The Ministry of Defence has signed an agreement setting out mechanisms for co-operation with the US in research, development, test and evaluation activities related to missile defence. This agreement is made under the framework memorandum of understanding on missile defence that I announced to the House on 12 June 2003, Official Report, column 57WS, and comes into immediate effect. I am placing in the Library of the House of Commons a copy of this agreement, although parts of the text relating to the handling of classified and export-controlled information have been withheld at the request of the US. This agreement replaces the 1985 strategic defence initiative memorandum of understanding as the vehicle for co-operation between the UK and US in the field of missile defence. It is intended that the new agreement will improve co-operation by providing information transfer and contracting mechanisms in keeping with current US and UK practices and the current state of development of the US missile defence capability.

Key targets have been set for the chief executive of the WSA for financial year 2004–05 as follows:

Support Vehicle

Following extensive work to identify the best way forward, the Ministry of Defence will appoint MAN ERF UK Ltd. as the preferred bidder for the support vehicle contract.

The support vehicle project is a tri-service procurement to replace the current cargo and recovery vehicle fleets. The new vehicles will bring the UK's armed forces a much-improved capability for transporting vital supplies to the front line while on deployed and expeditionary operations, together with a much enhanced recovery capability to deal with a greater range of damaged or immobilised vehicles.

Bids from MAN ERF UK Ltd., Mercedes-Benz UK Defence, the Oshkosh Truck Corporation and Stewart & Stevenson TVS UK Ltd. were considered. Following detailed consideration of the proposals, MAN ERF UK Ltd. have been selected as the preferred bidder for the demonstration and manufacturing phase. The MAN ERF UK Ltd. bid offered the most compliant proposal, demonstrated the best value for money and is consistent with the UK's defence industrial policy. The project team will undertake detailed contractual negotiations prior to letting a contract. The intention is to bring the new vehicles into service as soon as possible with deliveries commencing in 2007.

This will give our forces one of the most advanced support vehicle fleets in the world, whilst ensuring the British taxpayer gets the best possible value for money.

North Cornwall district council experienced exceptional flooding and consequential damage on 16 August 2004. Given these circumstances I am satisfied that financial assistance under the Bellwin scheme is justified. A scheme will therefore be established under section 155 of the Local Government and Housing Act 1989. Grant will be paid to the authority to cover 85 per cent. of the eligible costs above a threshold, which it has incurred in dealing with the flooding.

The Local Government Act 2003 requires the council tax revaluation in England to take effect on 1 April 2007. As part of the preparatory work, the Government has considered what property information should be published as part of the new council tax lists to help taxpayers take a view on whether the basis of their council tax band is correct.

The Office of the Deputy Prime Minister is today publishing a consultation paper seeking views on whether the council tax list should contain information about individual properties, whether the list should be published in draft by the Valuation Office Agency (as well as local authorities) and whether the Valuation Office Agency should issue a notice to each council tax payer showing the sales evidence on which the banding has been based.

Copies of the consultation paper have been made available in the Libraries of the House and are also available on the ODPM website www.odpm.gov.uk.

The consultation period ends on 4 January 2005.

I have today put forward for consideration findings from the consultation on existing private sewers in England and Wales. The Government paper summarises responses to that consultation and sets out the shared views of central government and the Welsh Assembly Government. I have placed a copy in the House Library.

Many householders are often unaware that their property is connected to a private sewer or that they are responsible for its maintenance and repair, sometimes jointly with others, until a problem occurs.

The problems associated with private sewers and drains include:

difficulties of establishing the ownership of and responsibilities for maintaining shared private sewers;

the unwillingness of some owners or occupiers to accept their responsibilities and the difficulty of requiring them to contribute towards the cost of repair to shared private sewers;

the owners and occupiers are unable to afford the high costs of repair to private sewers and drains;

the difficulty of getting private sewers adopted by the sewerage undertaker;

sewage flooding from private sewers.

The Government have already taken action to tackle these problems. This has been done in two stages: the first stage, now in place, prevents the proliferation of the problems by introducing a protocol for the construction of new sewers. This requires all sewers to be built to a standard that would not preclude their adoption by the sewerage undertaker. New legislation will allow sewerage undertakers to adopt laterals, that part of the drain situated outside a property boundary and running from the boundary to the sewer, if they are built to an adoptable standard.

