With permission, Mr. Speaker, I should like to bring the House up to date with developments since my right hon. Friend the Prime Minister made his statement to the House on Monday 11 July.

A total of 56 people are now known to have died as a result of the explosions. The identities of all of these have now been formally confirmed through the relevant procedures. Support and advice continue to be given to the families affected as requested, in what remain very difficult and traumatic circumstances. It is possible that this total may rise as the police investigation of the very difficult scenes continues. Twenty-seven people remain in hospital undergoing treatment at present.

Until this week all four explosion sites have remained crime scenes, and at this point three still are. As the police have made clear, it is vital to their work that no clues or evidence are overlooked or destroyed. However, Transport for London is optimistic that Aldgate station, which has been handed back to London Underground by the police, may be returned to service by next Monday, 25 July. The train has now been removed from the Edgware Road site, although police remain at the scene. Subject to completion of the forensic work and a fuller inspection of the tracks at Edgware Road, it is hoped that a full Circle line service may be restored in a couple of weeks. It is not possible at present to say how long restoration of the Russell Square site may take. Roads around Upper Woburn place remain closed at present, pending conclusion of the police forensic investigation of the site.

There has been a great deal of speculation about the ongoing investigation. The police will continue to give regular updates, but I do not intend to make detailed comments, since to do so could be damaging and might impede any resulting prosecutions.

The House will, however, be aware that there has been rapid progress on identifying productive lines of inquiry. A very large volume of information, including witness statements, CCTV footage, and evidence from the scenes and recovered from searched addresses, is already being analysed. The police and security services are to be congratulated on their work in this complex and fast-moving investigation. We are all determined to take whatever steps are needed to identify, track down and bring to justice all those involved in instigating, planning, and supporting these terrible crimes.

I turn to the forthcoming counter-terrorism legislation. As the House will know, I wrote to the right hon. Member for Haltemprice and Howden (David Davis) and the hon. Member for Winchester (Mr. Oaten) on Friday setting out our initial proposals for inclusion in the Bill. Copies of my letter were placed in the Libraries of both Houses. On Monday I met the right hon. and hon. Gentlemen to discuss the matter, and I should like to place on record my appreciation of the helpful and constructive tone that they both adopted.

My letter set out the main items which the Government believe should be included in the counter-terrorism Bill. I should stress that these proposals were drawn up before 7 July. As my right hon. Friend the Prime Minister indicated in his statement last week, we are discussing with the police and intelligence agencies whether there might be further powers that they need in the light of those events and the subsequent investigation.

The heart of the Bill is the creation of three new offences. The first of these criminalises acts preparatory to terrorism in order to ensure that early intervention does not mean that those responsible, who may be planning very serious terrorist crimes, should escape prosecution. The new offence will capture those planning serious acts of terrorism.

The second proposed new offence focuses on indirect incitement to terrorism. Direct incitement to commit acts of violence is already a criminal offence. The proposal targets those who, although not directly inciting, glorify and condone terrorist acts, knowing full well that the effect on their listeners will be to encourage them to turn to terrorism. So indirect incitement, when it is done with the intention of inciting others to commit acts of terrorism—that is an important qualification—will become a criminal offence.

Thirdly, the Bill will deal with the giving and receiving of terrorist training. Our existing law already criminalises much activity that could fall within that description, but we want to close the gaps to make sure that anyone who gives or receives training in terrorist techniques is covered. Legislating for those last two offences will enable the UK to ratify the Council of Europe convention on the prevention of terrorism, which I very much welcome. The Bill will also make a number of other amendments to existing legislation, which are set out in the letter that I have placed in the Library of the House.

I am very pleased to say that when we met on Monday, the right hon. Member for Haltemprice and Howden and the hon. Member for Winchester indicated that they were, in principle, prepared to support all these measures. Of course they will want to see, and contribute to, the detail as it emerges, and I have undertaken to keep them informed of developments during the summer. I am grateful to them for their support and hope that we can continue to proceed by means of consensus. In that spirit, both of them indicated to me on Monday that they were in favour of the Government decoupling this legislation from the further parliamentary consideration of control orders, to which I gave a commitment during the passage of the Prevention of Terrorism Act 2005, and bringing it forward for introduction in October. They further indicated to me that they were in favour of proceeding straight to introduction, without pre-legislative scrutiny, provided that they could have early sight of the draft legislation and that the normal parliamentary procedures and timetable were followed in both Houses.

On that basis, we are proposing to bring forward the legislation as soon as practicable when the House returns. We propose to return to the issue of control orders in the spring after we have the report from the independent reviewer, Lord Carlile. He is not only the reviewer of the Prevention of Terrorism Act 2005, because he performs a similar function in respect of the Terrorism Act 2000. He published his most recent report on the operation of that Act on 26 May and I am grateful to him for a typically thorough and thoughtful report. Of course his report was published before the terrible events of 7 July, but he has since confirmed that his overall conclusions remain. I have today published the Government's response to his report and placed copies in the Library. We have given effect to several of his recommendations and are giving active consideration to others.

In the days and weeks since 7 July, many have raised concerns about extremists who seek to come to this country to foment terrorism, or to provoke others to commit terrorist acts. I have reviewed the Government's powers to exclude such people. The Home Secretary has powers to exclude individuals on the grounds that their presence in the UK is not conducive to the public interest. There is no statutory right of appeal against the exclusion decision, but of course it can be challenged through judicial review. In addition, immigration and entry clearance officers have similar powers. Any exclusion by them would generate a right of appeal. This power is currently informed by the operation of a warnings index of named individuals. I have concluded that these powers need to be applied more widely and systematically both to people before they come to the UK and when they are here.

In recent decades, for all Home Secretaries, the criteria for exercising these powers have generally been grounds of national security, public order or risk to the UK's good relations with a third country. In going beyond these grounds, we rightly need to tread very carefully indeed in areas that relate to free speech. However, in the circumstances that we now face, I have decided that it is right to broaden the use of these powers to deal with those who foment terrorism, or seek to provoke others to commit terrorist acts. To that end, I intend to draw up a list of unacceptable behaviours that fall within those powers—for example, preaching, running websites or writing articles that are intended to foment or provoke terrorism. The list will be indicative rather than exhaustive and we will consult on it, because it is important that we work with communities.

Where there are grounds for considering that a person has been engaged in such activities, or will do so in the UK, exclusion will be considered. I have asked my officials together with the Foreign and Commonwealth Office and the intelligence agencies to establish a full database of individuals around the world who have demonstrated the relevant behaviours. That database will be available to entry clearance and immigration officers and will be added to the current warnings index. I should make it clear that entry on that index does not necessarily mean exclusion, but in all cases it will trigger the possibility of a decision to exclude by Ministers.

In addition to using that list to ensure that those non-conducive powers are applied more widely and systematically at the point of entry, the specified unacceptable behaviours will not be permitted for individuals who have leave to enter or remain in this country. That power arises in various categories: for those here temporarily, for example, as visitors, students or workers, or their dependants and for those with indefinite leave to remain, any breach will lead to termination of their leave or deportation; for asylum seekers, we will, as a general rule, look to detain them and fast-track their claims; and for refugees, we will consider whether the behaviours described fall within one of the categories for exclusion from protection under the 1951 refugee convention.

We have already made it clear in the changes announced on refugee status earlier this week that any breach by a refugee of the categories for exclusion will trigger an immediate review of their status. We are already consulting on changes to the conditions for leave to enter and remain for ministers of religion, and we will consider with the faith communities whether further measures are needed.

I am also urgently seeking agreement with EU and other countries on the mutual exchange of information on exclusion decisions. The power of exclusion is necessarily targeted at those outside the UK. When people who are already in the UK engage in the kind of behaviour that I have identified and described, it may well be appropriate to deport them under statutory powers. I will ensure that a consistent stance is taken in relation to both deportation and exclusions. In the past, there have been some successful challenges to proposed deportations under article 3 of the European convention on human rights. For that reason, we have actively been seeking memorandums of understanding with a number of Governments to address those legal concerns.

