovo. Will the Secretary of State confirm that that will mean that almost 90 per cent. of land command personnel will either be committed to operations, or warned to deploy on operations? In those circumstances, what will the right hon. Gentleman do about overstretch and about the retention of personnel? Such a large number of Army personnel committed to unaccompanied operations overseas means that we will be losing troops because their families will not stand for it.

In many ways, I have answered that question already. I have underlined how important families are. I hold strongly in my mind the principle "recruit a soldier, retain a family", as does my hon. Friend the Minister for the Armed Forces. At the moment, the total number of British troops committed to Kosovo is 13,000, and I expect a significant reduction after about six months.

What steps his Department is taking to promote global nuclear disarmament. [86543]

In the strategic defence review and since, we have set out a wide range of measures contributing to our goal of the global elimination of nuclear weapons. We will continue to promote international peace and security and to reduce the need for any reliance on nuclear deterrence.

I thank my right hon. Friend for that reply. Does he agree that, in maintaining strong defence while promoting nuclear disarmament, we can justly claim to have led by example? Does he also agree that by maintaining nuclear deterrence as we promised we have kept our promises, as no more warheads are deployed on Trident than were deployed on Polaris when it first entered service?

My hon. Friend is right. We are deploying no more warheads on Trident than there were on Polaris when it entered service. He is also right about the need for in-depth dealings with the Russians. I hope that the G8 meeting at Cologne will be a starting point for that. Last week I met a delegation from the Duma, who I believe are here as your guests, Madam Speaker. That is an enlightened move, if I may say so. Major General Stolyarov, the deputy chairman of the Duma's foreign affairs committee, listened carefully as I outlined the unconditional measures that we had taken on nuclear weapons and suggested that the Russian Duma might like to follow that example and ratify the START 2 treaty.

What discussions the Church Commissioners have with international Christian and other bodies about the investment policies of the Church of England. [86565]

The commissioners have recently held informal discussions with the New Zealand Anglican Church regarding the Church of England's investment policies, as well as with the Victoria Synod of the Uniting Church of Australia.

Given that the Anglican Church in this country is part of the worldwide Church, will the hon. Gentleman suggest to the Church Commissioners that they should have a proper procedure for taking the opinion of the World Council of Churches and other bodies on all matters that relate to investment overseas, so that they have an ethical investment policy that is acceptable to the worldwide Church, not just to the UK Church? In the year when we hope to have freedom of information legislation, will we be able to see who is consulted and have their advice to the Church Commissioners published?

The commissioners are members of the Ecumenical Council for Corporate Responsibility, the Westminster ethical policy forum, the Institute of Business Ethics and the UK Social Investment Forum. They also meet regularly with Church investor groups. The hon. Gentleman would like to extend that consultation to foreign Churches that are part of the Church of England. We shall take that into consideration.

What recent representations the Church Commissioners have made on the charging of VAT on church repairs. [86567]

The General Synod, with the full support of the commissioners, has consistently argued that VAT should not be charged, but so far without success. It is estimated that a minimum of £15 million per annum is spent on VAT on repairs to that significant part of the nation's heritage.

I was hoping that the hon. Gentleman might confirm that he has received representations from me and from my noble Friend Baroness Platt of Writtle asking that once the Council of Ministers has agreed that VAT may be charged at zero rate or at a reduced rate on labour-intensive industries, the hon. Gentleman and the other Church Commissioners will argue forcefully that the Government should apply for that rate to be applied to church repairs.

I can confirm that we received those communications. The proposed European directive is a draft that might not pass into law. It relates to labour-intensive services such as hairdressing and hotels, for which the EU may permit a lower rate of VAT. The Church is humble in its origins and beliefs; it does not mind being associated with hairdressers and hotels if that permits a lower rate of VAT. However, we are disappointed by the rejection of any alleviation of that major burden on church-goers in the recent consultation paper on the taxation of charities.

Does that £15 million to which my hon. Friend referred relate just to the Church of England? Would the figure not be larger if it included all churches, which are also part of our heritage and also have to pay VAT on repairs? The Churches are hard pressed for money. If we want to preserve those parts of our heritage, which also play an important part in our national life, we need to attend to the problem.