The second stage looked at existing private sewers. A consultation paper entitled "Review of Existing Private Sewers in England and Wales" was published on 1 July 2003 and sought views on a number of possible solutions, including the adoption of private sewers by sewerage undertakers.

Respondents to the consultation included local authorities, sewerage undertakers, Ofwat, WaterVoice, and a number of other groups and individuals. We have studied all responses carefully, and I am grateful for the efforts respondents have made.

Ninety-five per cent. of respondents stated that current arrangements are unsatisfactory and that changes are needed to address the problems associated with private sewers. I therefore believe that there is a clear case for action to be taken to resolve the problems created by private sewers.

Respondents supported a number of general legislative changes and the introduction of guidance. However, it was acknowledged that these measures alone may only provide partial solutions to the problems caused by private sewers.

Eighty one per cent. of respondents—including 81 per cent. of responding local authorities, and seven out of ten sewerage undertakers—favour a change of ownership. A transfer of ownership to sewerage undertakers may provide a comprehensive solution to the problem of private sewers. However, this option would result in far-reaching changes and I consider that further work needs to be done before any decisions are taken on this matter.

Before a decision can be made, a number of issues and practicalities need to be resolved, including the scope of any transfer, the form it might take, the costs, funding, impact on the private drain and sewer repair business, impact on the insurance industry and customer reaction.

This is an important issue that impacts on many householders and I am keen to find an effective solution. My Department chairs a steering group that will continue to consider the issues set out in this paper, in consultation with stakeholders as necessary, with a view to informing a final decision.

As part of the consultation process I propose to invite interested stakeholders to a seminar. This will provide an opportunity to further discuss the issues raised in this paper.

I hope to be able to publish a decision paper early in the new year.

Phase 1 of the Quartet's road map is clear that settlement activity including natural growth should be frozen and that all outposts set up since March 2001 should be dismantled. This has not happened. Continued Israeli settlement building has undoubtedly contributed to the current stalemate in the peace process. Continued settlement building cannot be defended on security grounds. It undermines trust in the region and is illegal under international law. Examples of UK activity on the issue of settlements are:

We lobby the Israeli government at all levels to discuss their continued failure to fulfil their road map objectives concerning settlement activity.

Officials in our embassy in Tel Aviv and our consulate general in Jerusalem monitor Israeli settlement activity on the ground through visits to settlements and work with Israeli, Palestinian and international NGOs, the World Bank and UN specialised agencies to track settlement activity. This includes regular contact with the Palestinian Negotiations Affairs Department.

Analysis is made of the impact of continued settlement activity directly on the Palestinian population and the prospects for the establishment of a territorially contiguous Palestinian state.

Her Majesty's Government has spent £110,000 in financial year 2003–04 on funding a project monitoring settlement activity and is sharing this information with our international partners.

We have also sponsored a number of studies on Israeli government financial support to settlers, including one conducted by a well-known Israeli NGO in 2003. We share data from these projects and our own monitoring with our international partners for use in their discussions on settlement expansion with the Israeli Government.

Her Majesty's Government will continue this important work while maintaining equal commitment to encourage the Palestinian Authority to make real progress on their road map commitments.

The report on the review of intelligence on weapons of mass destruction chaired by Lord Butler of Brockwell, published on 14 July 2004 (HC 898), highlighted in chapter 5.9 the importance of effective scrutiny and validation of human intelligence sources, and concluded that validation of sources after the war had thrown doubt on a high proportion of the sources and their reports. Specifically, the review concluded that the validity of the line of reporting which included the 45 minutes intelligence had come into question; it further concluded that reporting received from a liaison service on Iraqi production of biological agent was seriously flawed.

The Chief of SIS has now written to the Intelligence and Security Committee (ISC) to inform the Committee that, as a result of further investigation by SIS, both these lines of intelligence reporting have been formally withdrawn. This is normal practice in such cases.

The annual accounts and accompanying comptroller and auditor general report of the Mental Health Act Commission for 2003–04 has today been laid before the House of Commons pursuant to section 98(1C) of the National Health Service Act 1977. Copies have been placed in the Library.