I am pleased to announce today that the Governments of the United Kingdom and the Hashemite Kingdom of Jordan have reached agreement in principle on the provisions of such a memorandum of understanding, regulating the arrangements by which assurances regarding the treatment of particular individuals can be sought prior to their deportation. The formal signing of the memorandum of understanding will be arranged shortly, and a copy of the text will be placed in the Library once the signing ceremony has taken place.

I do not in general intend to comment on the position of particular individuals. In the light of recent public comments, however, the House may be interested to know that I understand that Sheikh Yusuf Al Qaradawi is not now planning to visit the UK in the near future. If he were to seek to do so, I would of course have to consider whether his presence would be conducive to the public good. I will follow the approach that I have set out today in the case of Sheikh Omar Bakri Mohammed and other individuals whose names are in the public domain.

I want to conclude by applauding the efforts that the leaders of the Muslim communities are now making to improve their capacity to fight extremism and protect young people. Positive proposals are emerging from a series of meetings between my right hon. Friend the Prime Minister, myself and others on strengthening our capacity to fight the destructive and nihilist philosophy of those who promoted the London bombings.

As I hope that I have demonstrated, there is unity of purpose. The Government want to work with other parties to ensure that we have the most effective anti-terrorism legislation on our statute book. Similarly, we want to work with the Muslim community to isolate and weaken dangerous extremists. I am grateful to all engaged in that important work, which I hope commands Parliament's support.

I thank the Home Secretary for bringing the House up to date and for his courtesy in keeping Opposition parties informed privately about developments during the past two weeks, when Britain has shown that it can and will come together to fight the new breed of terrorism that stalks our land.

The new breed of terrorism is extraordinarily calculating—al-Qaeda and its foot soldiers know precisely what they are trying to achieve by their wicked and despicable actions. The overarching aim of the 9/11 atrocity was publicly to destroy symbols of American economic and military power, in the twin towers and the Pentagon. The Madrid attack was designed to interfere in the domestic politics and foreign policies of Spain. The King's Cross atrocity, with its calculated trail of evidence leading deliberately back to the cities of northern England, was designed to demoralise and divide our communities and to set Muslim and non-Muslim against one another.

It is to this country's enormous credit that, in large part, that has not been allowed to happen. British people of all religions and none have stood together in the face of this appalling evil. As a result, almost two weeks on from that terrible Thursday morning in London, the terrorists and all who harbour and support them know that they simply have not won.

Our united response to terrorism stems from three separate sources; the Home Secretary referred to some of them. First, there are the police and the security services. I pay tribute to them at this time. They have come under considerable scrutiny in the days since 7 July, but we must never forget that when a terrorist gets through it is inevitably public, but when a terrorist is thwarted, it often remains secret. The services have acted with tremendous speed to identify those responsible, and continue to display the utmost professionalism in tracking down those behind them. In doing so, some of them have had to work in hideously unpleasant conditions, and I know that the whole House will want to join the Home Secretary in putting our gratitude on the record.

The second source is the Government and Parliament. I pay tribute to the calm and measured way in which the Government have conducted themselves in the last two weeks. They have been quick to make effective proposals to update our anti-terrorism laws, and I commend the Home Secretary for accepting our proposals to accelerate the process, without eroding proper parliamentary scrutiny.

The first new offence that the Home Secretary proposes, covering acts preparatory to terrorism, we have called for for some time. For the benefit of the House, will the Home Secretary describe the difference between that offence and simple conspiracy, or attempting to commit terrorist acts? I know that there are differences, and I would like him to outline them a little more, for the benefit of the House.

I also welcome the new law on the indirect incitement of terrorism. It is much better focused than the alternative proposals that have been suggested in the past. As so much of the effectiveness of such a law depends on the drafting, will the Home Secretary ensure that early drafts are available as soon as possible in September, so that interested parties—not just the Opposition parties, but bodies such as the Law Society—can pass judgment and therefore help to improve the law?

I also reiterate the point made by my right hon. and learned Friend the Leader of the Opposition during Prime Minister's questions—that we continue to believe that allowing the use of phone tapping evidence in court will help even further.

As for practical actions, will the Home Secretary re-examine the security of Britain's ports? Reports have suggested that an individual connected with the attack may have entered the country through one of our ports and been seen, or missed, by the security services. I do not expect the right hon. Gentleman to comment directly on that, but will he tell the House what action he is taking to ensure that all British airports and ports have the proper establishment levels, the special branch officers and the other staff to ensure that that sort of thing does not happen?

Finally, the attacks demand an active response from the community itself, particularly from prominent members of the Muslim community in Britain. They have already shown leadership over the past two weeks, and Muslims in communities across Britain have responded quickly and openly to requests for help from the security services and the police. The Home Secretary and I met senior members of all the faiths and community groups this morning, and they fully understand that the best way to fight home-grown terrorism is to root it out at its source. They have a clear responsibility to act, but there are several things that the Government can do to help.

There are good imams and bad imams, and it is no help to the good imams if we do not deal with the bad ones. Accordingly, I greatly welcome the Home Secretary's announcement today about strengthening his powers of exclusion, and his implicit reference to dealing with Sheikh Al Qaradawi and Sheikh Omar Bakri Mohammed. I hope that the Government will also consider going further, by looking to train, or to encourage the training of, more imams here in Britain, so that their teachings will be consistent with the society in which they preach.

I also hope that the Government will think about what they can do to deal with the issue of disaffected young people who travel to madrassahs, particularly in Pakistan, where some madrassahs appear to indoctrinate rather than educate. Action on that issue would be greatly welcomed.

Many words have been expended over the past two weeks as people from all areas of British society and beyond have united to condemn the attacks. As time goes on, those words will increasingly turn unto demands for action. With the proposals that the Government have set out this week, they have shown themselves ready to meet that demand, and I am happy to say that we continue to stand ready with them.

Ultimately, tackling terrorism in Britain will be a combined effort, with politicians, the police, the security services and the community working together. That is what we have seen in the past two weeks, and that is why we have been able to make such swift progress in identifying those who committed the atrocity, tracking those who supported and abetted them, and learning lessons to improve our defences in future.

If the House will allow me to indulge in a personal comment, I may say that I have known and been a friend of the Home Secretary for 30 years. The last two weeks have probably produced the worst events and the most important decisions that he has had to take. If I may say so, I commend how he, personally, has responded to and risen to the occasion.

If in the days ahead we are able to carry forward that model, our society and our country really will have come out of this ordeal stronger. That, I think, would be the finest tribute to all those who, sadly, were killed or injured in London nearly two weeks ago.

I thank the right hon. Gentleman for his personal remarks, which I very much appreciate, and for the political support that he and his party have given to the whole of our approach. It is very important that we should work in the way that he has described, and I certainly can confirm my absolute determination to continue working in that way over the coming period.

The right hon. Gentleman raised several specific points. The offence relating to acts preparatory to an act of terrorism is intended to facilitate the prosecution of individuals known to have instigated an act of terrorism or to have been planning, preparing or conspiring to commit an act of terrorism. That is because there is a requirement to protect the public, which means that the police and security agencies may have to intervene early when they become aware of a terrorist cell, with the consequence that it may not be possible to know what precise atrocity was being planned. Indeed, the terrorists themselves might not have concluded on what form of action they would follow. That is the issue that we are trying to address with that offence.

I can commit the Government to making early drafts available in September and to doing so more widely than simply to the Opposition parties. That will allow us to look at where we are and see where we are going.

On interceptors evidence, the right hon. Gentleman will know that I still do not agree with the point that he is putting. However, as the Prime Minister made clear at Question Time, there is no issue of principle here; there is a practical issue of how to deal with it in a proper way. We shall continue discussing that point.

On ports, we shall continue to keep the situation very much under review. We shall look consistently at the security arrangements on ports, but I have to say that the co-operation in the way that the various agencies are working together is extremely good at this point.

