In March last year I placed before the House a written statement, Official Report, Vol. 400, Part 354, column 72WS, setting out improvements in contingency planning that had taken place and announcing the next steps in improving our resilience, including progress in delivering Civil Contingencies legislation. Almost 12 months on, we have made considerable progress and have in place plans to cover a wide range of both civil emergencies and terrorist attacks. Such plans include the purchase of equipment, the identification and training of personnel, the preparation of policy guidance and crisis management arrangements, liaison with other nations, and exercises. There has been excellent co-operation across Government and the wider public service and I would like to place on record my thanks, particular to local authorities and the emergency services for their continuing hard work.

Review of progress at time of last update:

Since the outbreak of the foot at d mouth disease and the September 11 atrocity, we have been planning for larger-scale challenges and at the time of my last update to the House, substantial progress had already been made. A horizon scanning capability had been established within the Cabinet Office to anticipate and prepare for the potential impact of any large-scale incident, and this complemented the work of the Joint Intelligence Committee it providing assessments on domestic and overseas terrorist threats. Guidance had been published on decontamination of people following a Chemical, Biological, Radiological or Nuclear (CBRN) incident for use by the emergency services and other responders, and a UK national stockpile of countermeasures had been established before the end of 2001 including antibiotics, antidotes, and respiratory support equipment in strategic locations around the UK.

In London, the London Resilience Forum had been established to drive forward the resilience agenda bringing together representatives from the emergency services, local government, military, transport, utilities, health sector and business. Substantial progress had been made, and plans for a range of contingencies now exist including new pan-London command and control arrangements and a well-developed programme of exercises.

Update of progress in the last 12 months to the present:

Organisation:

The programme of work to enhance the key generic resilience capabilities, co-ordinated within the civil contingencies secretariat in the Cabinet Office, remains the core framework through which the Government are seeking to build resilience across all parts of the United Kingdom. This centrally led programme constitutes an efficient and effective way of harnessing the expertise and resources that already exist within Government without duplicating or creating new structures. The programme has expanded in the past twelve months and now comprises seventeen separate workstreams.

Central response

Regional response

Local response

Essential services—DoH

Essential services—DEFRA

Essential services—HMT

Essential services—DFT

Essential services—DTI

CBRN Resilience

Assessment of risk and consequence

Mass casualties

Treatment of infectious diseases (human)

Treatment of infectious diseases (animal & plant)

Mass evacuation

Warning and informing

Mass fatalities

Site clearance

Work is progressing well on all fronts although inevitably some areas are more advanced than others not least because of the necessity to keep our plans under constant review to enable us to respond effectively to new threats and challenges. I and ministerial colleagues receive regular updates and reports on the progress of these workstreams and ensure that attention is focused where most required. We have also worked closely with the Devolved Administrations and clear responsibilities have been established so that the Devolved Administrations are able to undertake their own resilience preparations whilst ensuring that UK-wide resilience can be ensured.

Preparedness of the Emergency Services:

Under the New Dimension programme, 4,400 personal protective suits have been delivered, enabling fire fighters to decontaminate safely and effect rescues. Purpose-built decontamination vehicles are now coming into operation around the country and fire fighters are being trained in their use. The rolling training programme for police has seen over 5,000 officers trained and equipped in CBRN response and we are on target to have increased this to 5 per cent. of the police service by June.

Every acute hospital and ambulance service now has a stock of personal protective suits, and is equipped with mobile decontamination units, to allow safe working and decontamination of patients. Some 3,200 protective suits were provided for hospitals and 4,300 for the ambulance service. Of the 360 mobile decontamination units procured, 200 have gone to hospitals and 160 to the ambulance service. These units offer shelter, power and water management systems to NHS personnel who are decontaminating patients. In addition, a central stockpile of protective suits has been established and agreement reached with the Fire Service for support in the event of a need for mass decontamination.

Since late 2002, senior ambulance staff have been participating in Joint Emergency Service CBRN Incident Commander Courses. All ambulance services in the UK will have received this training by April 2004. A cadre of instructors has also been trained to enable the local training of decontamination teams. Courses are being held regionally and about 180 trainers have successfully completed it to date. By early summer this figure will have increased to around 300.

Considerable investment has been made across Government in providing equipment for the emergency services and will continue to be made in areas such as developing the urban search and rescue capability within the Fire Service, and improving first responders' ability to detect and monitor CBRN substances. The Office of Government Commerce now has a dedicated CBRN procurement team in place to ensure economies of scale, assist with equipment interoperability issues, and streamline procedures for our partners and contractors.