On 16 September 2004, I provided the House with a written statement of the United Kingdom's response to the impact of hurricane Ivan on the Caribbean. I would like to update the House on subsequent developments, including the impact of hurricane Jeanne. May I once more express all our sincere condolences to the families of those who have lost their lives, and to all those who have suffered injury and continue to suffer in the aftermath of these devastating hurricanes.

The British Government's immediate response to the relief needs of those affected by the two hurricanes have been some £3.4 million of assistance. In addition the Royal Navy frigate HMS Richmond and its auxiliary vessel RFA Wave Ruler have also provided support.

On Grenada, hurricane Ivan caused 37 deaths and affected most of the 102,000 population to some extent. Of the six parishes, St. Andrew, St. David, St. Georges and St. John were the worst effected. Approximately 30 per cent. of houses were destroyed and a further 60 per cent. damaged. According to the Red Cross some 50 per cent. of the population is currently homeless. Government buildings, the main prison, hospitals, schools and churches have all been affected. The official residences of both the Governor-General and the Prime Minister were destroyed. Utility services were severely disrupted and the agricultural sector has been decimated. The continuing needs include emergency shelter, food, health, seeds and tools.

Following our initial and immediate support to the relief effort, reported in the earlier statements to the House, we have contributed £500,000 to the regional appeal of the International Federation of the Red Cross, of which £300,000 is for Grenada. The appeal will support 10,000 families on Grenada for the next six months with emergency food, shelter, water and sanitation and various non-food items. Following a request from the Prime Minister of Grenada, the United Kingdom's regional prisons adviser visited the island from 1–6 October to make an assessment of damage to the prison and to draw up recommendations. We have provided £30,000 for urgent repair work to the prison. Remedial repair work has already begun. We also reinforced our office in Grenada, sending four officials from Bridgetown and two from London, who among other tasks provided assistance to British citizens who wanted to leave Grenada to do so. The United Nations has launched a flash appeal for Grenada to respond over the next six months to urgent humanitarian need and to help establish the foundation for the rehabilitation of social services and economic recovery. The appeal is for £14.9 million. We are consulting United Nations agencies on how we might best support their appeal. In addition, we are providing £200,000 to Christian Aid and £200,000 to Oxfam to support their relief programmes.

The European Community has announced it is mobilising £4.65 million in emergency relief and post emergency rehabilitation to help Grenada focus on the provision of emergency shelter, food, water and other key supplies for 5,000 homeless families. It includes funds to be mobilized under the 9th European Development Fund, which are expected to be used primarily for school rehabilitation. The United Kingdom's share of this European Community assistance is about £700,000.

The Department for International Development has been re-examining how its ongoing programmes in Grenada might be modified. We have already extended the contract of our public sector modernisation consultant to work with the Prime Minister's Office and assist with the design of a new government structure, including an agency for reconstruction and development, and an implementation plan; started a technical assessment of the key constraints and immediate priorities for the private sector; and re-directed funds under our micro finance programme.

The Department for International Development will also seek to ensure that there is a co-ordinated and effective response to the present crisis. We called and chaired a donor co-ordination meeting on support to the education sector in Grenada to start discussions about how donors should align their support in this sector, which has been identified as a key priority by Prime Minister Mitchell.

Last week's donor meeting on Grenada convened by the World Bank in Washington provided a useful opportunity for Prime Minister Mitchell and his Minister of Finance to outline the traumatic social and physical cost that hurricane Ivan had inflicted upon his country. It was also an opportunity for key agencies— such as the United Nations—to highlight how the region and the donor community had responded thus far to the immediate humanitarian challenge. The Economic Council for Latin America and the Caribbean presented a report where they estimated that the total public and private cost of rehabilitation will be around £485 million. The International Monetary Fund presented a paper where they had calculated that there was a budget financing gap of around £21 million that needed to be filled between now and the end of this year. A follow-up donor meeting is planned for six weeks' time in Grenada.

The Foreign Secretary sent a personal envoy, Baroness Howells, to Grenada to express the condolences and sympathy of the British Government and people to the Grenadian Government and population and to assess the situation. She visited the island on 23–24 September. The British High Commissioner from Barbados and Department for International Development officials accompanied her. The Foreign Secretary and I are meeting her shortly to discuss her findings and assess the UK's response.