Finally, the points that the right hon. Gentleman made about the community are absolutely true. I want to address two dimensions. From the very beginning, from Thursday 7 July, we have brought together faith leaders of different faiths who are already working strongly together and who need to continue to do so. They have been exemplary in the way in which they have operated, and we need to continue to develop that.

The second strand, as the right hon. Gentleman implied, is to work with the Muslim community in particular to strengthen those forces within that community who want to develop their relationship with the wider society in a strong and constructive way. There are interesting issues about the training of imams that need to be addressed. I note that the Church of England and the Catholic Church have, through their teacher training colleges, which are now university colleges, found a range of ways of looking at some of the issues. It may well be worth exploring whether work could be taken forward in that way for the Muslim community and other faith communities. I hope that that will arise out of the conversations that we will hold.

I thank the Home Secretary for notice of his statement and for the approach that he has taken over the past couple of weeks. In particular, I thank him for the constructive meeting held on Monday. As he knows, the Liberal Democrats have offered our support for the three measures that he has outlined. We believe that they could contribute towards security in this country.

The measures on indirect incitement to terrorism will be difficult to define, and I welcome the Home Secretary's constructive approach in working with all parties on the wording. Does he agree that the key to the law will be to produce a wording that can stand up in court but which is not so wide in scope that it could ever be misused in future?

The Home Secretary knows that we still have differences on control orders. I welcome the idea of raising those differences and working with the Government when they are debated in the spring. When will he next report on the number of control orders issued, and does he agree that that report cannot wait until Parliament returns in mid-October?

The Home Secretary has stressed in the past that he believes that the intelligence services have the resources that they require. However, it is local police who are in the front line and who often provide essential back-up for the intelligence services. Is he satisfied that the Met and local police forces that have major cities in their area have the resources to be able to provide that essential back-up?

On deporting, which the Home Secretary mentioned in his statement, he said that he would seek memorandums of understanding with other countries on human rights. What system will be put in place to check that countries stick to the commitments in the memorandums, and would he favour some form of independent assessment to see that that is being done?

Finally, it is our firm view that good legislation needs good debate and scrutiny by parliamentarians. The Liberal Democrats will play our part in that process, but we do so from the firm belief that all parties should work together on these measures to send the terrorists the strongest possible signal that parties committed to democracy in this country are determined to join together to defeat them.

I am very grateful to the hon. Gentleman for his comments, which I appreciate and accept entirely. I appreciate, too, the way in which he and his colleagues have worked on these matters in the past days. We shall continue to work in that spirit.

The hon. Gentleman asked about the wording standing up in court, and that is precisely the point. He is also right to say that the drafting issues on the inciting offence are by no means straightforward, which is why we shall discuss them in the way that he suggested. He is quite right that the offence will have a value only if it can stand up to the scrutiny of courts at a later stage, and that will be a central principle in what we do.

On control orders, we are committed to reporting every three months on the operation of the regime. We reported after the first three months a few weeks ago and will next report at the next three-month point, which is in, I think, the second week of September. We will, I hope, report via the parliamentary process at that time, although it is yet to be resolved exactly how. Certainly, under all circumstances, we will report as we have committed to.

On resources for policing, I do believe that extra resources for policing have made a difference, particularly the extra resources for the intelligence services, which, I have been told, have made a significant difference already to their work over the recent period. I accept the point that we will need to review how resourcing has been over the period. I have had initial discussions with the Commissioner on one or two aspects of that, and we will keep it under close review.

On the memorandums of understanding, the hon. Gentleman is quite right to say that they must be capable of including a monitoring process that will be seen to be acceptable. The question of the independence or otherwise of the assessment will be dealt with on a country by country basis. We have been active in pursuing the agreements, and I am delighted by the announcement I have been able to make today about Jordan. The memorandums will themselves have to stand up in court when courts come to consider how article 3 operates.

Finally, I appreciate the hon. Gentleman's commitment to a healthy debate on those matters. I, too, will try to give as good as I get.

I congratulate my right hon. Friend on the way in which the process has been conducted, particularly in my borough, Hounslow, which is a well established multicultural community. My right hon. Friend mentioned recruitment to the police in his statement, particularly from the Muslim community. The borough commander in Hounslow, Dr. Diziea, is from that community, and I would welcome any opportunity to discuss with my right hon. Friend his role in helping in any way.

I thank my hon. Friend for her comments. I know the borough commander and his work, and I share her assessment of him. I spoke earlier today with the Commissioner about precisely these matters. He sees two major areas that he will seek to develop in conversations he will have next week. The first is the recruitment of Muslim police officers, which my hon. Friend referred to, including at senior level. The second is how to develop work on counter-terrorism in a strong way that ensures nationally, and not just in London, that there is a strong relationship with the Muslim community that can help to detect any proposed terrorist acts.

Will the Home Secretary thank the chief constable of Thames Valley for the professionalism with which his officers and the Met carried out their operation in Aylesbury last week? Will he welcome the denunciation of terror and the strong support for the police expressed by the imam and the leaders of the mosque in Aylesbury? Does he agree that alongside the counter-terrorist measures that he is rightly bringing forward, we as a country need to address why a minority of young men from our Muslim communities feel so disaffected, not only from mainstream white society but from the older generations of their own communities, that they have, in a minority of cases, wanted to listen to those who were urging extremism and hatred?

I am happy to reinforce the hon. Gentleman's praise for the chief constable of Thames Valley police. The police in general have done an outstanding job, particularly in areas such as Aylesbury, Leeds and London, where there have been particular challenges.

I was delighted to read of the denunciation by leaders of the Muslim community in Aylesbury of these terrible atrocities. It is particularly important, if I may say so, that the communities directly involved make explicit, strong and courageous statements in the way that the hon. Gentleman describes. It is critical to twin that with the determination to root out the causes of this behaviour.

On disaffected young people, that is an issue of the ages that we have to address. This morning we had a good discussion—the right hon. Member for Haltemprice and Howden (David Davis) was present—with several people from different communities about what we can do. I can confirm that following those discussions the process will continue, with some specific propositions over the summer. I do not want to imply that it is an easy issue, because it is not—it is quite fundamental.

I thank my right hon. Friend for his calm and measured leadership in the past two weeks. Will he join me in offering a word of tribute to people in the Burley Lodge area in Leeds? I rushed home on Tuesday because they were evacuated from their homes while the whole area was searched for a bomb factory. When I got to the community centre, I found that only 34 people from the 470 homes that had been evacuated were there because the rest had been taken into the homes of families, friends and neighbours, cutting across racial, religious and cultural divides. That quietly demonstrates the forbearance and tolerance that could be a hope for the future in our communities.

I thank my right hon. Friend for the way in which the police and the security services worked with the local community at the tape barrier during the crisis; it was a model of police and community relations. Does he agree, however, that while we work on the taskforce initiative and on building a consensus for necessary new legislation, it will be crucial in the next few weeks that all sections of the community, including peoples of different faiths and none, work together to ensure that we are vigilant—watching out for each other—without turning into vigilantes? Life could be difficult in our neighbourhoods unless we develop a deep respect and calm in our neighbourhoods while we work to address the complex challenges that this has thrown up.

I am grateful for my right hon. Friend's remarks, particularly his references to vigilance and respect. Those are key words for us all in the way that we operate, and he is right to highlight them.

I join my right hon. Friend in paying tribute to the police and community leaders in Leeds. In the immediate aftermath of the events, I was particularly glad to have his advice on how to deal with them. I pay tribute to the role that he played in seeking to lead his community in the direction that he describes, which has been very important.

Will the Home Secretary take account of the need to review the Human Rights Act 1998 in the context of these terror attacks? I am sure that he appreciates that severe difficulties arise if that Act gives judges the right to make decisions that should properly be taken by him and through legislation in this House. Does he agree that were he to provide for a "notwithstanding" clause—as in "notwithstanding the Human Rights Act 1998"—before legislating, he would be able to overcome many of the difficulties on control orders, as I indicated in a Bill that I introduced a few months ago?

