To ask the Secretary of State for Defence if he will make a statement on the collapse of the court martial of seven paratroopers from the 3rd Battalion the Parachute Regiment, accused of murdering an Iraqi civilian two years ago.

I want to make it clear from the outset that the armed forces operate to the very highest standards. All personnel are aware of the necessity to operate within the law. It remains MOD policy to initiate a service police investigation into every instance where the action of British service personnel may have led directly to the death or injury of Iraqi civilians. The Government back our troops fully. I, together with the chiefs of staff, am very proud of the role that British armed forces play in the world. They do an exceptional job in very difficult circumstances and operate to the very highest standards.

The trial of the seven members and former members of the 3rd Battalion the Parachute Regiment concluded on 3 November in Colchester, after the Judge Advocate General directed the board to find all seven defendants not guilty. The trial related to an incident in Iraq which occurred at the roadside in Maysan province in southern Iraq on 11 May 2003, following which Mr. Nadhem Abdullah, an Iraqi citizen, died. The seven individuals were jointly charged with murder and violent disorder.

I am limited as to what I can say about the Judge Advocate General's decision, as this is a matter for my noble and learned Friend the Attorney-General. However, it may be helpful if I place the trial in its operational context.The end of the trial has raised the question of why the soldiers faced those serious charges. Soldiers understand that they are required to operate within the law and their rules of engagement and can be held to account for their actions. All soldiers in Iraq and elsewhere receive a briefing on that. They also receive training in the law of armed conflict as part of their annual training. Soldiers are not above the law.

Whenever an incident occurs or an allegation is made, a Royal Military Police—RMP—investigation is launched by the commanding officer. The conduct and scope of such investigations is determined independently of the chain of command. The RMP special investigation branch—SIB—is a fully professional investigative agency, which conforms to UK Home Office standards, where appropriate, and follows civilian police investigative procedures. Investigations are carried out thoroughly, professionally and in accordance with the rules of evidence, UK best practice and the Association of Chief Police Officers standards, but operational circumstances or cultural differences may limit the forensic and investigative opportunities.

In this case, the Royal Military Police was operating in a hostile and volatile environment, which clearly impacted on some aspects of its investigation, both in terms of its scope and its timing. The decision to prosecute was taken by the Army prosecuting authority based upon the evidence gathered by the RMP. The APA acts as prosecutor in all courts martial and has a similar role to that of the Crown Prosecution Service in civilian courts. The APA is statutorily independent of the Army chain of command, which has no influence over its case management or decision-making process. The decision to prosecute is based upon its assessment of the evidence and of the realistic prospects of a conviction.

Everyone is presumed innocent unless and until they are found guilty. The four servicemen and three ex-servicemen were provided with every assistance to enable them to put their case: a unit defending officer was provided for each of them and acted as their link with their defence team; they were each defended by a QC, funded by the Army criminal legal aid authority; and they were all afforded full welfare provision throughout the period up to and including the trial—and this continues.

The Judge Advocate General made it clear that he had no criticism of the Army prosecuting authority in bringing the case to trial. This court martial demonstrates the Army's commitment to transparency and accountability. It was held in open court, where it was open to full public scrutiny, and to the same standards of justice and independence that are present in the civilian justice system. All the parties and authorities involved, military and civilian, acted properly and in good faith.

The British Army is not complacent. Following all operational commitments, a process of continuous and determined professional review is undertaken. The comments of the Judge Advocate General are being considered and a comprehensive review of the 3 Para trial is under way. In addition, the Army announced a review following the trial earlier this year of members of 1 Royal Regiment of Fusiliers. The review is being conducted on behalf of the Chief of the General Staff by a senior experienced officer and is looking at issues arising from concluded courts martial relating to deliberate acts of abuse. It will seek to learn lessons and look at wider issues emerging from trials and other reports, in order to safeguard and improve the Army's operational effectiveness. Any findings can be published only after all the courts martial have concluded, so publication is therefore likely to be some time in the future.

This case has shown our determination to ensure that justice is done irrespective of the difficulties. We are very sensitive to the ordeal that these soldiers have been through—they have acted with dignity throughout and I hope that they will now be given respect and privacy to enable them to continue with their lives. More than 80,000 servicemen and women have served in Iraq—only a very small number of them have been accused of ill treatment of Iraqi civilians, and a number of those have already been cleared of any wrongdoing, as in this case. Our troops in Iraq continue to perform outstandingly, but they are not above the law.

I thank the Minister for that reply. I understand that this is not an easy subject for him and that many of its aspects do not fall directly within his area of responsibility, but he is the Minister with responsibility for the armed forces, and he is responsible for their morale. He, like me, pays frequent and heartfelt tribute to our armed forces—he has done so again today, and I join him in doing so. Indeed, it is for that reason that I have put down this question because, as he knows, the prosecution of those seven soldiers had a serious effect on morale, and the collapse of the prosecutions has created even greater uncertainty and doubts in the mind of our armed forces.

Of course, where a crime has been committed and the evidence substantiates it, it must be prosecuted, but that was clearly not the case here. In his decision to stop the cases, the Judge Advocate General described the investigation of the case as "inadequate" and much of the evidence as "inherently weak or vague". He referred to witnesses having

"colluded to exaggerate and lie",

and he referred to witnesses seeking "blood money". The bringing of this case therefore raises some serious questions. Who decided that these prosecutions should proceed? Was the Attorney-General involved in that decision? Was a political overview sought and was one given? Who was paying for the witnesses and who decided what they should be paid and for what?