On Jamaica, 17 people were killed by hurricane Ivan. Although the Government of Jamaica were well prepared, there was still extensive damage over a wide geographical area and it appealed for international assistance. Rapid joint assessments were conducted from 14–16 September by a United Nations Disaster Assessment and Co-ordination Team, supported by United Nations agencies, the International Federation of the Red Cross Field Assessment and Co-ordination Team, the Jamaican Red Cross, non-governmental organisations and representatives from the Office of Disaster Preparedness and Emergency.

The worst affected parish was Clarendon. Other parishes severely affected included St. Catherine, Manchester, St. Elizabeth, Westmorland, Portland and St. Thomas, as well as Kingston itself. Some limited damage was reported in St. Ann, St. James and Trelawny. Most of the damage resulted directly from the strong winds. In Westmorland there was also significant flooding and in Portland and St. James landslides constrained immediate access. Around 25,000 people were affected significantly, with a higher number affected by loss of electrical power and interrupted water supply. Up to 13,000 were accommodated in shelters. More than 3,000 families received immediate relief assistance. The Jamaican Defence Forces participated in early relief efforts by airlifting food to isolated communities. The Pan American Health Organisation has been working closely with the Ministry of Health assisting with the supply of potable water to hospitals.

Some £150,000 of our contribution to the appeal of the International Federation of the Red Cross will benefit Jamaica. The appeal aims to provide support to 3,000 affected families. We have also provided £157,000 to Save the Children for the provision of non-food relief and repairs to households and schools, £200,000 to Oxfam for their relief and rehabilitation programme and £115,000 to the Pan American Health Organisation for their support to health services. The European Commission has pledged £830,000 to Jamaica through its Humanitarian Aid Office, focusing on reducing the number of persons in temporary shelters and providing alternative accommodation for those currently housed in schools. The United Kingdom's share of this support is about £153,000.

Hurricane Ivan caused widespread devastation across the island of Grand Cayman resulting in a breakdown of communications, power and water, as well as severe damage to individual properties and commercial buildings. Approximately 3,000 residents took refuge in eight government shelters. There was one confirmed death and one person missing at sea presumed dead. The islands of Cayman Brae and Little Cayman were affected by tropical storm force winds and rain but essential services were soon operational on these two islands.

The Royal Navy frigate HMS Richmond and its auxiliary vessel followed in the wake of the hurricane. It stood off Grand Cayman until it was safe for the crew to go ashore. They helped with a number of civilian clean up tasks.

The relief effort on Grand Cayman was managed through the Office of the National Hurricane Committee, supported by the British Red Cross Society—Cayman Branch. The assessments report damage to 75 per cent. of houses and between 20 and 25 per cent. destroyed, the worst damage to low cost housing areas. Five shelters remain open accommodating and feeding around 900. Schools, hospitals and government buildings suffered damage to varying degrees.

The Department for International Development sent a two person assessment team to Grand Cayman on 13 September. They reported that the airport and hospital were functioning, and food and water had been distributed to the 3,000 residents living in shelters. The Government authorities have also established systems to deliver food and water to people who were residing in their homes or with host families. In consultation with the Governor and the National Hurricane Committee, the Department for International Development team returned to Jamaica on 15 September, from where they maintained close contact with the National Hurricane Committee.

There was no immediate shortage of fuel on Grand Cayman, but there was a temporary problem with access to power to operate the three main gas stations of the island. However, distribution of fuel proved the main problem in the immediate aftermath. Power was gradually restored by the Caribbean Utilities Company who brought in additional teams. Fuel vouchers were distributed to staff working in essential services. The main desalination plant on Grand Cayman was working by 17 September and water supplied to George Town. A second smaller desalination plant was also quickly re-operational. Stocks of bottled water on Grand Cayman were gradually being depleted and although the water distribution network was being repaired it was necessary to bring in additional supplies. As a contingency measure we responded to a request to provide an urgent airlift of water.

Although there were early reports of sporadic looting, this was opportunistic rather than organised, and limited, and was soon under control. Police reinforcements brought in from other overseas territories in the region supported by the British Government. The Foreign and Commonwealth Office Overseas Territories Law Enforcement Adviser also arrived on the island to provide expert advice.