The recent Churches, needs survey, commissioned jointly by English Heritage and the Council for the Care of Churches, shows that the annual cost at 1998 prices of major repairs to Church of England churches was approximately £123.4 million, including fees and VAT. Those figures relate solely to major repairs and exclude routine maintenance and running costs. My hon. Friend's point is well made. We are working with the Treasury on the issue, but so far we have had no success.

Will the hon. Gentleman confirm that the concession sought by the Anglican Church is needed by other faith groups and denominations? Refurbishment work is required quinquennially in the Church of England. Much of the money for that is raised not only by church-goers but by others in the community who deserve thanks. As most of the work is labour intensive, and with the extra 30 or 40 per cent. tax and national insurance, as well as VAT, nearly half the cost of repairs goes to the Government, not to the Churches.

The hon. Gentleman makes a valid point. One of our major concerns is that the Church of England pays more in VAT than it receives in grants from English Heritage. New churches are zero-rated for VAT, but buildings that are an important part of our national heritage incur 17.5 per cent. VAT. In the past, the Synod has recommended 5 per cent. VAT and it will debate the issue again in July.

What plans the commissioners have to review clergy pay. [86568]

The national average stipend for incumbents and clergy of incumbent status as at July 1998 was £15,210. In addition, clergy also receive free housing, with an estimated value of £7,820 per annum and a non-contributory pension, which costs £3,010 per minister per annum. A review of clergy stipends has recently been announced and will report its findings next year.

Can my hon. Friend say whether plans to put the clergy's conditions of service on a more temporal or secular basis could include contracts of employment, tribunal rights and union recognition, which are increasingly available to others in our society?

I should draw the House's attention to the fact that the Archbishops Council has taken on the commissioners' powers and responsibilities as the central stipends authority and has recently agreed terms of reference for a review of clergy stipends. Among other things, it will examine the content of the clergy remuneration package, including stipend, housing and non-contributory pension; compare the remuneration of clergy with that of other groups; and conduct a large-scale survey of the financial circumstances of the clergy. I will make a personal representation to ensure that my hon. Friend's points are considered in the study.

What measures he will take to promote the accountancy skills of NAO auditors. [86569]

The staff of the National Audit Office already have high accountancy skills. The office encourages all staff to maintain and enhance them through continuous professional development, an integrated and comprehensive technical audit training programme and secondment opportunities to private firms. The office's trainee auditors undertake the qualification of the Institute of Chartered Accountants in England and Wales and there is also direct training support for staff undertaking other professional accountancy qualifications, such as that of the Association of Chartered Certified Accountants.

I am most grateful to the right hon. Gentleman for that informative response. What proportion of auditors in the National Audit Office are, respectively, chartered and certified accountants? Are the office's services regularly subjected to market testing, and is he happy with the results of any such testing?

I do not have the exact figures but I know that staff achieve considerable successes in their examinations. I have presented prizes, and it is a pleasure to see the high marks—some of the highest available— that some staff achieve. It is an important matter that concerns both the office and the Public Accounts Commission.

Before I call the Minister, I should remind the House that Madam Speaker has placed a limit of 15 minutes on all Back-Bench speeches for the entire debate.

I beg to move, That the Bill be now read a Second time.

The Government's concession is much appreciated. The Farmers Union of Wales, for example, has taken it as an indication of the Government's willingness to listen to such concerns. Does the Minister recognise that the same principle might apply to the Meat Hygiene Service? Huge costs and regulation are weighing down producers and abattoirs. Will the Minister undertake to consider that issue very seriously?

The Government listened on the levy, and we are not only listening very carefully on the matter of costs that fall on the abattoir industry. A current review has already resulted in the Government absorbing for a further year specified risk material charges, which are the largest single element of new charges that were under consideration for this year. The matter is still under consideration; the Government are listening. Nevertheless, there is a clear and discernable trend in the industry towards larger plants, and fewer of them. The hon. Gentleman asked me not to exacerbate that trend by the imposition of charges, which is a perfectly fair point and well made.