The hon. Gentleman is a long-standing campaigner on the European convention on human rights; I am not sure whether that is simply because it comes from Europe or because he does not like human rights. Nevertheless, these are important issues. The right way to proceed is not by withdrawing from the convention, but by respecting human rights and trying to ensure that we can carry that through in an effective way.

Does my right hon. Friend share my concern that some of those who have sought to understand and explain what happens have sometimes been accused of justifying what happens, and that in the current circumstances it is important that there is an open debate that recognises the causes of the London bombing?

On the legislation, the House is in recess for three months, but Select Committees are not necessarily so. Will my right hon. Friend consider publishing the draft Bill in sufficient time for the Home Affairs Committee to consider it before the House comes back?

On my right hon. Friend's last point, I will certainly consider doing that. I appreciate the implicit offer in his readiness to see whether the Select Committee might meet although the House is not sitting. I will consider in conversation with him whether that might be a device to help further positive consideration.

On the more general point, I agree that care has to be taken. Some voices are immoderate in the way in which they address these questions, although immoderacy can perhaps be understood in the circumstances with which we are dealing. In general, although there are exceptions, the response of even the most extreme elements of the media has been positive rather than negative, and all parts of society have been trying to respond in a positive way.

As much as the Home Secretary has said, I thoroughly support. However, why do we have to depend on The New York Times to find out that the joint terrorist analysis centre, working from MI5 headquarters, concluded in June:

"Events in Iraq are continuing to act as motivation and a focus of a range of terrorist related activity in the U.K."?

Why have the Government been so adamant that Iraq is not a factor—not a reason or an excuse, still less a justification, for atrocity, but a factor—in terrorist capability within the United Kingdom? We have had academic opinion in the Chatham House report and public opinion in yesterday's poll in The Guardian, and now we find that that was the view of the joint terrorist analysis centre in June. Has the Home Secretary seen that report and how does he reconcile it with the views expressed by the Government over the past two weeks?

On the JTAC report, I will commit myself simply to the remarks made by the Prime Minister during Prime Minister's questions.

On the more general point, there is a serious intellectual flabbiness on the part of those who argue that Iraq was the cause of this issue. If one looks back over the past 10 years at the appalling atrocities that have taken place across the world, including 9/11 and other events, one realises that many of them took place in different circumstances before the Iraq war was engaged upon.

It is very important to say that large numbers of perfectly reasonable people think that the Government's position on Iraq was wrong, but that does not mean that they are on the edge of being terrorists. It is perfectly okay to disagree with the Government. The Government had to come to a decision; I think that it was the right one. People can have their different opinions—that is perfectly legitimate and part of the debate that can take place. However, it is completely mistaken to imply—I am not suggesting that the hon. Gentleman implied it in quite this sense—that if one says that the Government's position on Iraq was wrong, that takes one to the edge of moving towards a terrorist attack.

I very much welcome the Home Secretary's statement and the proposals in it. Does he accept that the root cause of the terrorist problem facing us is a global ideology that fuels hatred and that cannot be dealt with other than by facing it head on and accepting it for the evil that it is? Does he also agree that it is unacceptable for people to excuse or support suicide bombings outside this country, yet claim to be against the same sort of action within our shores?

I strongly agree with both my hon. Friend's points. I believe that her explanation is much nearer the problem with which we have to wrestle in trying to understand why the appalling events took place. We have to contend with a quasi-ideological set of issues. Not only all of us here, as Members of Parliament, in Government and in Opposition, but the communities—especially the Muslim community in the case that we are considering—must contend with it. We have to be engaged in the argument. It is our job, especially mine, to do whatever we can with the Muslim community to help it to address the matter. However, my hon. Friend has put her finger on precisely the sort of issues that we must address when thinking our way through the problem.

May I join my right hon. Friend the Member for Haltemprice and Howden (David Davis) in congratulating the Home Secretary on the way in which he has handled matters since the atrocities were committed? Will the Home Secretary join me in congratulating the people of London and elsewhere on their refusal to be intimidated by the brutal acts and murders? Will he also assure hon. Members that any legislation relating to the terrorist acts that he intends to introduce will not be burdened—if I may use that word—by an unnecessarily harsh programme motion? I believe that adequate opportunity for all hon. Members to contribute positively is vital. Does he accept that if he excluded fanatical clerics, such as Abu Hamza, it would suggest to the people of this country that the Government and Parliament are serious about eradicating fanaticism?

I hope that my statement will help to address the last point. On the second point, it is not for me to prejudge the usual channels—I have always sought to avoid that in my political life. However, I reaffirm the commitment that I gave in the statement, which was agreed with the right hon. Member for Haltemprice and Howden (David Davis) and the hon. Member for Winchester (Mr. Oaten), that there will be time for proper parliamentary scrutiny of the issues in both Houses and that that should form the context of the discussion between the usual channels.

Of course, I agree with the hon. Gentleman's comments about London, but I want to add one point. The response was due to the quality of our emergency services and the police, and the confidence that they—no one else—gave the people of London that the situation was being handled and was under control. It was also due to the absolute determination of all faiths to maintain the strength and reassurance that was part of the approach. That has re-established the importance of all faiths in our national life. I believe that that was one of the things that allowed the people of London to respond as strongly as they did.

Will my right hon. Friend join me in congratulating Bedfordshire police and the emergency services on dealing with the difficult situation of the bomb scare in Luton and on the positive community relations that they have maintained? Will he clarify whether his proposals on indirect incitement would deal with the activities of al-Muhajiroun-related groups, which distributed inflammatory literature on the day after the terrorist attack in London? How can we deal with that issue without creating more so-called martyrs?

I absolutely associate myself with my hon. Friend's congratulations to Bedfordshire police and the communities in Luton. There were difficult problems there and they were handled extremely well. I pay tribute to my hon. Friend's efforts to try to move matters forward.

I shall not say what the relationship will be between the legislation and the group that she mentioned. However, I stress that the measure will cover the issue that she raised. I do not draw any specific conclusion for the particular group to which my hon. Friend referred, but the issue will be addressed. We have to do that by getting maximum support throughout all communities for dealing with incitement. We cannot simply let it all go on without taking a stance against it. We must address it and we call on all communities to work with us. I commit myself and the Home Office to working as closely as we can with communities in Luton and elsewhere to tackle those matters.

Any measure that undermines terrorism is welcome. However, I remind the Home Secretary that in 1998, after the Omagh atrocity, the House was recalled to introduce special legislation to combat terrorism, yet no one has ever been prosecuted under that measure. In proposing to criminalise acts preparatory to terrorism—I welcome that—is not intelligence gathering as important as evidential information in securing prosecutions? Is not the use of phone tap evidence to secure convictions for acts preparatory to terrorism crucial? Drawing on our experience in Northern Ireland, is it not time that the Home Secretary accepted the need to use phone tap evidence to secure prosecutions against terrorists, who are adept at avoiding leaving a trail of evidence?

I understand the hon. Gentleman's point. It is one of the issues that we considered in the review that the Prime Minister commissioned on the use of intercept as evidence and on which I reported to the House earlier this year. As I have said, we have to discuss the matter further—I am sure that we will do that in Committee—to ascertain how we deal with it. However, the hon. Gentleman is fundamentally correct in saying that intelligence is our key weapon. That includes communications evidence. We must analyse how we ensure that we maintain the ability to collect intelligence and do not jeopardise our capacity to do that while getting the evidential basis for successful prosecution.

Is it not a priority that we train imams here for the British Muslim population of 1.6 million? Until we reach that stage, will we make it a condition of settlement for imams to be able to speak and understand English? Will imams be quizzed on their views when they apply for settlement?

Language is a requirement in the new proposals, which we sent out for consultation early this week, just as my hon. Friend suggests. Quizzing on ideological or philosophical views is not yet part of our proposals, but I shall listen to my hon. Friend's comments in the consultation that is currently taking place. On training imams, several senior community leaders made that precise proposal in the meeting that I held with them this morning. I committed myself to considering it carefully for the reasons that my hon. Friend implies. One of the under-appreciated points is that Muslim communities differ according to which part of the world they are in. That is why my hon. Friend's point has force and we are obliged to ascertain how it can be taken forward constructively.