Strengthening Regional Resilience:

One of the capabilities added to the programme since last March focuses on developing new regional resilience arrangements to co-ordinate both planning for and responding to disruptive events. Since April 2003, Regional Resilience Teams have been operational in each of the Government Offices in the nine English regions. These teams have taken the lead in managing key relationships with local responders, communications between regional partners, and between the regions and government. Regional Resilience Forums. comprising representatives from key partners and agencies, now meet regularly in all the English regions.

Health:

The Department of Health, together with the NHS and other key stakeholders, has developed a national strategy for major incident planning at an operational level, with a supporting framework for the NHS. The document "Handling Major Incidents—An Operational Doctrine" was published on 7 January 2004 and builds on current guidance by setting out general principles to help the NHS develop its existing emergency plans to respond to new potential threats. Revised smallpox guidelines were published in December 03 and can be found on the Department of Health website: http://www.doh.gsi.gov.uk/smallpox/ keydocs.htm

Civil Contingencies Legislation:

In January this year we introduced the Civil Contingencies Bill into Parliament. The Bill, and the accompanying non-legislative measures, will deliver a single framework for civil protection in the UK to meet the disruptive challenges of the 21st century. The Bill is separated into two substantive parts: local arrangements for civil protection (Part 1) and emergency powers (Part 2). Both parts of the Bill replace existing outdated legislation, notably the Emergency Powers Act 1920 and the Civil Defence Act 1948. The Bill has now completed its report stage.

Key stakeholders have been involved in the policy development process including the Local Government Association, the Emergency Planning Society, the Association of Chief Police Officers, the Chief and Assistant Chief Fire Officers' Association and the Ambulance Service Association, They have played an important role in helping to shape the legislative proposals.

A major public consultation of the Bill's proposals was carried out last summer. Around one half of local authorities and emergency services responded. The consultation exercise was supported by events held in each of the English regions and the Devolved Administrations, attended by over 1,000 civil protection practitioners. This was supplemented by attendance at national conferences and local events. The Government continue to consult widely as the Bill passes through Parliament. Regular bulletins on progress are sent to all civil protection professionals and a programme of outreach visits is eliciting views directly from individual local areas. The feedback has been very positive.

Civil Contingencies Reaction Forces:

Civil Contingency Reaction Forces (CCRFs) achieved full operating capability on target by 31 December. Fourteen CCRFs are now available to support the civil authorities as required providing both general and specialist support. Possible ways in which CCRFs might be used include assistance with evacuation, providing temporary accommodation and feeding facilities, and general logistical support. A programme of exercises between local CCRFs and the emergency services began in 2003 to test working together in an emergency.

Co-ordinated Exercise Programme:

Central to our work to develop resilience capabilities is a coordinated approach to exercises designed to test our responses to a range of major incidents including natural disasters and accidents. Over the last year we have brought together Government Departments, regional and local authorities, the Devolved Administrations, and agencies, to create a focused cross-government exercise programme. This exercise programme tests the emerging capabilities and highlights areas for further development. Training exercises are also an important part of counter—terrorism, as they ensure we are prepared to respond to any kind of terrorist attack. Three large-scale live counter-terrorist exercises are held each year, involving participants from central Government, police, agencies and the military. In addition, twelve table-top or workshop exercises arc held annually, carried out across the UK and involving the police, lead Government Departments, and emergency recovery agencies. The live exercise held at Bank Tube station in September last year was a good example of a multi-agency exercise designed to ensure that plans and procedures we have developed will be effective on the day. UK also took part in an international table-top exercise called Global Mercury last autumn to test international communications between health agencies in the event of a smallpox outbreak.

The current exercise programme includes the joint UK/US exercise in the Metropolitan Police Service area, mentioned to the House on 3 July. We will continue to carry out a range of exercises throughout the country, in particular, to validate emerging regional plans, and ensure civil emergency and counter-terrorist exercises are utilised to test our capability both to respond to and manage the consequences of a CBRN incident.

Exercise Counter Balance:

Under the CBRN Resilience Programme, the Home Office, in conjunction with the Emergency Planning Society, Regional Resilience Teams and Devolved Administrations has continued Exercise Counter Balance, a programme of CBRN training seminars originally run in 2002. The seminars continue to be delivered throughout the UK at local level and feature a combination of presentations, discussion groups and table-top exercises based around the response to a range of CBRN scenarios. The seminars provide the opportunity for local authorities. In particular, to give feedback on the revised CBRN guidance to local authorities published in August 2003. Eight of the twelve planned seminars have been delivered to date with the remainder due by May 2004. Participants have included representatives from Fire and Rescue Services, Government Agencies, Health Services, Local Authorities, the Armed Forces, Police Services, the utilities and the voluntary sector.