As my right hon. Friend is surely aware, the G8 communiqué has said that references are to be made to the Organisation for Economic Co-operation and Development scientific committees, for them to look into the products of genetic modification. Does he believe that those new studies, to be undertaken in the EU, will have any implications for the Food Standards Agency? Will he, under his wider responsibilities, ensure that the terms of reference of those studies are made available to Members of the House?

One of the purposes of the creation of the agency is to ensure transparency. I welcome the work that the OECD is to undertake. In particular, I think it is right to consider both the food safety and the trade aspects of the new technology. It is the Government's desire to be candid with the House and to ensure that information is in the public domain. I therefore give my hon. Friend, as far as it is my place to do so, the assurances that she seeks.

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I shall give way first to the hon. Member for Totnes (Mr. Steen), secondly to my hon. Friend the Member for Sunderland, South (Mr. Mullin) and thirdly to the hon. Member for Ludlow (Mr. Gill).

As I understand it, the incidence of food poisoning has increased in this country every year, and has increased fivefold since 1982. Each year since 1982, there have been more rules and regulations for food hygiene. Presumably, the new agency will recommend even more rules and regulations for food hygiene. Has the Minister estimated how many extra cases of food poisoning will result from the existence of the agency, which will make us cleaner and cleaner, and produce more and more cases of food poisoning?

The agency will provide effective advice to those who prepare and sell food, either in the catering industry or the retailing industry, those who store it and those who prepare food at home. There is a range of reasons for outbreaks of food poisoning and a range of methods to address them. That is not done just through the regulatory regime. Clear-cut advice to the public has an important part to play, in which the agency will provide a particular service and impetus.

I see no reference in the Bill to farm animal welfare as it impacts on food safety. My right hon. Friend is aware that the rise in food poisoning, to which the hon. Member for Totnes (Mr. Steen) referred, is directly related to the growth of industrial farming and, for example, the massive misuse of antibiotics. Will the agency have the power to make suggestions about the way in which farm animals are reared, where that can be shown to be connected to the safety of food?

On the use of antibiotics as growth promoters rather than as veterinary interventions, yes, the agency will give advice to Ministers. The issue is under consideration at European Union level in the Council of Ministers.

The Minister said that the role of the Food Standards Agency was to inform, help and advise the industry. Does that rule out the possibility of the FSA being an enforcing agency as well?

The FSA is an enforcing agency, but only of the rules that have been agreed by Parliament. It would be a rather feeble set-up if the agency could tell us what was wrong, but could not do anything about it. The functions being transferred to the agency are those that are at present carried out by food safety officials in my Department, by officials in the Department of Health and by the Meat Hygiene Service, which is a regulatory and advisory service. The agency will have responsibility for enforcing the rules that Parliament has agreed. As well as advising the public and the industry, it will advise Ministers. If necessary, Ministers will have to act on that advice and bring proposals before Parliament.

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I am willing to take a further intervention.

I am grateful to the right hon. Gentleman. His comments provoked me to rise. If he and his officials conclude that, in a particular case, the agency is being over-cautious, and that its advice on new regulations is not proportionate to the risk assessed by him and his officials or by Department of Health officials, will he be able to stand in the way of a powerful new agency clamouring for new legislation?

Ultimately, those are decisions for Ministers and for the House. The lead Minister will be my right hon. Friend the Secretary of State for Health. One of the new features of the agency is transparency. It can formulate and explain its advice and put it in the public domain as well as giving it to Ministers, so that there can be a public discussion of the issues. As the right hon. Gentleman knows, the balance of views on these matters depends to some extent on where the critic is coming from.

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One more go, then I must make progress.

Will the agency have its own team of hygiene police?

The entire Meat Hygiene Service is being transferred to the agency. As the hon. Gentleman will know, the Meat Hygiene Service currently operates as a next steps agency reporting to my Department; it will operate as a stand-alone next steps agency reporting to the Food Standards Agency, which in turn will report to my right hon. Friend the Secretary of State for Health in respect of seeking a legislative route. That does not mean that there will be no consultation with my Department. Responsibilities for industry sponsorship, for example, remain with the Ministry of Agriculture, Fisheries and Food and, clearly, we will want to establish a good working relationship with the agency and a clear dialogue. I have no doubt whatever that we will be able to do that.