We need urgent answers to those questions. They also form part of a wider concern about the serious damage to morale arising from doubtless well-intentioned but ultimately unsubstantiated prosecutions such as these and that against Trooper Williams, which also collapsed earlier this year. We must never forget that our forces are operating in a highly dangerous and hostile environment where confidence is essential and where nearly 100 of our soldiers have lost their lives. They cannot operate effectively with the spectre of the lawyer metaphorically looking over their shoulder.

Does the Minister agree that such prosecutions are highly damaging to recruitment and retention, both of which are under severe pressure? Does he also agree that they highlight a failure of his Department's duty of care towards service personnel? In that regard, can he throw some light on a report in yesterday's edition of The Observer that the Secretary of State will this week unveil a so-called action plan to offer support and counselling to those facing such prosecutions? Will he undertake to initiate a full review of how such prosecutions are undertaken?

Does the Minister agree that such prosecutions undermine the whole concept of mission command upon which the British Army operates? Does he share my sympathy for the view expressed in another place by Lord Boyce, the most recently retired Chief of the Defence Staff? He said that

"The Armed Forces are under legal siege".—[Official Report, House of Lords, 14 July 2005; Vol. 673, c. 1236.]

He went on to say that they are being pushed in a direction where necessary operational military orders could be deemed improper or legally unsound. The battlefield is not a court of law and actions often have to be taken spontaneously. Is it not vital that in the proper pursuit of justice we must never compromise the ability of our armed forces to fight and to win?

I appreciate what the right hon. and learned Gentleman said at the outset about the role that is played by Members across the Chamber in highlighting not only the difficulties that personnel face in conflict or in dealing with the aftermath of conflict, no matter where they may be, but the way in which they carry out their duties. I am sure that that view is shared throughout the House.

I hope that the right hon. and learned Gentleman, who served as a Northern Ireland Minister at a time when members of Her Majesty's armed forces and the security services were brought to trial for actions that were carried out, is not arguing that we should simply turn a blind eye to wrongdoing. [Interruption.] Well, we have established that; it is important to do so. I do not know whether he is then arguing that we should have ministerial oversight of the judicial process. That was not the case in the past, it is not the case now, and it would not be advisable for it to be the case in the future.

All judicial processes have to be wholly independent, and those circumstances applied in this case. I recognise the way in which it has played out. Great publicity was given to it and it was sometimes exploited by those commenting on it, perhaps for political purposes, on both sides of the debate—those who want to oppose the Government per se and those who want to oppose what the Government are doing in Iraq overall. That does not help in the judicial process, which must be wholly independent and, in the right sense of the word, calculating in terms of all the evidence that is before it. The Judge Advocate General determined that there was true justification for bringing this case to trial and sufficient material evidence so to do. He also recognised the very difficult circumstances in which the SIB carried out its investigations, although he went on to comment on what he perceived to be the failings in those investigations that ultimately led to the collapse of the case.

As I said, the whole matter will be subject to a thorough review. We review every incident of such a serious nature. As MOD Ministers we—and equally importantly, if not more so, the chiefs of staff who have the responsibility alongside us to maintain high morale—must ensure that any lessons that need to be learned will be learned. I give the right hon. and learned Gentleman that commitment. As I said in my opening statement, that review is under way. We have said that consistently and, as we take each lesson on board and determine what we must do, a suitable report will be made in some shape or form to the House.

The right hon. and learned Gentleman asked about the payment of witnesses. There is nothing unusual about witnesses receiving expenses and that applied in the case that we are considering. We must now examine whether the level was appropriate and what can be construed from that. The military court service made the decision and it, too, is currently reviewing its processes.

I hope that the right hon. and learned Gentleman and Conservative Members who have supported us in the conflict recognise that, as in any theatre of conflict, there is a fine line to walk. We must ensure that we maintain the confidence of the people whom we are trying to help while ensuring that our troops receive adequate and proper resources to carry out their job. Some of the comments that are made off side do not help morale because they undermine the difficult task that our soldiers face. They know that they have to conform to the rule of law and those who misunderstand and misdirect comments do not help in boosting morale.

The right hon. and learned Member for Devizes (Mr. Ancram) mentioned Trooper Williams, who is a constituent of mine. All charges against him were dropped. I asked the Attorney-General on 2 March about those matters and I was told that the role of the military prosecuting authorities is subject to the general superintendence of the Attorney-General. I was further told that the Attorney-General would not reassess his role. In the light of the judgment and what has emerged, may I take it that the Minister will press the Attorney-General to review his role?

I do not think that my hon. Friend has made a case for that. The collapse of a trial or the fact that it does not proceed to conviction does not mean that the Attorney-General's supervisory role is wrong per se. That happens in civilian life, too, but does not mean that the Attorney-General should not be involved in due process. I am not a lawyer, but I believe that it is right that the highest judicial authority in the land examines such matters if required because that places a protection in the system of proper legal assessment of all aspects that are presented. I know that that supervisory role is undertaken with the highest probity and independence. I hope that that is so ever more.

I join the Minister and the shadow Secretary of State for Defence in paying tribute to our armed forces in the dangerous places where they operate—Iraq, Afghanistan and many other parts of the world. I also agree with the Minister's comments about the dangers of ministerial oversight of judicial process.

Serious military justice issues arise from the case. I hope that we will consider them in the Armed Forces Bill in due course. It is surely a fundamental principle in our country that, as the Minister said, our armed forces must never be above the law. However, is not the quid pro quo that any prosecution should be brought only on evidence gathered from proper forensics, timely witness statements and, in a murder case, some basic evidence that would allow a post mortem? The Judge Advocate General was scathing in his opinion of the investigation that the Royal Military Police conducted. Surely the lack of resources available to the investigation team was the basic problem. For that, Ministers should be held fully accountable.