While I welcome the creation of the new offence of indirect incitement to terrorism, I point out to the Home Secretary that some of us, including the hon. Member for Hendon (Mr. Dismore), have been warning about the activities of fanatics for the past 10 years, yet the Government have taken no action. I sent the Home Secretary's predecessor, the right hon. Member for Blackburn (Mr. Straw), a letter in 1998 about Omar Bakri Mohammad. In it, I stated that unless the British Government made it clear that we would not tolerate incitement here, we would find that other fanatics would be encouraged to follow Bakri's line and that our institutions would be subject to attack. It is important to tell the House whether the previous pronouncements of people such as Omar Bakri Mohammad will be called as evidence and taken into account. He openly condoned the attacks on our ally, the United States. If only future incitement is taken into account and people's past pronouncements are ignored, we will do the people of this country a disservice.

I will not comment on individual cases, as I said in my statement, but I confirm that all aspects of conduct will be taken into consideration when deciding what action should be taken. The Home Secretary's powers in relation to acts that are not conducive to the public good are important in principle. Getting the balance right is important. I hide from no one the fact that the events of the past few weeks have changed my view to some extent about the direction that we should take. It is a difficult balance and judgments must be made, but I have made the statement today because I believe that we need to consider the situation in a slightly different way.

May I congratulate my right hon. Friend on his statement and the police on their remarkable forensic work since the London bombings? Will my right hon. Friend comment on recent reports that, following the Madrid bombings, the police were able rapidly to identify the owners of the mobile phones that were used as detonators because, in Spain, an ID card is a prerequisite to purchasing a mobile phone? Does he agree that although ID cards are not a panacea, they may be a useful tool in the fight against terrorism?

My hon. Friend puts it entirely correctly. No particular proposal—for ID cards or anything else—is a panacea, but they can provide useful tools, and her account of the events following the Madrid bombings is correct. I am not making the argument that anyone should change their view about particular proposals for legislation—for example, ID cards—as a result of the events of 7 July. However, I do ask people to take all the issues into account in the round in the way that my hon. Friend has suggested. That is certainly the way in which we will approach this.

My constituent, Shyanuja Parathasangary, perished in the bombings on 7 July. She was around my age and was travelling on the No. 30 bus, on her way to work, with many other Londoners. My thoughts—and, I am sure, those of the whole House—are with her family at this time as they struggle to come to terms with their enormous loss. Her family are from Sri Lanka, like many residents of Brent. All nations and all faiths are represented there, and people live alongside one another in remarkable harmony. Does the Home Secretary agree that great care must be taken over the language that we use to describe these atrocities, to ensure that community relations are not inflamed? Good community relations are hard won, but very easily lost.

I certainly agree with the hon. Lady, and I have tried to behave and to use care in the way that she suggests. I, too, had a constituent who died on 7 July in those events, and I am acutely aware of the sensitivities that the hon. Lady describes. The most important duty that we have towards the friends and families of those who perished is to learn our lessons and to show how we can build in the future a society that has increased strengths. That is certainly what I will seek to do.

Among the fatalities were four people from my constituency. They were four people from four different ethnic community backgrounds, so the tragedy has seriously affected the whole of my constituency and been a great source of distress to us all. I welcome my right hon. Friend's comments regarding the extremist clerics but, as the hon. Member for Aldershot (Mr. Howarth) said, this is not a new issue. Since 1998, I have consistently raised in the House the activities of Omar Bakri Mohammad and others. My right hon. Friend already has the power to remove indefinite leave to remain, which is the basis on which Omar Bakri Mohammad is in the UK. Will my right hon. Friend give urgent consideration to removing his indefinite leave to remain under those powers, so that we can take steps to remove him from this country?

As I said, I am not going to comment on individual cases, beyond the general discussions that I have had. However, I shall certainly listen to any representations made by hon. Members after they have had a chance to study my statement today. I accept my hon. Friend's deep concern following the deaths of his constituents.

If an individual were totally to condemn suicide bombings in Britain but to condone or applaud them in Baghdad, Ankara or Tel Aviv, would he or she be caught by the new offence of indirect incitement, however it is finally defined?

I am not going to prejudge the debate that we shall have in the House and the other place on that legislation. However, I will say that suicide bombing and the killing of civilians—wherever it occurs, anywhere in the world—is simply unacceptable, full stop. It is terrorism of whatever description. I do not think that there is a difference between British people who are killed in terrorist outrages such as that in London on 7 July, and people who are killed in terrorist outrages in the places that the hon. Gentleman mentioned. That has to be the motivating spirit behind the way in which we address these questions.

May I join others in the universal praise for the Home Secretary and Sir Ian Blair for the exceptional way in which they have conducted themselves over the past few weeks, and for the dialogue that the Home Secretary has personally established with the Muslim community in Britain? One of his proposed measures, however, will put greater pressure on the entry clearance operation. Will he ensure that more resources will be given to the posts abroad that have to deal with these applications, particularly Islamabad and Karachi, where the situation sometimes seems chaotic? Will he give me an assurance that the extra attention that will be paid to these cases will not in any way affect the genuine people who wish to come here as visitors, and who might face the prospect of more refusals because entry clearance officers will obviously have to be very careful? Will he also put these measures to the community groups when he meets them?

I appreciate my hon. Friend's remarks, which are genuinely well meant. Yes, I will give the assurance that he seeks that existing procedures will not be slowed up by the process that he has described. I will also give the assurance that I will look into the precise resources implications that will arise. I know that my hon. Friend will agree that the best way to secure strong community relations in this country is to have good, effective, accurate decision making on visa and other applications from other countries throughout the world. That is what we are trying to achieve.

The Home Secretary will know that firefighters are in the front line of emergency rescue operations. Tributes have been paid today to the splendid response of our emergency services in the aftermath of the London bombings. He will know that firefighters are often first on the scene, and are therefore the most vulnerable to secondary devices. He will also know that most insurance policies have exclusion clauses for acts of terrorism. What discussions has he had, and what plans has he, to ensure that, should there be similar incidents, our splendid emergency services have proper protection?

The hon. Lady is right. The answer is that I have not yet had any discussions of the kind that she describes, but I am chairing a meeting tomorrow to get responses from a wide range of elements among those who are involved in this approach, to determine what lessons we have learned. I shall ensure that that point is considered at the meeting.

Has my right hon. Friend recently re-read the excellent Home Affairs Committee report on terrorism and community relations? If he has, he will have seen that one of the recommendations made in March 2005 was that the Government should ensure that British Muslims were fully engaged in the formulation of any new anti-terror legislation. What steps is he taking to implement that recommendation? Does he agree that while the consensus between the political parties inside Parliament is welcome, it is even more important for there to be consensus between Parliament and our citizens? All the strands of our community signing up to the anti-terror legislation could—with a fair wind and God willing—result in there being no more terrorist attacks in the UK.

My hon. Friend is completely correct. I have not recently re-read the Home Affairs Committee report but, prompted by his suggestion, I shall certainly take it to the beach this year and make sure that I get on top of it. My hon. Friend is entirely right: the serious point is that it is critical that everything that we do is widely understood and supported in the community. That is why I gave a commitment in my statement to consultation on a variety of the issues that we are talking about, and I can confirm that that will be our approach.

I am sure that the Home Secretary will join me in welcoming the condemnation by Muslims in Birmingham—particularly in the Acocks Green ward of my constituency—of the attacks on London. Does he agree that to achieve a calm and peaceful world we need to stand on two legs: security and justice? We cannot have justice without security but, at the same time, we cannot have security without justice. We need to focus on ensuring that justice is done, nationally and internationally, and that it is seen to be done, for example, under international humanitarian law. The proposal for ID cards was mentioned earlier. Such cards might not be able to prevent attacks such as these, and there is an argument in regard to ID cards about whether one can do things ex-post facto. There is also an argument about whether closed circuit television would be more cost effective.