In response to the hurricane, the Department for International Development airlifted 5,000 plastic sheets, 40 metric tonnes of bottled water and a further consignment of chainsaws, adult and baby cots, water purification tablets and public health and sanitation items, including industrial and household waste disposal bags, and industrial gloves. The value of this relief response is about £200,000. An airlift of additional relief items from the International Federation of the Red Cross's Pan American Disaster Response Unit were received on 17and 23 September. The British Government have also pledged around £100,000 towards the cost of deploying a contingent from the Bermuda Regiment, which is providing support to the clear up operations.

The Government of the Cayman Islands quickly initiated a process of identifying contractors, electricians, plumbers, building and insurance inspectors in preparation for the rehabilitation and reconstruction task. A Cayman Islands Recovery Committee was formed, which includes high-level representation from Government and the private sector. Disease and surveillance systems were established to address all health conditions. To prevent tetanus infections, boosters were offered and 13,000 doses given. Supermarkets quickly reopened. The water authority has restored running water to much of Grand Cayman, although in some areas supplies are restricted to certain times. Mains supplies, however, are yet to be restored to eastern districts. Mains electricity supply has been restored to most of the capital but is still to be restored to the remainder of Grand Cayman. Many homes are being powered by generators. The Cayman Islands Government are liaising with the insurance sector to ensure payments are released quickly, so the reconstruction of homes can begin in earnest. A national recovery fund has been established.

Hurricane Ivan crossed over Cuba as a category 5 hurricane on 13 September. It took nearly five hours for the hurricane to pass over the northern tip of the island with sustained winds reaching 160 miles per hour. The Cuban authorities undertook appropriate measures in advance of the arrival of the hurricane and the Cuban Red Cross kept the population informed through a series of television and radio announcements. Over 1.5 million people were evacuated and 300,000 people accommodated in shelters. There was some damage to the agricultural and housing sector but no deaths reported. The regional appeal of the International Federation of the Red Cross supports the provision of shelter and non-food relief for 3,000 families in Cuba, The Department for International Development's contribution to the Red Cross regional appeal includes provision for support to the needs in Cuba.

Tropical storm Jeanne passed through Puerto Rico and the United States Virgin Islands on 15 September killing two people. It made landfall on the Dominican Republic as a category 1 hurricane and moved slowly north-west on 16 and 17 September, losing strength but causing extensive damage and killing 11. It reached Haiti on 17 September, with heavy rain falling over deforested hills in the north. Flooding started slowly on 18 September and then increased quickly to flash flooding causing fast run-off into the valleys and towns.

The death toll in Haiti currently stands at 1,870 with 884 people missing and 2,620 injured. Around 300,000 have been affected, with 4,471 houses destroyed. The city of Gonaives was the most seriously affected. Other towns in the peninsula, between Gonaives and Port de Paix, were also affected including Ennery, Gros Morne, Ans Rouge and Port de Paix. As a result of the flooding a big lake formed on the approach to Gonaives and submerged the surrounding roads, limiting access into the city from Port au Prince. However, Gonaives was still accessible from the south by trucks, with careful navigation. The route from Gonaives to Cap Haitien and Port de Paix was temporarily closed due to flooding and landslides.

The Interim Prime Minister Gerard Latortue called for international assistance and formed a National Emergency Committee to oversee the relief effort. The United Nations Office for the Co-ordination of Humanitarian Affairs deployed a seven-person assessment and co-ordination team to assist them.

The Haitian Ministry of Health sent four doctors and ten health officers to Gonaives. The United Nations Stabilization Mission in Haiti flew helicopters into Gonaives, carrying food and medicine. The World Food Programme has been trucking food into Gonaives. The International Federation of the Red Cross responded by making available hygiene kits, family tents, plastic sheeting and body bags from stores in Port au Prince. The Pan American Disaster Response Unit airlifted further quantities of hygiene kits, kitchen sets and plastic sheeting. The World Health Organisation delivered 10,000 basic health kits and the Red Cross and non-governmental organisations rehabilitated the operating theatre of the main hospital in Gonaives and set up an emergency field hospital and health clinics. The United Nations Stabilisation Mission provided doctors to Gonaives. Medical supplies were initially sufficient due to pre-existing Pan American Health Organisation stocks. As an interim measure additional water provision was met through bladders and water purification plants. Sufficient amounts of potable water are now available.