I am grateful to my right hon. Friend for allowing me to intervene a second time. I certainly welcome the progress that has been made regarding the WTO, but my question was about the powers of the agency. Does he accept that there is a clear relationship between the way in which farm animals are treated and the safety of much of the food that we eat? If he does, what powers will the agency have to address that problem?

I do accept that, and there are enforcement mechanisms in place for farm animal welfare for the different livestock regimes. Indeed, at the Council in Luxembourg, we agreed to alter the rules for laying hens, which is a welcome and long-overdue reform. There are other regimes in place and a base level of animal welfare regulation is being introduced throughout the European Union. That forms the basis in respect of trade.

I am most grateful to the right hon. Gentleman for allowing me to intervene. My concern about the agency relates precisely to the task that he is setting out. Could not it be conducted by environmental health officers or health and safety inspectors? The feeling I am getting in the Vale of York is that we do not need extra bureaucracy. Can he convince the House that he needs an agency to undertake those specific obligations?

That is essentially work that is carried out currently. The purpose of the agency is to pull food safety work—the work of officials in my Department, in the Department of Health and in the Meat Hygiene Service, which employs the largest number—together into one place, but there will, of course, also be an important working relationship, which I will refer to in a moment, between the agency and the environmental health officers who are employed by local government. That is not another tier of officialdom, which is what the hon. Lady's question implied, but a better and rather more effective arrangement of what is in place at present.

Can the Minister explain how the agency's integrity and independence will be maintained when it is put above the Meat Hygiene Service? There will, no doubt, be another food scare, and the blame will whizz straight past the Meat Hygiene Service and be laid at the door of the head of the agency. The Special Select Committee made it clear that we thought that the Meat Hygiene Service should be separate from the Food Standards Agency so that it could perform its audit function without having its integrity questioned.

I was going to refer to that point later, but I may as well deal with it now. The Meat Hygiene Service's audit function will be separate and independent, so to that extent, the Special Select Committee's concern is met. However, the Government believe that, on balance, it is probably right for policy and implementation to be tied together. That means that the Meat Hygiene Service will report to Ministers through the agency. In other words, a next steps agency will report to the board of the Food Standards Agency. I accept that the Select Committee came to a different view on that point, but the Government have not accepted it—with the important qualification of the audit itself. The Government see some merit in what the Select Committee said about that, and want an independent and separate audit so that the arrangements are independent of the rest of the working arrangements for both policy making and enforcement. Therefore, although I cannot wholly meet the hon. Gentleman's concerns, the Government have gone some way to meeting them.

We have already heard about the significant rise in cases of food poisoning, and my hon. Friend reassured the House about how those will be tackled in the future. However, he will be aware that many more people in this country die every year as a result of poor nutritional standards—up to 30,000 are estimated to die of heart disease. How will the Food Standards Agency tackle the problem of nutritional standards as well as deal with microbiological safety and food standards?

I referred to that earlier in my remarks. The agency will work with the Department of Health on nutritional matters. There is no debarment to the agency working in that area. I understand that work is in progress on an agreement between the Department of Health and the agency about the details. The Department takes the matter seriously and looks forward to working with the agency on that issue. My right hon. Friend the Secretary of State for Health, who is sitting next to me, will have heard what my hon. Friend said, and I hope that my reply will reassure him.

Given the wide-ranging powers that the Minister has just described, and the impact that they could have on farming practices, at least indirectly, will the Minister confirm that the Government intend that the agency will be accountable to the Select Committee on Health and the Select Committee on Agriculture?

It is not for me, as a Minister of the Crown, to comment on the workings of Select Committees, which are properly a matter for the House and not for me. As to the placing of information in the public domain, one of the agency's most important founding powers is openness. I remind the House that it is an independent agency, driven rationally and relying on science. Putting key conclusions that have been independently arrived at and key advice to Ministers in the public domain is an important power in its own right, and an important safeguard for the public, because the rest of the decision-making process must then be defended. I believe that that is right.

Is it true that officials of the Meat Hygiene Service are obliged to sign the Official Secrets Act? If so, as there are 1,500 of them and they will be answerable to the Food Standards Agency, how will we have an open culture?