I thank the hon. Gentleman for his opening comments. He is right that some of the issues will need further examination and scrutiny in the Armed Forces Bill and I hope that all Members who participate in the proceedings will do so with a genuinely open mind to find the best legal framework in which our armed forces can continue to operate.

The hon. Gentleman appeared to have reached a conclusion—I wish that I had his capacity.—[Interruption.] He has not got hindsight but foresight in one sense. I said that a range of issues would be subject to thorough review. We cannot reach a conclusion about them until all outstanding matters are tackled. There are two other directed cases and two awaiting direction. That process has to be gone through, and it would be wrong to say at this early stage that we have come to a conclusion. If a subsequent trial finds something new or different, we shall have to examine that. This is going to be a thoughtful and detailed process. However, where we can identify specific issues about which there is no real debate, of course we shall seek to act.

The whole question of resources is one that we have to look at, at any point in time. We need to ask whether there is a sufficiency of numbers, for example, and whether the environment is appropriate for the troops to carry out their activities. We then have to walk a very fine line. I can envisage the hon. Gentleman saying that there should be an investigation, perhaps even a prosecution, but he must take into account the difficulties involved. No matter what resources we put into that theatre, there could still be an extreme risk when carrying out such an investigation. It so happens that, in this trial, a view was taken that those involved in hearing the trial should visit the scene. However, it was judged to be too dangerous for them to do so. It could also be too dangerous in many circumstances for the Royal Military Police to carry out further investigations. This would not be for a lack of trying, or for a lack of resources, but because circumstances might just dictate that it was impossible. I hope that the hon. Gentleman understands that.

If I may, I wish to put this proposition to my right hon. Friend as honestly and sincerely as possible. I accept that our soldiers have to operate under the rule of law—that is what makes them different from the people they are fighting against—and we must ensure that any trial or action abroad is totally independent. We must make that as clear as possible, so as to dismiss any allegations that political pressure has been brought to bear to ensure that this trial took place. We must be seen to be operating according to the letter of the law, to win friends in places such as Iraq. Will my right hon. Friend give the House an assurance that there was no political involvement in, and no political pressure brought to bear on, these cases?

I know that my hon. Friend is a very good friend of Her Majesty's armed forces, and I always listen with interest to what he says on these matters. I can give him an absolute guarantee, as I tried to do in my opening response, that there was no political interference in this matter—nor should there be. It would be wholly damaging if we were acting on one side of the debate. It could damage the independence of the judicial process or the morale of the troops if things were going the other way. We have been completely hands off. The Army prosecuting authority is wholly independent, as are the investigation processes. Some of the nuances involved, such as the role of the commanding officer, will of course be considered during the process of the Armed Forces Bill. I am sure that my hon. Friend will make valuable contributions during that process and help us to achieve a corpus of legislation that will help the armed forces for many decades to come.

One of the many problems with this is, as my right hon. and learned Friend the Member for Devizes (Mr. Ancram) has said, the possible knock-on effect on recruitment and retention. Will the Minister confirm that only a tiny, tiny minority of our armed forces are ever accused, let alone found guilty, of wrong doing, and that when young men and women decide to take up a career in the armed forces, they carry with them the pride and the reputation of this country and the thanks of this House?

The right hon. Gentleman makes a valuable and important point. The answer to his question is yes, only a very small number is involved. As I have said, two more cases have been directed and two await direction, so we shall have more of this debate. The men and women, many of whom are very young, who join the armed forces are joining a highly professional, highly capable organisation, which seeks to deliver the good face of this country. They are a force for good. As in any part of our society, when people step over the line and do wrong they must be brought to justice. That applies to the armed forces as much as to anyone else. However, given that more than 80,000 of our armed forces have served in Iraq, and only a very small number have been accused never mind found guilty of wrongdoing, that speaks volumes for their quality. Clearly, that should encourage more young people to consider the armed forces as a career.

Will the Minister put on the record that the seven serving and former members of the 3rd Battalion the Parachute Regiment left that court martial without a stain on their character? Can I advise him that the relief across the Colchester garrison and the wider community is matched only by the disbelief that the trial happened in the first place? Many figures have been mentioned, but can he indicate how much the whole saga cost?

On the cost issue, the hon. Gentleman will be aware that when dealing with QCs the cash register keeps running for some time afterwards, so the total cost is not available. It was very sizeable, however, given that each individual had a QC and all the support arrangements that applied. When any of our people are subjected to the rule of law in terms of court action, we are determined that they should be given full support. In addition, although I cannot give him a precise answer, we probably do not count in all the welfare support and man hours that contribute to providing that type of support to our people, who, we recognise, can be very fragile in such circumstances.

As to the disbelief in the Colchester garrison or perhaps across the Army and armed forces, I do not take that view. Certainly, because the trial collapsed, the question has been asked: why did it happen in the first place? The hon. Gentleman can assist his constituents and their families by reading the transcript of what the Judge Advocate General said, understanding that, and then answering his own first question.

My right hon. and learned Friend the Member for Devizes (Mr. Ancram) and I represent thousands of service families in Wiltshire. We know the enormous strain put on the families of our servicemen and women overseas. Will he consider the financing of the Army welfare services and the Army Families Federation, both of which do an enormous amount to assist the families of those involved, and both of which are constantly under financial pressure?

The answer to that must be yes—we must consider that all the time, given the intensity and tempo of attitudes and views about the pressure on our people. We cannot chase the last headline, however—the hon. Gentleman is more sensible than to do so, and I wish that others were as balanced—because if we do that, we do not necessarily fix the problem. We must consider shortfalls and shortcomings in the round and examine where our duty of care mechanisms for our people can be strengthened. We are always on that case and many things happen within the system, sometimes without even ministerial oversight and approval, simply because they are required to be done. The matter is always under review.