Following discussion with the United Nations and humanitarian agencies, the Department for International Development organised two airlifts carrying 718 family tents to provide shelter for over 3,500 people in Gonaives. Some humanitarian agencies were experiencing logistical difficulties, so the airlifts also included two landrover pick-up vehicles, four portable generators and radio communications equipment to support an expansion of their operations. The Department for International Development also deployed a humanitarian adviser to Haiti to assess the situation and consult with partner agencies. We have since invited funding proposals from non-governmental organisations and are considering support to their relief programmes. The United Nations launched a flash appeal, in New York, on 1 October. We are consulting with United Nations agencies on possible support through the appeal. The Department for International Development have provided £625,000, in support to the relief effort in Haiti. This consists of £150,00 to the International Federation of the Red Cross towards the relief operations and £475,000 to CARE towards logistics and for the distribution of 718 family tents procured by us. The European Community has announced a contribution of £1 million towards emergency relief in Haiti. The United Kingdom share of this humanitarian assistance is approximately £200,000.

Tropical storm Jeanne then continued a path across the Caribbean and was upgraded to a category 3 hurricane as it passed over the north-western Bahamas on 25 September. Several areas had been evacuated from its path and many people moved into shelters. Hurricane Jeanne struck Abaco, Andros, Berry, Bimini, Eleuthera, Exuma, Grand Bahama and New Providence islands. The most significant damage in the Bahamas was caused to the islands of Grand Bahama and Abaco. However, no deaths or serious injuries were reported, with approximately 100 homes reportedly damaged. The Bahamas Red Cross undertook an initial assessment that indicated up to 5,000 families in the hardest hit areas were in need of assistance. The International Federation of the Red Cross provided support to the Bahamas Red Cross, having utilised funds from their Disasters and Emergency Relief Fund, to which the Department for International Development makes an annual contribution. The most urgent needs have been met.

One month on from the devastation caused by hurricane Ivan across the Caribbean, the first phase of emergency response is well underway. Mid to longer-term reconstruction is expected to continue for many months. Coverage of beneficiaries is improving rapidly with affected communities having received at least one distribution of food, and various combinations of other types of non-food and shelter assistance. Reconstruction and repair of houses, schools and essential public buildings will continue to take time to address. The relief effort is working well together. All major donors have now sent missions to the affected countries to assess how they should re-shape their ongoing programmes of support, a co-ordinated response to support the plans of national government will be key to taking forward the reconstruction effort. I have already contacted the IMF, the World Bank, the Caribbean Development Bank and the Inter-American Development Bank to urge them to offer support as quickly as possible.

This has been an extremely difficult period for the Caribbean. The British Government have contributed quickly and appropriately to the immediate needs in the region and our support to the relief effort is continuing. I would like to place on record my thanks to the DFID staff, and to other colleagues across Government and in the Royal Navy for their sterling efforts. Other countries, including within the Caribbean region, have also made important and valued contributions to bring help to those in need. We will now be working hard, with other donors and the multilateral institutions, to maintain the relief effort and help bring the necessary support for the longer-term recovery of the affected islands.

I am pleased to announce that the oversight commissioner's second statutory report for the year 2004 was published on 21 September, in accordance with section 68(4)(a) of the Police (Northern Ireland) Act 2000. Copies are available in the Library.

This is the second report compiled by Al Hutchinson as oversight commissioner and the eleventh in the series of oversight reports published since 2001.

Copies of the annual report and accounts for the Fisheries Conservancy Board for Northern Ireland for the year ended 31 December 2003 have been placed in the Libraries of both Houses.

This document provides details of the board's fisheries conservation and protection activities, its performance, and its income and expenditure for that year.

I am pleased to announce that I have approved the appointment of the right hon. Sir Liam McCollum as a surveillance commissioner under the terms of section 91 of the Police Act 1997.

Sir Liam McCollum succeeded Sir John McDermott on the expiry of his appointment as a surveillance commissioner on 30 September 2004.

I am pleased to announce that my hon. Friend the Member for Manchester Central (Tony Lloyd) has been appointed as a member of the United Kingdom delegation to the parliamentary assembly of the Organisation for Security and Co-operation in Europe.