These are serious issues. CCTV is an extraordinary case. Its utility in this investigation has been of particular importance. Where there are serious issues of human rights—which there are—there needs to be proportionality in dealing with them. That includes CCTV, ID cards and the retention of telecommunications data as evidence. I hope that all parties in the House—I look to the hon. Gentleman's Front-Bench colleagues—will look at all of these proposals in an appropriately proportionate way.

In regard to port security, I was visited last Friday by a constituent who is a coach driver who regularly travels between here and the continent. He told me that security—for coach drivers, anyway—had deteriorated to the point of being almost non-existent in the past few years. Does my right hon. Friend have any plans to review the situation at ports, particularly in relation to coach drivers? My constituent says that someone trying to smuggle something in would only require an alliance with the coach driver, not the co-operation of passengers. He raises what I think is quite a serious issue, although I appreciate that these days most port security is intelligence led.

The national co-ordinators of special branch and ports police are actively reviewing the situation that my hon. Friend describes. I do not know, but I assume that they are considering the coach issue specifically, along with other issues. He is right that it needs examining carefully, and we are doing just that.

I very much welcome the Home Secretary's statement. May I focus on one specific point? He rightly identified the role of websites in inciting violence and said that he would control that. But he knows as well as I do that websites can be generated from outside the United Kingdom. What discussions has he had with internet service providers in the United Kingdom so that if websites are identified as inciters to violence and terrorism, ISPs based in the UK will block them?

We have had two types of discussions. The first is with other countries. About a month ago, we had a specific session on this point at the G8 meeting of Interior Ministers in Sheffield, which is relevant to the hon. Gentleman's point, as one or two of the G8 members are places from which websites can be run. We agreed to increase significantly our work to address that point, which is also being addressed in the EU context. Secondly, I have had discussions about such developments with some ISPs, but in the context of child pornography rather than in this context. The hon. Gentleman is right, however, and we will move in both directions—through the industry and in relation to particular jurisdictions—to see how we can take matters forward.

The Home Secretary's forthcoming legislation deserves the most painstaking and sympathetic scrutiny. In making the case for it, notwithstanding what he has said about the broadly responsible media reporting of recent events, will he accept the need to underline constantly that we are seeking to upbraid and prevent acts by a tiny minority of people who want to destroy this country? He and all of us recognise that the overwhelming majority of people who seek to come to this country, whether to study, work or be granted asylum, have no ill designs on us and would deprecate terrorist atrocities as vociferously as all of us in the House.

The hon. Gentleman's attention to legislation is always painstaking, and I am sure that that will be equally true with this legislation.

I can give him the assurance that he seeks. We are talking about a tiny number of people, but the deep truth, as he well knows, is that it is possible for even a tiny number of people to do immense damage, so the challenge for us is how to get the right approach, and the legislation is focused on trying to do that.

I am sure that the Home Secretary is aware of the activities of several organisations, some of which are banned in other countries, that prey principally on young male Muslims? What does he propose to do to monitor and deal with those, and more important, have the Government given some thought to what positive action we might take to engage some of these disaffected young people to turn them away from some of those organisations?

First, I think the measures I announced in my statement will help with some of the issues that the hon. Gentleman describes. Secondly, through the process of the discussions to which I referred earlier today, a conscious and positive effort is taking place to consider how we deal with disaffected young people and communicate more effectively with them.

The Chancellor's pledge of £10 million to support the survivors and the families of the victims of the London bombings is most welcome and appropriate. I hope that the Home Secretary will agree that had the event taken place abroad, not a penny of this money would be available, because it comes from the criminal injuries compensation scheme, and none of the money is available unless an incident takes place in the UK. Will the Secretary of State therefore reconsider and extend the scheme so that financial support is provided regardless of where the incident takes place? Sadly, the events of last week have shown that terrorism occurs all over the globe, and our support for Britons caught up in such horrific events should also have no boundaries.

First, I am aware of the hon. Gentleman's very personal understanding of these issues, and I appreciate the way in which he put his point. I am ready to consider all these questions, but if we are being candid, there is a real problem. The regime under which compensation is dealt with, for people who die in a series of circumstances and in different ways, is complex and confused. As he rightly says, we have a criminal injuries compensation scheme that deals with issues in this country. There are particular schemes to deal with great natural disasters such as the tsunami, and a different set of issues arise particularly when there is strong public feeling, for example about a train accident. It is important to try to find a more equitable approach to tackling these problems, but to be frank I do not have a good solution to offer at the moment, although I will consider his point carefully.

On a point of order, Mr. Deputy Speaker. Yesterday evening, there was some confusion in the House, and I am sorry to say that it was caused by the Secretary of State for Transport. In relation to the Select Committee being set up to deal with the Crossrail Bill, he may inadvertently have given the House inaccurate information when he said that

"if someone comes along with a petition on something different, such as varying the line of the route, no Government or, indeed, the House, would say that the Select Committee should not consider it."—[Official Report, 19 July 2005; Vol. 436, c. 1129.]

An instruction to a Select Committee of this type is quite explicit, however. The custom of the House is that such a Select Committee can take petitions only from people with a direct or specific interest in the subject. I would therefore ask not that you make a judgment now, which would be unfair, Mr. Deputy Speaker, but that Mr. Speaker makes a considered judgment so that before the matter is taken forward, everyone can be clear about what this Select Committee can or cannot be petitioned on, and what it can or cannot consider.

I understand the hon. Gentleman's point of order and it is certainly not a matter on which I could give a decision now. I am sure that the Select Committee will consider the matter in great detail when it starts its deliberations. As regards Mr. Speaker, he will have seen his comments and will no doubt consider them, too.

I beg to move,

That leave be given to bring in a Bill to make further provision about the retention of vehicle registration marks pending transfer.

Registration numbers are not items of property in their own right, so it is not possible to acquire legal title to them. They are assigned to, and may be withdrawn from, vehicles rather than keepers, by the Secretary of State, as part of the basic registration and licensing process required by law. The registration number is a unique means of identifying a vehicle, primarily for taxation and law enforcement purposes. It is assigned to a vehicle, and it normally remains with that vehicle until it is broken up, destroyed or sent permanently abroad. To meet the widespread interest in personalised and cherished registration numbers, however, the Driver and Vehicle Licensing Agency provides special facilities to allow motorists to acquire and retain the use of particular registration numbers.

The current provisions stifle choice and flexibility for the individual and for business. Purchasers of marks on retention are understandably wary, as the keeper is currently unable to give away rights to the number at the point of sale by detailing a new third party as the grantee. That means that the purchaser of a retained number has no rights to it until he or she assigns that number to a vehicle, despite financial payment already having been passed to the vendor. In addition, the co-operation of the original grantee is required to effect assignment to the purchaser's vehicle. It is also the grantee who retains the right to purchase extensions to the 12-month period of entitlement for holding a number on certificate, even after the sale of a number to a third party. There is clearly potential for considerable loss to the purchaser of a number on certificate should entitlement to a number be lost through the non-co-operation of the grantee, or simply the practical difficulty of locating that person.

Attractive registration numbers can fetch large sums. I do not know whether my hon. Friend the Minister would be interested in the registration number DT1—probably not, because he might then be assumed to be a Minister at the Department for Trade and Industry rather than a transport Minister. If his middle name were Oliver, he might want a DOT registration. I am sure that both would be extremely expensive. There is, however, a growing business out there. One company trading from an office just outside my Preston constituency, newreg.com, has been hugely successful in building up such a business in a legitimate fashion, but elsewhere there have been several cases of organised criminal activity aimed at acquiring valuable numbers by illegal means.

The transfer and retention facilities must therefore be carefully controlled to cut abuse and protect individuals' interests. Only vehicles that exist and are registered at the DVLA, currently licensed, subject to an annual test and available for inspection may participate. Vehicles that satisfy those requirements are generally easier to identify, so their entitlement to the numbers claimed can be more readily verified. Those measures have proved very effective in limiting the scope for abuse, and they are strongly supported by the police.