The point that we are making in the Bill is that policy advice to Ministers is not an official secret. Officials of the Meat Hygiene Service have the same obligations as other public servants. It is for the agency to decide whether to put advice into the public domain, not for employees to make their own decisions on a day-to-day basis.

I am grateful to the Minister, as he has been most courteous in giving way. What new information on food safety may be published by the agency that his Department and the Department of Health do not presently issue?

The obvious answer is submissions and policy advice to Ministers. As the right hon. Gentleman knows, because he has carried out these duties, advice is given to Ministers, who decide whether to accept or reject it. In this important area of public safety, the new agency will arrive at its decisions independently. Its decisions will be science based—that is, not based on any economic interest of one sort or another—and placed in the public domain as policy advice to Ministers, especially the Secretary of State for Health.

I am grateful to the Minister for giving way to me three times.

I am not sure whether that is an environmental protection question, which would be outside the scope of the agency, or a food safety question, which would be entirely within its scope. If it is a food safety question, the regulatory regimes will be applied by the agency. If it believes that a product is to be put on the market in the United Kingdom that would be injurious to human health, it will have the power to say no. If there is a need for Ministers to act to protect the public, of course they will take such action.

I apologise to the Minister for not being in the Chamber for the first part of his speech, but I shall study very carefully in Hansard the section that I missed.

"one of our most important manifesto commitments",

"establish an independent food standards agency".

"the old climate of secrecy and suspicion and replace it with modern, open arrangements which will deliver real improvements in standards",

I can help the hon. Gentleman on that. The clause dealing with the levy, and which would be the statutory foundation for such a charge, has been removed from the Bill. There is no primary legislation, and therefore no levy—more permanent than that one cannot get.

I am relieved to hear that. However, does the Minister realise that the anxiety about the issue arises from the position of the Meat Hygiene Service, which is to be transferred to the new Food Standards Agency? The MHS already makes very substantial charges to slaughterhouses for inspection, and the burden of those high charges is driving many slaughterhouses out of business. Therefore, the principle of the agency—effectively via the MHS—making charges to parts of the industry already seems to be established. For that reason, the Minister's assurance is particularly badly needed.

The Bill proposes no changes to the Meat Hygiene Service charges, which are set at exactly the same levels as we inherited from the previous, Conservative Government. We are proposing no changes to those charges. If the hon. Gentleman is saying that the Opposition now have an entirely new policy on the matter—that the MHS should not charge to recover its expenses, as required by European directives—will he say so?

The Minister should have listened to what I said. I did not say that there was a new proposal from the Conservative party. I merely pointed out that in the context of the Bill and the Government's climbdown on the decision to charge small shops, there were already opportunities for the Government to charge businesses that are affected by the Bill.

Perhaps I could help my hon. Friend. I understand that we are the only country in Europe that is interpreting the French word "vétérinaire" to mean fully qualified veterinary surgeons. Will my hon. Friend press the Minister on why we have interpreted that word so strictly, as environmental health inspectors or Health and Safety Executive officers could simply be retrained? Why should Spanish vets be allowed to do this job when they cannot tell the difference between the animals concerned?

My hon. Friend makes an important and powerful point to which the Minister of State will, I hope, respond when he winds up the debate. This matter is causing great concern to the industry and is doing considerable damage to a number of small businesses. The effect is that small businesses must lower still further the prices that they can pay to the livestock farmers who supply them.

Is my right hon. Friend aware of how catastrophic the charges are for small businesses? I received a letter from an abattoir in east Wales which is being charged, effectively, £180 a tonne in inspection charges, whereas a large supermarket in south Wales is charged, effectively, less than £1 a tonne.

My hon. Friend makes a telling point. [Laughter.] I am sorry that members of the Government find it funny that small businesses up and down the country—some of which may be in their constituencies—are being destroyed. The consequence is that live animals have to travel far greater distances because, since the Government came to power, one slaughterhouse has closed every 10 days. My hon. Friend makes a good point about the uneven impact of the policy, and about the way in which it bears particularly heavily on small abattoirs.