My right hon. Friend the Attorney-General has made the following Ministerial Statement:

"On 4 December 2003, Official Report (Lords), columns WA32–33, I announced that the Government had decided to accept the recommendation of the review conducted by Mr Justice Butterfield, that the Customs and Excise Prosecutions Office should become a fully independent prosecuting authority, accountable to me.

Subsequent to that announcement the Chancellor of the Exchequer announced on 17 March 2004, in his Budget Statement, that the Government was accepting the recommendations of the 'Review of the Revenue

Departments' led by the Permanent Secretary to the Treasury, Gus O'Donnell. One of the key recommendations of that review was to integrate the Revenue and Customs into a single department.

I can now announce that the Government has decided to create a single prosecuting authority to deal with revenue and customs prosecutions work, in line with the creation of Her Majesty's Revenue and Customs. The new prosecuting authority, which will be known as the Revenue and Customs Prosecutions Office (RCPO) will be an entirely separate prosecuting authority, accountable to me, and responsible for the prosecution of all HM Revenue and Customs cases in England and Wales. This is an important step which will ensure that we have an effective and fully independent prosecuting authority dealing with many of the most important cases in the criminal justice system. Work to create a fully independent prosecuting authority is underway; and the legislation required to complete the establishment of the new office will be brought forward as soon as parliamentary time permits".

I welcome the Pensions Commission's interim report that was published today. I would like to thank Adair Turner and his fellow-commissioners for their thorough work on this important issue. Building on the analysis in our 2002 Green Paper, this report makes clear the scale of the challenge posed by increasing life expectancy. It is good news that people are living longer. But it means difficult decisions for all of us—individuals, employers. Government and society as a whole—about how we balance work, saving and retirement.

In this initial baseline report, the commission has made a number of recommendations about how the Government collect and analyse statistical information. I welcome and accept these.

The report stresses that while some major advances in pensions have been made in the last few years, pressures on private pensions have been building up since the early 1980s. It further stresses that the biggest implications are some 20 to 25 years off, rather than being imminent. This is a problem for society over the longer term that requires us to begin to map out solutions now. As the commission says, we need "well-founded policy recommendations" rather than "immediate conclusions".

The report recognises the logic and many successes of recent pension policy. Our first priority was to tackle the legacy of pensioner poverty. In 1997 some 2.7 million pensioners were below the absolute poverty line, and many were expected to live on as little as £69 a week. Principally through record increases in support to poorer pensioners, absolute poverty was reduced by two-thirds by 2002–03; this progress is continuing through the pension credit introduced last year.

The next step was to help those on lower incomes build a second pension and ensure that it paid to do so. For the last year, the pension credit has been getting extra cash to those with modest second pensions, and the state second pension plays a crucial role in helping many people build a proper second pension for the first time, including 5 million carers and disabled people, as well as 15 million lower-paid workers.

The report recognises the importance of strengthening private pensions. The Pensions Bill and other forthcoming measures—outlined in the report—will restore public confidence in pension saving, while making it easier for firms to run good schemes. Reforms will also strengthen voluntary saving with attractive new options to save, a much simpler tax regime and initiatives to inform and activate people to help them take advantage of what is already on offer.

The report emphasises that a crucial part of the response to longer lives is likely to be more people choosing to work for longer. It shows that over the last decade employment rates for older workers have increased very significantly. This welcome trend needs to continue, and measures in the pipeline, such as the outlawing of age discrimination in October 2006, will be crucial. Under measures in the Finance Bill, for the first time people will be able to continue to work while drawing an occupational pension from the same employer. Proposals in the Pensions Bill will allow people who put off claiming their state pension to have a new choice—either to build up a higher weekly pension as now, or earn a taxable lump sum. For example, someone who delayed claiming £80.00 for five years could get either a weekly pension of £120 a week or a lump sum of around £25,000 before tax.

It is also clear to me that we need to keep in view both sides of the pensions equation—state and private. Our reform of the state system first improved its effectiveness in tackling poverty. The next step was helping lower-earners build up decent second pensions and ensuring that saving does not go unrewarded. As we go forward, we need to design a pension system that has the basic state pension at its core, continues to give special help to the poorest and provides incentives to save for hard-working families whatever their income.