The hon. Member for Pendle (Mr. Prentice) raised earlier the trial of Trooper Williams, which collapsed in similar circumstances. That case was brought to trial only after the Army Board, of which the Minister is a member, referred it to the Attorney-General—one of the rare occasions on which that has happened. Can the Minister confirm that the case of these members of the Parachute Regiment was not referred from the Army Board to the Attorney-General, and that it was purely the decision of the commanding officer to bring these men to trial, and not of people further up the chain or, indeed, the Army Board of which he is a member?

The hon. Gentleman is right about one thing—that I am a member of the Army Board—but he is wrong about everything else.

On a point of order, Mr. Speaker.

Order. I can take a point of order only after questions have finished, but I can tell the hon. Gentleman before we go any further that the quality of replies is nothing to do with me.

As one of the very small band of Members in all parts of the House who served with Her Majesty's armed forces—admittedly in non-hostile, non-war circumstances—may I say that I consider the prosecution to have been totally unnecessary and totally unacceptable? Is the Minister aware that members of our armed forces, unlike politicians, put their lives on the line? If it is believed that they have done anything seriously wrong, should there not be unimpeachable evidence that they have done so before a prosecution is brought? I believe that we are treating our armed forces—not only in Iraq but in Northern Ireland, those who serve and those who have retired—in a grotesque and unacceptable way.

Let me calm it down a wee bit. The hon. Gentleman says that he has military experience, but I think I am right in saying that he has never had any ministerial experience. I conclude from his comments that had he been a Minister on this occasion, he would have interfered in the due process of law. That is not the standard that applies in this country, and I do not think Conservative Front Benchers are saying the same, although some of them have been through it.—[Interruption.] The Attorney-General will answer for himself. His is the highest opinion that can be sought.

The Army prosecuting authority is dealing with some heavyweight issues, which has excited the hon. Member for Macclesfield (Sir Nicholas Winterton). It is right that it should have done so, but he has been led to the wrong conclusions. I think it appropriate for that independent authority to take the case to the Attorney-General, who is a ministerial superintendent of the APA. Independence is involved in that process. If the hon. Gentleman is saying that it is not involved, he will have to prove his case. The system has stood the test of time. It is still valid today, and I think that it will stand the test of time in the future.

Anyone who had listened to the Minister, my right hon. and learned Friend the Member for Devizes (Mr. Ancram) and the other Members who have asked questions would probably say that the Minister and the Government have now achieved the worst of all possible positions. It may be only a minority, but a minority of public opinion suspects that the process is not open enough, not transparent enough and not independent. At the same time, members of the armed forces undoubtedly feel that they will be tried twice, once by a military system and once by a normal civil system. I know that the Minister is responsible only for the defence side, but may I say to him that the Government, including the Attorney-General, need to examine the whole system? As I have said, at present they are in the worst possible position, and I believe that that undermines the morale of our troops.

I am grateful to the hon. Gentleman for the lecture. I am sure that the personnel of our forces would benefit from a few lectures.

My hon. Friend was a tutor at staff college.

I am pleased that the hon. Gentleman understands the point. It shows that he is awake.

I think that we have an open and transparent system.—[Interruption.] I am going to give an answer to the hon. Member for Mid-Norfolk (Mr. Simpson). I am just trying to take some heat out of this.

As I said, I believe that the system is open and transparent. If we did not have an open and transparent system, we probably would not have heard some of the very good questions that we have all been asked today. That shows that people understand a large part of the process, which is conducted openly. We have an independent prosecuting system and an independent judiciary. Some issues involving the relationship between all those elements will have to be dealt with by the armed forces Bill, and I know that the hon. Gentleman will make a valuable contribution to the debate.

I am sure that the Minister will take a serious and genuine look at why the prosecution was brought, but does he understand that there is a wider danger, which was articulated in some of the Sunday papers and which has given many of us who served in Northern Ireland cause for great concern? Does he understand the wider effect of that and the need for joined-up government? Will he exclude here in the House the implied threat in those articles that there will be a tribunal to look into cases where suspect terrorists were shot by members of the armed forces in Northern Ireland? Does he understand that that will damage recruitment, as my hon. Friends have said, which must be taken into account?

If wrong-doing has occurred, I am sure that the hon. Gentleman is not saying that we should simply ignore it. [Interruption.] Members indicate dissent, but I am asking the hon. Gentleman whether, as an ex-soldier, he understands what he was taught and the rule of law that he had to apply. He knew that if he stepped over that line he could be subject to investigation. Clearly, as with any other criminal action, if that is indeed what it was, such an investigation could be subject to retrospective review. At any point, if new evidence arises it is right that it is examined.

I am not going to comment on speculation in the press. That will be debated when we deal with some of the ongoing difficult issues we have had to face day upon day, month upon month in moving forward the peace process in Northern Ireland. I pay tribute to the hon. Gentleman because he, as a serving soldier, helped to bring about that peace by applying the highest standards of integrity, probity and—[Interruption.]

Order. You must be careful, Mr. Howarth. The Opposition came to me and asked for an urgent question, and I requested that the Minister come to the House. I must give the Minister protection. No one should be shouting at him while he is speaking.

The Minister mentioned the supervisory overseeing role of the Attorney-General. Presumably, the Attorney-General had a look at all the evidence, or an outline of the evidence, which the Minister has admitted was completely flawed. The whole case has been a fiasco. Can the right hon. Gentleman imagine this happening in countries such as France or Spain? Should not the Attorney-General now explain himself?

I am sure he will, but not in this House—not at the present time. I quote from Judge Blackett's findings:

"I make no criticism of the prosecution or the Army Prosecuting Authority, even though I have directed verdicts of not guilty at this stage. Where on the face of the papers presented by the investigator a serious crime appears to have been committed it is perfectly proper to take the matter to trial, and in this case the prosecution team have presented their case properly and objectively."