Communications:

Communication is a vital element in ensuring that we have the ability to respond to a crisis effectively and rapidly. Over the last year we have made considerable efforts to engage with those upon whom we will rely in the event of an incident. This has enabled us to make the best use of expertise not only from within central government but also from other organisations and sectors such as the business community and the voluntary sector. Examples of communication include working with the emergency services to develop the first responder role; engaging with health workers so staff are aware of what is required and trained to respond appropriately; and liaising with key contractors to ensure the necessary capacity and flexibility is available to deliver essential services. During a crisis, the media's ability to deliver factual information and advice will be essential. Thus News Co-ordination Centre facilities have been set up and there is close liaison with the media and press officers over emergency media arrangements both nationally and around the country.

In London, the London Resilience Team hold regular meetings with the business community including senior representatives from umbrella organisations such as the Oxford Street Traders' Association. the British Bankers Association, and London Chamber of Commerce. Last summer, the National Association of Counter Terrorist Security Officers (NACSO), together with London First and the British Continuity Institute, published a booklet and CD-Rom entitled "Expect the Unexpected" providing continuity planning advice for business. This has been distributed to 44, 000 London businesses.

The British public, regrettably, are used to living with the threat of terrorism and have in the past demonstrated commendable resilience and common sense in dealing with it. We are, however, conscious that the new scale of potential attacks on our society pose new challenges. While it is necessary for us to limit the flow of information on our resilience planning for understandable reasons of security, we have made large amounts of information available on our government websites www. uk resilience. info/ and http:// www.homeoffice.gov.uk/terrorism. We plan over the next few months to be issuing further advice and guidance for the public.

Proliferation security initiative

The proliferation security initiative has developed well since it was launched in May 2003. Some 60 countries have indicated their support for it and their intention to apply its principles. There is more that we can do to extend its possibilities:

we are working in the International Maritime Organisation to secure amendment to the Suppression of Unlawful Acts at Sea Convention, which will make it an internationally recognised offence to transport WMD, their delivery systems and related materials on commercial vessels. It is already an offence under the Chicago Convention of the International Civil Aviation Organisation to transport WMD on civil aircraft.

agreements have been concluded in the past providing for the boarding of vessels which may be carrying drugs. We now plan to negotiate similar agreements with the main commercial flag states allowing for the boarding of vessels which may be carrying cargoes which could be used in WMD programmes. Shipping of the 10 largest commercial flag states covers some 70% of maritime trade. So with a relatively small number of such agreements, a large proportion of the world's shipping would be covered. The options available to the proliferator and rogue supplier would be reduced.

we will consider with our partners whether new penalties should be introduced to deter air or shipping lines from seeking to transport such cargoes. Might the vessels and planes of any companies found to have engaged in such transport be denied landing or port rights around the world? Should we consider an international register of companies and individuals convicted of proliferation offences?

we support President Bush's call to use Interpol and all other means to help law enforcement agencies work against the traffickers.

within the EU, we see a case for Customs experts considering how to tighten regulations and practices, and how better to exchange information in order to prevent the trafficking of WMD.

in the UK, we have begun work on the screening of traffic for the illicit movement of radioactive materials. This will eventually cover all air, sea and Channel Tunnel traffic-passengers, parcels, vehicles, freight and containers.

Global Partnership

Eighteen months ago, the Kananaskis G8 Summit established a Global Partnership against the spread of weapons and materials of mass destruction. Under this initiative G8 leaders decided to support specific cooperation projects, initially in Russia, to assist the destruction of chemical weapons, the dismantlement of decommissioned nuclear submarines, the disposition of fissile materials and the employment of former weapons scientists. The United Kingdom announced that it would make up to $750 million available over 10 years for this work. The first report of work undertaken by the UK was published in December.

Since Kananaskis, we have had the Iraq conflict and Libya's decision to dismantle its WMD programmes. Work is under way to develop a programme for the employment of former weapons scientists in Iraq. The UK has offered to help with a similar programme in Libya. We would like to see the Global Partnership expanded so that it is fully global in its geographical extent, and for the number of donor states to be expanded so that the target of $20 billion can become a floor rather than a ceiling.

The United Nations and Counter Proliferation

An anomaly in the field of counter proliferation has been the lack of discussion since 1992 of proliferation in an overall sense by the UN Security Council. Following a proposal by President Bush last September, work is now under way on a resolution which will call on states to adopt tough national legislation to criminalise the possession, manufacture or trafficking of WMD, in particular for terrorist purposes; to develop effective export controls where these do not exist; and to maintain effective physical protection of sensitive materials. I hope the Council will pass this soon.