Only the registered keeper of a vehicle may apply to transfer or retain its registration mark. As I said earlier, when a vehicle's registration mark is placed on retention the registered keeper becomes the grantee. The Cherished Numbers Dealers Association has requested the addition of a facility to the retention arrangements, to ease the administrative burden on the companies that make up the association and to improve sales.

Regulations provide that entitlement to a number that is on retention may pass to a third party only on assignment of the number to that person's vehicle via nominee agreement. That arrangement precludes the disposal of a number to a third party who wishes to keep the number on retention. I propose the introduction of an option for third parties to be granted entitlement as soon as the number is placed on hold under the retention facility.

The Bill would aid the industry involved in buying, selling and transferring registration mark rights, with no additional costs to Government. It would amend the Vehicle Excise and Registration Act 1994 to simplify the administrative process for selling cherished registration numbers, and would be warmly welcomed by many customers as well as cherished number dealers. The new facilities would allow an improved service at no extra cost to the DVLA or its customers, and would not endanger the accuracy of the record or lead to an increase in fraud. I understand that there has been informal consultation between the DVLA and the CNDA, and that both are strongly in favour of the proposed changes. I commend the Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Mark Hendrick, Tony Lloyd, Mr. Jamie Reed, Mr. David Drew, Mr. Greg Pope, Mr. Neil Turner, Mr. Mike Hall, Steve McCabe, Paul Farrelly and Derek Wyatt.

Vehicle Registration Marks

Mr. Mark Hendrick accordingly presented a Bill to make further provision abut the retention of vehicle registration marks pending transfer: And the same was read the First time; and ordered to be read a Second time on Friday 11 November, and to be printed [Bill 48].

I beg to move,

That the draft Council Tax Limitation (England) (Maximum Amounts) Order 2005, which was laid before this House on 7th July, be approved.

The order will be made under section 52F(4) of the Local Government Finance Act 1992, which was inserted by the Local Government Act 1999. In my view, its provisions are compatible with the convention rights. It sets out maximum 2005–06 budget requirements for eight local authorities, which means that they are being capped in year. The eight authorities named in the order, all district councils, are Aylesbury Vale, Daventry, Hambleton, Huntingdonshire, Mid-Bedfordshire, North Dorset, Runnymede and South Cambridgeshire.

Subject to the House's approval, I will make the order and issue notices to the authorities about their maximum 2005–06 budget requirements—that is, their caps. They will then be required to recalculate budget requirements that are at or below the level of the caps. They will also have to send revised council tax bills for the current year.

On 23 March, my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) made a statement in the House about the capping action that the Government proposed to take in 2005–06. He pointed out that the Government had first used their reserve capping powers in 2004–05, and that we had made clear that we were prepared to take even tougher action this year if necessary. He said that he was pleased to see most authorities responding positively to the Government's strong message on council tax. Let me add some figures to those words. That means that 447 of the 456 authorities—98 per cent.—did not set excessive budget and council tax increases, which is a credit to those authorities individually and to local government as a whole.

Some authorities, however, did impose unreasonable increases on their council tax payers. My right hon. Friend therefore went on to say on 23 March that the Government were designating nine authorities with a view to capping them in year.

Why did the Government recognise the position of low-taxing authorities last year by taking into account the absolute level of tax, and choose not to do so this year? Where is the consistency in that?

The hon. Gentleman makes a point that he and his council have made before. It is true that the criteria applied this year were, in some instances, different from those applied in previous years. The Government are trying to avoid the second-guessing whereby councils try to set their tax and budgets at the level that they expect the capping regime to produce, which is a self-fulfilling prophecy. The hon. Gentleman's point has been noted. I hope that if he catches your eye, Mr. Deputy Speaker, I shall be able to answer his question more fully later.

Will the Minister give way?

I will take some interventions when I have set out the principles of the order.

As I was saying, my right hon. Friend announced that the Government were designating nine authorities. He proposed maximum budget requirements for them at levels that would not be defined as excessive according to principles determined by the Secretary of State. As I said in my written statement to the House on 7 July, when the order was laid, all nine designated authorities challenged the proposed maximum budgets.

The Under-Secretary, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick), and I met representatives of all those authorities to listen to their cases. Having carefully considered the representations made by all nine of them—and, indeed, by Members present in the Chamber today—and having taken into account all relevant information, the Government have reached the following decisions. We have set a maximum budget for seven authorities—Aylesbury Vale, Daventry, Hambleton, Huntingdonshire, Mid-Bedfordshire, North Dorset and Runnymede—at the levels we proposed on 23 March. We have set a maximum budget for South Cambridgeshire that is £1 million higher than the originally proposed cap, in order to allow the authority time to reduce its over-reliance on reserves.

We have decided to cancel Sedgemoor's designation and to nominate the authority instead. [Interruption.] I am grateful for that acknowledgement. We propose a notional budget of £11,974,169 for 2005–06, which takes account of the fact that the authority made a genuine mistake in thinking that special expenses did not count against its budget for capping purposes. I should emphasise that in doing so we have not set a precedent for the treatment of special expenses in future capping rounds; authorities should be in no doubt that such expenses form part of their budget requirement. There is no parliamentary procedure involved in setting notional budgets for nominated authorities, so the draft order before us does not include Sedgemoor. But Sedgemoor has 21 days from receipt of the letter in which to challenge its proposed notional budget, should it choose to do so.

The hon. Gentleman is laying this order before the House in order to protect council tax payers, but given that none of the capped authorities has a council tax greater than his own authority in Oldham, East, can he explain why he is not capping his own?

The hon. Gentleman is talking about actual levels of council tax, but the capping order before us today relates to percentage increases. That is the regime and the policy being pursued. The legislative definition—by which the Secretary of State clearly has to abide—is concerned with what constitutes "excessive". I understand the point behind the hon. Gentleman's intervention, which other Members representing authorities affected by the measure have also made forcefully, although courteously and reasonably. They have asked whether this is a fair way to proceed, especially in cases where the council tax level is below the average for the type of authority in question. Of course, the counterpoint to that argument is the obvious, arithmetic one: ignoring the average level would simply bring about a self-fulfilling prophecy. We have to look at this issue from the point of view of the council tax payers in the affected areas.

My hon. Friend mentioned the statement made by my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford), in which he laid down the criteria and said in conclusion:

"These principles have been applied to all authorities."—[Official Report, 23 March 2005; Vol. 432, c. 884.]

Does my hon. Friend not accept, therefore, that the capping criteria are universal—and pretty crude?

They are neither crude nor universal. The increases proposed by some of the councils that we are discussing today, even after the cap has been put in place, are still greater than the capped increases being made by other councils. Members present have doubtless prepared speeches pointing out the alleged inconsistency in this viewpoint, but both viewpoints cannot be true. My hon. Friend, who has dealt with these matters for many more years than I have, and who has been a champion of local devolution and local autonomy, suggests that we are going back on our policy. Of course, we have to take into account local authorities' statutory duties and their particular circumstances, so I reject the accusation that the capping criteria are crude and universal. However, I have no doubt that my hon. Friend will carry on his campaign against any form of capping regime.

The hon. Gentleman referred to "excessive" spending and said that spending must be in the context of the area in question. Perhaps he can therefore explain why in my authority, a band D council tax increase of £98 is considered excessive, whereas in the neighbouring constituency—it was retained by his colleague, the hon. Member for South Dorset (Jim Knight)—Weymouth and Portland borough council has set a council tax increase of £232 for band D properties. Most of my constituents would say that those authorities are in the same area.

Of course, different authorities of the same nature in similar geographical areas often have different budgets and apply different council tax increases. I remember following closely debates in this House that compared Lambeth and Wandsworth boroughs. I do not suppose that the residents of Lambeth were satisfied with the outcome, either, but that is the nature of local authorities. One has to start from where one is, and from the point of view of the council tax payer. However, if the hon. Member for North Dorset (Mr. Walter) is successful in catching your eye, Mr. Deputy Speaker, perhaps he can amplify his point.

Does my hon. Friend not accept that we will always be in this predicament until we sort out the banding system and the standard spending assessment?