The hon. Gentleman may have a different view from the Judge Advocate General, but I think that that is quite a weighty conclusion.

I should inform the House that I have selected the reasoned amendment in the name of the Leader of the Opposition.

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

This short two-clause Bill is brought before the House as the legislative consequence of the Government's decision to extend the remit of Sir Michael Lyons' independent inquiry into local government funding, and the decision that followed to postpone the 2007 council tax revaluation in England.

Eat it more slowly.

We will come to that a bit later.

Local government is at the heart of national life and has a unique role in our communities. It plays a crucial role in delivering services, leading and co-ordinating the activities of local public, private and voluntary organisations, and making villages, towns and cities more prosperous and pleasant to live in. I pay tribute to councillors of all parties and to hard-working public servants for the way in which they have raised standards, so that the Audit Commission's comprehensive performance assessment now classifies two thirds of upper tier authorities as either "excellent" or "good".

Important changes are under way in local government. Local authorities are leading new children's trusts across the country that are bringing together social services, education, health and other services. Local area agreements enable councils and central Government to recognise and to agree local priorities, to rationalise funding streams and to support greater local leadership.

Our manifesto set out an ambitious programme of further public sector reform, continuing the improvement in neighbourhood services to make them more responsive to the needs of people who use them. Since 1997, there has been a 33 per cent. real terms increase in grants to local government. Investment and reform have gone together and have delivered.

We often hear from the Government about the huge increase given from the centre to local government. If that is the case, why has council tax gone up by so much? That is what people want to know.

I can give a number of clues. First, council taxes are set locally by local government. Secondly, local government has an extremely ambitious agenda that it is delivering. Thirdly, the one thing that certainly would push up council tax is if local government funding were cut as the Conservative party proposed at the last election. That would certainly drive up council tax—by our calculations, by about 11 per cent.

rose—

rose—

I have an embarrassment of riches, but I think that I will choose the future rather than the past.

Obviously the Minister must make a finely balanced judgment between the fiscal position on the one hand and the risk of political flak on the other. He has made his choice and will do his best to justify it today. But in the circumstances, given the plug that has to be gapped, what assessment has he made of the effect of the change in the rules on the use of capital allowances from the sale of council houses on the size of interest repayments on local authority debt?

I am a genuine admirer of the hon. Gentleman's ability to command the attention of the House, but when he talks about gapping plugs rather than plugging gaps he really does have us on the edge of our seats. He will join me in saying that the Government's decision to ensure that the proceeds of the social homebuyers scheme are returned to local authorities to help them build should be supported by all hon. Members. It would only be polite if I allowed the right hon. Member for Wokingham (Mr. Redwood) to intervene.

The Minister is courteous in the end and I am grateful to him. What was his reaction to the weekend's press stories that if someone has taken the trouble to do up their home, put in extra facilities and paint the front door a decent colour, they will be socked in the teeth by the Government with a higher valuation?

I suggest that the right hon. Gentleman spend more time reading the Bill than the Sunday papers, because the Bill is designed to ensure that that does not happen. I am surprised to get such a lesson from the right hon. Gentleman, who, as the great believer in the market, should be arguing that a property-based taxation system should reflect the market value of properties. If he does not take that position, we can have an interesting debate on the role of markets in public life.

We believe that the changes that I have set out represent not only a big challenge but a massive opportunity for local government and we believe that opportunity is most likely to be grasped if local government is able to focus on service delivery supported by financial stability. This is the context for the changes we are debating today.

The Opposition gave the Under-Secretary, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick), the chance to set out our arguments and explain the Lyons inquiry in our recent debate on 19 October. The Government appointed Sir Michael Lyons in July 2004 to carry out an independent inquiry into local government funding. He has made good progress with that remit and, over the summer, discussed with Ministers his view that robust recommendations on possible reforms to local government funding could not be made in isolation from proper consideration and understanding of the changing role of local government.

It is in that context, and for that reason, that my right hon. Friends the Chancellor of the Exchequer and the Deputy Prime Minister extended the terms of reference of Sir Michael's inquiry to consider and review the changing role of local government and to review how the Government's agenda for devolution and decentralisation could improve services, and, in the light of this, to consider how to manage pressures on local services. That was in addition to his existing remit to make proposals on the funding of local government.

Will the Minister confirm that Sir Michael Lyons said that a delay of one year in revaluation was justified, but not longer?

I did not hear all of the right hon. Gentleman's question, but if he said that while Sir Michael Lyons was willing to countenance up to a year's delay in revaluation but did not propose the postponement that we are proposing today, he is absolutely right; I do not seek to hide our decision behind the recommendation of Sir Michael Lyons.

As I said when I announced our decision on 20 September, we need a clear and complete picture of what we want local government to do before we tackle how it will be funded. In short, we must settle function before funding. As I also said on 20 September, later this autumn Sir Michael will set out his preliminary thinking, drawing out the relationship of local government function to finance. He will publish a series of reports next year in the lead up to his final report at the end of 2006.

Can the right hon. Gentleman, who is a former Education Minister, tell me whether the recent White Paper adds to, or reduces, the responsibilities of local government?

As the hon. Gentleman and I have discussed before, the White Paper provides for a changed role for local government that builds on the existing strength of its relationship with schools. If, like me, he had been in Sheffield last week talking to the local authority, he would know that it does not see itself running schools. It is for head teachers and governing bodies to run schools, but the role of local authorities is to step in and to promote reform and development, which is what the best local authorities throughout the country are doing.

Will the right hon. Gentleman give way?

The temptation is too great.