We also believe that the Council should also consider establishing an appropriate follow-up mechanism, perhaps a counter proliferation committee, just as the Council's Counter Terrorism Committee was established in 2001.

The European Union

The European Security Strategy, adopted by the European Council in December, highlights the importance of work against WMD. The month before its adoption, the EU agreed that agreements with other countries should include a non-proliferation clause. We are working with our EU partners and the Commission to see this introduced a s new agreements arise or existing ones are renewed.

Non proliferation treaty and International Atomic Energy Agency

The non proliferation treaty obliges states party to enter into safeguards agreements with the International Atomic Energy Agency to verify that nuclear activities are and remain legitimate. Article IV of the treaty confirms states' rights to develop and use nuclear energy for peaceful purposes.

But states which fail to comply with their safeguards obligations inevitably lose the confidence of the international community. The bargain which is at the heart of the treaty then called into question. We should consider whether such states should not forfeit the right to develop the nuclear fuel cycle, particularly the enrichment and reprocessing capabilities which are of such proliferation sensitivity. That does not mean that they would be deprived of the possibility of constructing and running civil nuclear power stations. These could still operate with fuel supplied by countries honouring their safeguards obligations. The fuel would be subject to agency monitoring while in the receiving country, and would be returned to the country of supply when spent. This would prevent a seemingly civil programme masking a weapons programme.

Experience in recent years has shown the need for more wide-ranging agency inspections of national nuclear industries. The agency's additional protocol provides the basis for carrying out such inspections. It is important that all members of the international community adopt one. Suppliers of nuclear technology should increasingly see this as a key commitment when they judge export licence applications.

The agency has done well to meet a growing verification workload within the constraints of its budget, but we should not ask it forever to do more within the same resources. We may need seriously to consider further strengthening of its Safeguards Division.

Biological and Toxins Weapons Convention

The Government set out in a Green Paper in April 2002 ideas on how to verify compliance with the Biological and Toxins Weapons Convention. We continue to believe that we need a mechanism, possibly under the authority of the Secretary-General of the United Nations, for investigating instances of alleged use and suspect biological weapons facilities. We will be putting forward proposals to follow this up at the next meeting of states party of the Convention in Geneva in July.

Conclusion

Countering proliferation remains as important today as it ever was. The part our intelligence services play in it is vital. We and they can be proud of what we have achieved over the past year. But we cannot let up. There is much work still to do. The proposals I have outlined are designed to assist that.

A public expenditure survey (PES) transfer from the Home Office of £2,088,000 for European residence permits.

A PES transfer from the Ho me Office of £740,000 for biometrics trials in connection with the issue of UK visas.

An increase of £4,171,000 to fund increased contributions to international organisations subscriptions. A decrease of £2,783,000 in respect of an adjustment for overseas price movements.

A PES transfer from the Cabinet Office of £500,000 in respect of Coalition Information Centre (CIC) costs.

A PES transfer to the Department of Trade and Industry (DTI) of £300,000 in respect of the E-business programme.

PES transfers from the DTI and Department for Transport totalling £134,000 (£67.000 each) in respect of the UN Convention on the Law of the Sea (UNCLOS).

An increase of £5,725,000 in respect of increases in providing consular and visa services overseas.

An increase of £27,149,000 in respect of increased Iraq related security costs.

A PES transfer from HM Customs & Excise (HMC&E) of £806,000 and from the Home Office of £1,000,000 and £2,000,000 in respect of the FCO Afghanistan Drugs Plan

and an additional £122,000 from the Home Office to continue research techniques for identifying and measuring opium cultivation.

A PES Transfer to the Home Office of £20,000 as a contribution to the Group of States Against Corruption (GRECO).

A PES transfer from the Department for International Development (DFID) of £10,150,000 in respect of the remainder required to fund planned programme activity to the end of the financial year.

Take up of end-year flexibility (EYF) of 18,215,000 from a combination of underspends on the 2002–03 conflict prevention departmental unallocated provision (DUP) and DFID and FCO conflict pool (CP) underspends.

A PES transfer to DFID and the Ministry of Defence (MoD) of £11,000,000 and £2,000.000 respectively for the remainder required to fund planned programme activity to the end of the financial year.

PES transfers to the Security and Intelligence Agencies (SIA) of £7,016,000 and £85,000 to reflect funding revisions for CP.