I take my hon. Friend's point, but it would be wise of me to exercise caution and to refrain from commenting on the banding process at the moment. As we know, the Lyons review is examining the future of local government finance, and the standard spending assessment has been replaced by the formula spending share. Members who have followed these debates closely will have noted that yesterday I laid before the House a written ministerial statement announcing the consultation document on the future of the formula. We are consulting on whether we should continue with what is referred to as the notional level of council tax, which often causes confusion and is used by parties across the political spectrum to attack their political opponents. I understand why that happens, but on the whole it does not benefit local government.

We believe that the action proposed in the draft order, and the separate action that we are taking in respect of Sedgemoor, represent a measured and proportionate response to excessive increases. As we have said on previous occasions, capping decisions are not taken lightly. Indeed, I should like to make it clear for the benefit of the record that capping is very much a last resort, and that 98 per cent. of councils avoided the capping regime. In the first instance, it is for local authorities to set their council tax levels and to justify them to their local electors. But the Government also have a duty to protect council tax payers from the small percentage of authorities that set excessive increases. Indeed, the House agreed to that principle when it discussed local government finance legislation.

Why is the Minister so hooked on percentages? Surely the bottom line for council tax payers such as me who live in Hambleton is that it has the third lowest council tax in the country. Why is he penalising prudent Conservative-run councils that are keeping a low council tax?

The hon. Lady has made a very strong case on behalf of her area on this issue, and in respect of other difficulties that it has suffered in recent times. I should perhaps take advice from those hon. Gentlemen who are about to instruct Hansard to insert laughter, but I must say that there is no party political element in this matter—[Laughter.] There is no pre-ordained position and even the most cynical of Front-Bench Opposition spokesmen on local government could not contrive to imagine that I would be ingenious enough to predict that this would affect only Conservative councils. Indeed, some of the local authorities affected have independent, Labour and Liberal Democrat members, some of whom are opposed to the decision and some of whom are in favour.

I believe that I have already answered the substantial point made by the hon. Member for Vale of York (Miss McIntosh), but let me cite two reasons for our decision. One is that we have to start from where we are. It is the excessiveness that is at issue, as specified under the legislation, and I am rightly obliged to follow up what that legislation specifies. It is the excessiveness involved in moving from A to B that matters. Secondly—[Interruption.] I am going to repeat this second point because the hon. Member for South Cambridgeshire (Mr. Lansley) is looking either threatening or puzzled—and quite possibly both. If he can contain himself and listen to my argument first, he can then disagree, although he will doubtless disagree with me whatever I say. My second argument is that using percentages covers the point about step changes and differences. Percentages help to address the real problem faced by Governments of any colour—the danger of the self-fulfilling prophecy.

I thank the Minister for his courtesy in giving way and for the way in which he is manifestly making the best of an unbelievably appalling job. Whatever the formulaic procedure, I put it to the Minister that what constituents demand of us and what the people demand of the Government is a judgment: sometimes something that is set out in black and white becomes patently ridiculous or nonsensical, at which stage the Government should take the decision not to proceed with it. If the Minister applied his personal judgment to what he is reading out, he would not be in the position that he has to defend this afternoon.

I thank the hon. Gentleman, who is among the most courteous Members of the House and a champion of his constituency. I recognise that what he says today is spoken on behalf of his constituency. The House will notice that no Member who has intervened so far, apart perhaps from my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts), has disagreed with the principle of capping—[Interruption.]

rose—

Well, my preparations for this debate have just proved to be accurate in this regard, because if we can have a statement from the Opposition Front-Bench spokesman to say that his party would rule out any form of capping—universal, crude, targeted or otherwise—that would be interesting to hear. the hon. Member for Brentwood and Ongar (Mr. Pickles) speaks. I am sure that the hon. Member for Brent, East (Sarah Teather) will want to put her party's position on the record, too. Very high local income tax rates would, of course, follow any such pronouncement.[Interruption.] Already, I hear some qualifications, but I look forward to Conservative policy being put clearly on the record when

We were on the subject of excessive spending and the Minister implied that he was effectively constrained by the legislation, but he knows that that is not true. The intention behind the Government's changes of 1999 was precisely to allow discretion in respect of the circumstances in which capping is applied as an exceptional measure. As far as South Cambridgeshire is concerned, the Minister has demonstrated such discretion by raising the cap, but where in the local representations has anyone suggested to the Minister that reducing the spending of South Cambridgeshire district council by 13 per cent. in comparison with last year's budget is an appropriate use of discretion?

There will inevitably—and, I suppose, quite rightly—be some hon. Members who will want to make specific points about the budgets of their own councils and the consequential council tax increases. I will attempt to answer all the points if we can proceed to debate the issues sensibly within the time allotted. I can tell the hon. Member for South Cambridgeshire that the points that his council made have been listened to and its representations and correspondence have been answered, although not necessarily to its satisfaction.

I am confident, to answer the point raised by the hon. Member for North-East Bedfordshire (Alistair Burt), that these decisions are consistent not just with the letter of the legislation, but with the general point that the Government have a duty to perform on behalf of council tax payers. In 98 per cent. of cases, the policy has been successful.

rose—

I will give way one more time, but I am conscious that Mr. Speaker has had to apply limits to Back-Bench speakers and that every intervention I take limits the opportunities of hon. Members to contribute to the debate.

I just want to put on record our party's opposition to capping in principle and remind the Minister that it was not so long ago that his party was also opposed to capping in principle. How far we have moved since!

I thank the hon. Lady for being clear about her party's policy—that there will be no capping regime of any sort whatever under a Liberal Democrat regime.

rose—

I really must move on. As I have already said, the more interventions that I take, the fewer the opportunities for hon. Members to contribute to the debate.

The hon. Member for Brent, East made her point clearly. To be fair—something that I am always in favour of—my own party's manifesto, on which we fought the election, included the point that a limited capping regime was our policy. It is the case that, three years ago, council tax increased by 12.9 per cent. on average, before the capping regime, yet this year the average increase was 4.1 per cent. Those two statistics are not coincidental.

In laying this order, we are keeping our promise to act on excessive council tax increases. That promise was made in our manifesto. Opposition Members are too easily dismissive of another important point—the Government have provided all authorities with grant increases in line with or above inflation in all of the last three years. Overall, the funding that we have provided for local government has increased in real terms by 33 per cent. since 1997—a real-terms increase of a third in the Government grant to local authorities. That compares favourably with what came before us, Mr. Deputy Speaker, although I do not want to say that all the evil was done under the last Conservative Government—just most of it. It compares with a cut in real terms of 7 per cent. in the four years before 1997. The financial regime and the financial climate for local authorities has changed substantially. In that context, local authorities have to look long and hard before proposing significant council tax increases. If central Government were to propose significant or, indeed, any increases in other taxation policy, Opposition Members would not be—[Interruption.] The hon. Member for Brentwood and Ongar says from a sedentary position that we have proposed other increases—

Through the council tax.

The hon. Gentleman may say that, but that is the very issue that I am addressing. People cannot have their cake and eat it—in that regard or any other.

Given the Government's substantial investment in local government, there is simply no justification for authorities setting excessive council tax increases. We have shown over the past two years that we will take action to deal with that. No authority should assume that it is somehow immune to or exempt from possible capping action in the future.

As I said, our general election manifesto reaffirmed our commitment to use these powers if necessary and as a last resort. It is up to authorities to take that message on board.

Those hon. Members minded to oppose this order must answer the following questions. Do they support percentage council tax increases that go well into double figures? Do they feel that the Government should take no action on increases of up to 100 per cent.? Will they go out and defend such increases to their constituents?

I will.

Well, that is for each hon. Member to decide. We must not forget the public in this debate, and they have made their views clear. They are not prepared to accept excuses for excessive council tax increases—

Will the Minister give way?

The hon. Gentleman is getting very excited, so I will give way to him.

The Minister says that he is responding to what residents and constituents have said, but that is not the case in Huntingdonshire. At the polls, people elected a Conservative administration based on the budget that he is now capping.