I am very grateful to the right hon. Gentleman for generously giving way again. It really is the merest casuistry to answer my hon. Friend the Member for Isle of Wight (Mr. Turner) in those terms. I rather suspect, even though I have not spoken to my hon. Friend on this subject, that he was not looking for an essay-question response or for an evaluative answer from the right hon. Gentleman. What he really wants to know is whether the right hon. Gentleman thinks that, as a consequence of the White Paper, bills will go up overall and more money will therefore be required, or that they will go down, with the logical corollary that that involves.

Tempting as it is to be the tutee of the hon. Gentleman, council tax bills is precisely not what the hon. Member for Isle of Wight (Mr. Turner) was asking about. If the hon. Member for Buckingham (John Bercow) had read the White Paper, he would know that it makes it absolutely clear that it imposes no new burdens on local government. The hon. Member for Isle of Wight was actually probing our view of the role of local government in national life, and specifically in respect of education.

rose—

If I may, I shall proceed. We are here to discuss the postponement of revaluation and, tempting though it is to discuss education policy, perhaps we can stick to local government finance.

Does the Minister agree that this Bill effectively puts revaluation in limbo, and that there might be no revaluation in future if there is a rethink on the grant formula, depending on the Government's reaction to Sir Michael Lyons' comments?

By definition, if we are not taking a decision now to revalue but are keeping our options open, all options remain open in future. But we have made it clear that we think it right to keep property tax as the basis of local taxation, to invite Sir Michael Lyons to complete his review, and to assess the role of a revalued council tax in that context.

As the House knows, at the same time as we announced the extension of Sir Michael's remit, we announced that we intended to legislate to postpone council tax revaluation. As our announcement explained, the case for revaluation—that it is right to maintain a fair alignment between house prices and council tax bands—is linked to wider questions about the structure of council tax and to the operation of council tax benefit. It is also relevant that a number of other changes in the local government finance system are imminent, including the move to three-year budgets, the review of the local government finance formula, and the creation of a dedicated schools budget located in the Department for Education and Skills.

We have reached the view, therefore, that to proceed with the current timetable for revaluation would not be sensible. We have concluded that we need the flexibility to revalue as part of a fully developed package of funding reforms, rather than as a precursor to them, and at a moment of greater financial stability for local authorities.

The right hon. Gentleman is being extremely generous in giving way. All the things that he has just announced were known when the Government decided to move towards revaluation. They have spent £60 million on it, of which £45 million was spent on software alone. Is anyone in the Valuation Office Agency working on revaluation, and how long will the purchased software remain relevant, before becoming obsolete?

I am afraid that I cannot allow the hon. Gentleman's assertion to remain on the record unchallenged. To take one obvious example, the creation of the dedicated schools budget was not known in 2003; it was a subsequent decision, so his assertion simply is not right. I shall deal with the Valuation Office Agency in a moment, if he will allow me. The software is state of the art and will be an efficient and effective replacement for the 22 million files that existed until now. The digitisation of that data forms the basis of effective government.

We reached the view that to proceed with the current timetable would not be sensible and we concluded, as I was saying, that we needed the flexibility to revalue as part of a fully developed package of reforms.

Ministers announced that the Lyons report would be published at the end of 2006. In view of that, has the Minister decided when the Government will have considered that report and when the Government will announce their resultant policy?

I think that the hon. Gentleman may be referring to the statement of 20 September, which was repeated before the House on 10 October. If he read on, he would see that we expect the Government to come forward with their views during the completion of the comprehensive spending review in the summer of 2007. As I said, that was made clear on 20 September.

Although this is a short Bill, it may help the House if I explain its effects. First, it removes the requirement laid down by the Local Government Finance Act 1992 for the compilation of new lists on 1 April 2007. Clause 1(3) amends section 22B of the 1992 Act by removing the duty on the listing agency—in practice, that means the Valuation Office Agency—to compile a new valuation list to billing authorities in England on 1 April 2007 and a draft of that list to be completed by 1 September next year. We have already informed the House that the VOA has stopped work on the revaluation of domestic properties in England to prevent nugatory expenditure—and the provision formalises that position.

Secondly, subsection (4) removes the requirement for subsequent revaluations on the 10th anniversary of the previous one, unless an earlier date has been specified by order. Until the Government have received and considered Sir Michael Lyons' final report, we cannot take a view on how frequently revaluation should occur and we therefore think it right that we should not be statutorily committed to revaluing on a rigid, predetermined cycle.

I hear my right hon. Friend's argument for postponement—I do not agree with it—but I do not understand the argument for deleting the provision for a 10-yearly cycle for revaluation. That was the subject of Government consultation in 1999–2000 and was the subject of a White Paper, which set out a commitment to a 10-year revaluation. As far as I know, Sir Michael Lyons has not been asked to comment on whether that revaluation cycle should change. I simply do not understand the Minister's logic for cancelling a provision for regulation revaluations.

And he is your friend!

My right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) is, indeed, my very good friend and he speaks with a great deal of authority on these matters. He will know more than anyone else that at the time of the 2002 Bill there was a great deal of discussion about the requisite period. As it happens, and ironically in the current context, the Conservative spokesman in the other place wanted to reduce from 10 to five years, the—The hon. Member for Meriden (Mrs. Spelman) is shouting from a sedentary position. We are all disappointed that she is not speaking today and that she has left the task to others; she may be winding up the debate, but I do not know.[Interruption.]

As my right hon. Friend the Member for Greenwich and Woolwich knows, there was considerable discussion about the period and we think that it is right to keep the flexibility created by the clause.