PES transfers to the MoD of £1,800,000 and £1,200,000 to reflect funding revisions for CP.

The change in the capital element of the DEL arises from:

An increase of £9,000 in respect of an adjustment for overseas price movements.

An increase of £9,751,000 in respect of increased Iraq related security costs.

A PES transfer from the Home Office of £1,013,000 in respect of the setting up of a new visa regime in Kingston.

A PES transfer from the Home Office of £912,000 for European residence permits.

A PES transfer from the Home Office of £122,000 for biometrics trials in connection with the issue of UK visas.

A PES transfer from HMC&E of £816,000 in respect of the FCO Afghanistan Drugs plan.

A PES transfer from the DTI of £816,000 in respect of the E-business programme.

http://www.dti.gov.uk/cld/ published.htm and in the Libraries of both Houses. My Department are today also replying to the Trade and Industry Committee Report.

This consultation generated a large response from a wide range of parties: institutional investors, companies, trades unions, accountants, remuneration advisers and many representative organisations. This demonstrates the high level of interest in this issue and the concern, which I share, about cases where poor company performance is accompanied by excessive remuneration.

That is why, before publishing the consultation document, the Government have already taken significant action, through the Directors Remuneration Report Regulations, introduced in 2002, requiring quoted companies to produce a detailed annual directors' remuneration report and to submit it to shareholders for approval at the Annual General Meeting. These Regulations give the UK a corporate governance framework for Directors pay which leads the world in terms of transparency and accountability. They have had an immediate impact in terms of increasing the focus on directors' remuneration by shareholders and promoting constructive dialogue between them and companies about remuneration strategy and practices.

The full impact of the 2002 Regulations. however, cannot be measured after one year alone. For this reason, my Department will be commissioning a detailed assessment of compliance with the Regulations in the course of this year's AGM season, and an assessment of changes in remuneration practices.

The challenge for remuneration committees and their advisers is to produce rewards packages, which tie pay and performance targets to the creation of long-term value for shareholders and are transparent to shareholders. All can agree that directors deserve high rewards for good performance but companies need to think creatively about the design of remuneration packages with those objectives in mind. Shareholders must be vigilant to ensure that situations where directors enjoy rich rewards whilst companies perform poorly and shareholders and employees suffer are challenged. The improved design of all aspects of Directors remuneration packages will play an important part in creating an environment where good businesses can prosper: businesses which produce goods and services of high quality; are honest and fair in their dealings with consumers, employees and suppliers and careful with their reputation; and thereby create sustainable long term value for their shareholders.

Building on the Regulations, the consultation document set out a range of options for tackling the problem of excessive compensation payments made to directors who leave companies, which have performed poorly. The great majority of respondents considered that this was an area where the focus should be on promoting the take up and implementation of best practice. In particular, the responses demonstrated a good deal of support for reducing notice periods and the use of mechanisms such as phased payments and liquidated damages in order to reduce the problem of rewards for failure when contracts are terminated.

I have therefore been very pleased to see the further development in recent months of guidance on directors' contracts, both by the Association of British Insurers and National Association of Pension Funds, and separately by the Confederation of British Industry. I welcome their contributions and commend them to remuneration committees and their advisers. Shareholders too have an important role to play in holding boards to account for their policies in line with the code on activism agreed by the Institutional Shareholders' Committee.

I have considered very carefully the question of whether to introduce farther legislation in this area and have concluded that this is not necessary at this stage. I agree with the conclusions of the Trade and Industry Committee report and the comments of its Chairman that "the recent examples of increased activism by institutional investors, and the promotion of best practice have the potential to remedy the situation. The Government should wait to see the effect of these developments before it considers legislative remedies".

I have specifically ruled out legislation of the type introduced by the hon. Member for Tunbridge Wells (Archie Norman) n his Company Directors Performance and Compensation Bill. The overwhelming view of the respondents to the consultation was that this would be wholly unworkable in practice for a number of reasons: It would interfere with the operation of existing contracts; create a large degree of unnecessary uncertainty and complexity in the negotiation of new contracts; would be incapable of taking account of the wide range of recruitment circumstances; act as a deterrent to the recruitment of good quality directors, and could potentially lead to lengthy litigation which would be costly to shareholders.

I will be paying close attention to developments over the next 12 months. I am clear that the best way forward is through the application and development of best practice in negotiating contracts, which deal with performance issues effectively. But if the monitoring which I am commissioning demonstrates that further changes to the Companies Act are required, I will not hesitate to take appropriate action in the context of wider company law reform.

www.odpm.gov.uk.