Finally, the Bill replaces those two provisions for revaluation, for at least 10-yearly intervals, with a power for the Secretary of State to specify the date on which a new valuation list must be compiled. Such orders will be subject to the House's affirmative resolution procedure. That was also the case in respect of the Local Government Finance Act 1992, which created the council tax in the first place. For the sake of completeness, clause 2 simply provides for the short title of the Bill and for its extent.

I can bring the House up to date with progress at the Valuation Office Agency, which was responsible for carrying out the revaluation. Immediately following the announcement, the VOA took steps to reduce ongoing expenditure and to reshape the agency to fit the new situation. Some 420 staff employed as casuals or on fixed term contracts will have left the agency by the 18 November. A voluntary early departure scheme has been announced, with some 600 staff expected to depart between March and June 2006. Coupled with natural wastage, the total reduction is expected to amount to some 1,250 staff.

As we set out on 20 September, there will be significant short-term savings for the Government from not proceeding with revaluation. However, the Government have been explicit that £45 million of the £60 million spent so far is a prudent investment in modern and efficient working practices. The VOA will ensure that the country has an up-to-date, electronic property database, available as a source of accurate data.

When we have had regular revaluations of business rates, they have always been fixed for the period 1990 to 1995 and 2000 to 2005. One of the arguments for doing the revaluation of council tax in 2007 was to balance the work of the Valuation Office Agency. Does the cancellation of the revaluation mean that if we reinstate the revaluation for council tax in the future, we shall be blocked from going anywhere near 2010 because of the implications for staffing?

My hon. Friend speaks as a former valuer and therefore brings his expertise to the issue. Nothing has been blocked by the Bill. The Government have made it clear that we do not anticipate revaluation occurring during this Parliament, and that is a clear statement of affairs.

The Minister says that he wants to see a modern and up-to-date database of property values. Are we to understand that the dwelling house codes and the value of significance codes are still being collected in preparation for revaluation? Or will we just have a database with nothing on it? How much will the cancellation cost in staffing terms, and will he say a little more about redundancies, early leaving and ending of contracts?

In respect of the first question, the hon. Gentleman had an exchange with my right hon. Friend the Member for Greenwich and Woolwich on 19 October in which they agreed that it was important to continue with the procedure under which if people move and it is apparent that the property has had a significant change in value, it is reflected in the banding. For that and other reasons, it is sensible to have an up-to-date and efficiently working system.

In respect of the precise costs, I have made it clear to the hon. Gentleman that some 1,250 jobs will be lost as a result of the changes. The full financial effects of that are still being worked through, but as I said on 20 September significant savings are expected.

What was the Department's forecast for the number of grannies and granddads who would go to prison if he had not taken this action to take some of the sting out of the council tax? At what level does the number of people who think that it is an unfair tax become unsupportable?

The right hon. Gentleman will know, as a former Secretary of State, that the omniscience of the ODPM stretches in many directions, but not in the direction of predicting court cases.

I wish to take a moment now to explain how the Bill will not in any way affect the approach being taken in the devolved Administrations, contrary to the assertions of some Opposition Members. In our debate on 19 October, much was said about Wales, but executive local government functions in Wales are, rightly, devolved. We have consulted the National Assembly of Wales on the subject matter of the Bill and it has indicated that it is content that it has no effect on provisions relating to Wales.

The position in Northern Ireland is very different from that in England, not least because local government has continued to be funded through a domestic rating system instead of the council tax. The House will recall that Northern Ireland did not have the benefit of the poll tax. The Northern Ireland Executive commissioned a review of rating policy in 2000 and that has now led to the publishing of a draft Order in Council, which is currently subject to a consultation process.

When the Minister says that he has consulted the Welsh Assembly, does he mean that somebody has picked up the telephone and spoken to his close political colleague, Rhodri Morgan AM, or has the Minister encouraged the Assembly to discuss the matter properly? If he had done so, he would have discovered that a majority of the Assembly opposes the council tax re-banding and could vote it down.

I am interested in the hon. Gentleman's description of the situation in Wales. He will know that in 2001 the Welsh Assembly consulted on its proposal to implement a revaluation in 2005. All political parties and the Assembly's Local Government and Public Services Committee supported the proposal. The hon. Gentleman should bear that in mind before he makes such an intervention again.

rose—

I hope that the House will agree that I have been generous in taking interventions and I now wish to proceed. I look forward to hearing hon. Members' contributions later.

For the sake of completeness, I should also remind the House of the position in Scotland. The Scottish Executive commissioned its own independent review of local government finance in 2004. The review committee consulted on options earlier this year and will publish its report in the summer.

In debate with my right hon. Friend the Member for Greenwich and Woolwich, the hon. Member for Brentwood and Ongar (Mr. Pickles) said:

"We recognise the need periodically to revalue properties for the purpose of council tax . . . We support the revaluation being made on a regular and predictable basis."—[Official Report, 7 January 2003; Vol. 397, c. 64–5.]

No one should accuse the hon. Gentleman of changing his mind too quickly, because two years later, he said:

"Any council tax system inevitably requires some form of revaluation."—[Official Report, 2 February 2005; Vol. 430, c. 929.]

A sensible man.

The hon. Gentleman's boss, the hon. Member for Meriden (Mrs. Spelman), said that

"a property-based tax must take account of changes in the value of the property."—[Official Report, 2 March 2005; Vol. 431, c. 983.]

Her boss, the Leader of the Opposition—for another few days at least—said on 20 February 2005: "You have to revalue." So the Opposition support the principle of revaluation; nothing could be clearer. But in April they decided to argue for postponement. Fair enough.

The Leader of Opposition was clear: on 20 April, he told "Sky News" that his new policy was a postponement of revaluation, not a cancellation. For the avoidance of doubt, he added "for the first Parliament", when he was questioned about the delay. So I confidently expected the Opposition to support the Bill. After all, they want to be a mature Opposition. They have been told by their young pretender to remember that actions speak louder than words. They have vowed not to oppose measures simply for the sake of opposition.

What could be simpler than voting for a Bill to postpone revaluation? They might even have claimed that we had stolen their policy.But I had overestimated the people who go by the title of Her Majesty's official Opposition. They still take the title literally: they oppose everything. They are addicted to opposition and repulsed by common sense. No wonder that John Stuart Mill called them the stupid party—

rose—

The hon. Gentleman should listen to this, or he will end up going into the Lobby and doing something very silly indeed.

What could be more stupid than an amendment claiming to denounce revaluation, but with the effect that it will go steaming ahead—for that is the effect of the amendment standing in the name of the Leader of the Opposition? By opposing Second Reading, by declining to give the Bill a Second Reading, the Opposition want take the brakes off revaluation. The automated valuation model, which they spent the weekend saying was such a detestation, will be whirring like there is no tomorrow if they have their way.

The Opposition talk about supporting reform, but in the words of one of their Members, they are the roadblock to reform on this occasion. I hope that all Opposition Members realise that if they support their amendment, they will be voting for revaluation to go ahead, and we look forward to reminding them of that in the years ahead.

Sir Michael Lyons has made it clear that any proposals for reform of the funding system raise complex issues, and the Government have agreed that they need to be set firmly and explicitly within the context of a clear, shared understanding of the role of local government and of councils' accountability to service users. It is for that reason that we have extended the terms of reference for Sir Michael's inquiry into local government funding. In turn, we decided to postpone revaluation from 2007. We have recognised that to proceed with revaluation at this time would not be the right thing to do. The Bill, therefore, puts revaluation on hold, and I commend it to the House.

I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof:

"this House declines to give a Second Reading to the Council Tax (New Valuation Lists for England) Bill because the Bill merely delays rather than cancels the council tax revaluation, applies only to England and creates inequalities with other parts of the United Kingdom; and because the removal of the need for revaluation of domestic properties offers taxpayers no protection against the imposition of new higher council tax bands."

Were I the Minister, given the speculation in the Sunday newspapers about his position as regards the future leadership of his party and given the Chancellor's tolerance of such matters, I do not think that I would have used the words "young pretender" in this context.

However, on that brief note of solidarity with the right hon. Gentleman, I congratulate him, because only the last Blairite on the Government Benches could have delivered that speech with a straight face. It was nothing more than a panic attack—nothing more than the fear of wipeout at next May's elections. The Prime Minister's credibility is apparently at stake, and his credibility is so low that he fears the result that the electorate will produce in May.

Postponement is not cancellation. I hope that I am not doing the Minister an injustice, but, frankly, to describe the reason for the postponement as a success of local area arrangements strikes me as stretching credulity. There is little doubt that the right hon. Gentleman is regarded as the Prime Minister's plenipotentiary on earth. So let us just have a touch of reality. For the convenience of the House, I have managed to collect the reaction of the specialist press to the right hon. Gentleman's announcement.

I have here a very nice photograph of the right hon. Gentleman scratching his ear from the Local Government Chronicle, which says, "Miliband on the run. Funding reform delay as minister ducks his first tough decision." It continues:

"The announcement was met with dismay and incredulity by many in local government, who said urgently needed reform on council tax has been sacrificed for political expediency."

In a comment piece, which is a bit tough but nevertheless I feel that my hon. Friends may want to hear it, Kerry Lorimer, says:

"David Miliband was in prime ministerial mode, making up in expansive gestures what he lacked in expertise . . . Five months in the job, maybe it's time for the new boy to grow up."

That is a bit harsh, but I felt that I had to share it.

I wonder whether the phrase is not so much "young pretender" as "Artful Dodger". Did my hon. Friend notice how none of the good points that he and other hon. Members made were answered by the Minister today? He is obviously on the run in a very serious way.

Of course my right hon. Friend makes an excellent point, and the Minister is blushing as we speak.

Let us move on briefly to Tony Travers—a noted expert—who said:

"There must now be a risk the reform of local government finance becomes the object of near-permanent official inquiry. This issue would have been pushed into the longest of the long grass."

Under a further headline, "Miliband baulks a funding decision", we read:

"Mr. Miliband has baulked his first difficult fence as a cabinet minister."

We have an interesting piece from the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) in which he said:

"There is no case for postponing a review of the system, which is already 14 years old. It is getting increasingly out of date."

There is an editorial piece, "Kicked into touch again", which says:

"Yet ministers have bottled-out of grasping the council funding nettle, and passed the buck to the next PM, presumably Gordon Brown or, judging by their date for the next revaluation . . . a Conservative."

Will the hon. Gentleman give way?

I will give way to the hon. Gentleman as soon as I have finished giving this review of the papers, but it is coming to an artistic conclusion and we should not miss anything.

Another headline reads, "U-turn is bad news for hopes of reform". That is too hurtful to read out in public. Under the headline, "Revaluation is a ticking timebomb", the Local Government Chronicle says:

"exclusive survey reveals a quarter of councils, of every type and political colour, will be in the capping zone next year."

It continues:

"there is a limit to the pressure under which the system, already cracking, can be put—and it is now perilously close to collapse."

Finally, a headline says, "Local government in limbo as revaluation waits for Lyons." I have had a good look through all the press—

Will the hon. Gentleman give way?

No, no, I have not finished yet.

The only favourable comment that I could find is in the Municipal Journal from the directly elected mayor of Lewisham, and even that was reasonably lukewarm.

As the right hon. Gentleman has assured No. 10 that he can get revaluation away from all the problems, he cannot have been very pleased with the weekend's newspapers or this morning's or the decision by The Sun to call this new tax the patio tax.