With permission, Mr. Speaker, I should like to make a statement on the publication of today's report by the Pensions Commission. In making its recommendations, the Pensions Commission has acknowledged the progress that we have made since 1997. Its proposals are designed to build on that success, and I believe it important to consider them in that context.

As Lord Turner has recognised, the Government's first priority on entering office in 1997 was to tackle pensioner poverty, which was absolutely the right thing to do. We have succeeded in lifting nearly 2 million pensioners out of absolute poverty and are now spending £11 billion extra each year on pensioners, with almost half of that spending going to the poorest third. Thanks to measures such as the minimum income guarantee, pension credit, winter fuel payments and a 7 per cent. real-terms increase in the basic state pension, we have ensured that pensioners will never again suffer the indignity of living on as little as £69 a week, which was the scandalous legacy of pensioner poverty that we inherited when we came into office.

In our second phase of reform, we took action to tackle the loss of confidence in the private pensions market. That included the pensions mis-selling scandal we inherited. In 1997, less than 2 per cent. of pension mis-selling cases had been satisfactorily resolved. By the end of 2002, more than 99 per cent. of consumers with mis-selling claims had been compensated, with total compensation reaching £11 billion. Through the pension protection fund, the pensions regulator and the financial assistance scheme, the Pensions Act 2004 is helping to respond to the problems experienced by defined-benefit occupational pensions and to boost security for scheme members. The introduction of the Sandler suite and the stakeholder pension has been an important step in facilitating low-cost private savings. I believe that that amounts to a record of achievement of which this Government can be rightly proud.

Despite that progress, we recognise that there are still significant and serious issues that we need to address. I believe that there are three. First, there are the demographics. When our grandparents reached 65 they could expect to live another 11 years in retirement. The 20th century's tremendous advances in science, welfare and health mean that today we can expect to live another 19 years beyond 65 and our children can expect to live another 24 years. In 1950, we spent 18 per cent. of our adult life in retirement; now, we spend 30 per cent. in retirement. By 2050, there will be 50 per cent. more pensioners than there are today. Critically, by the same time there will be two people of working age for every pensioner, compared with 10 people 100 years ago.

Secondly, we know that people need to save more. Our 2002 Green Paper first highlighted the need to enable people to save more or to work longer to achieve the income that they want in retirement. It also established the Pensions Commission to review our long-term savings regime. The commission has calculated that nearly 10 million people are not saving enough for their retirement. Some have suggested that that challenge could be averted by the growth in housing assets, but that offers, at best, only a partial solution. People would need to release £100,000-worth of equity to generate £100 per week of pension provision, which is far from easy given that the average house price is now £180,000 and people still need to live somewhere in retirement.

Thirdly, we know that the existing system is complex—yes, possibly the most complex in the world. It produces unfair outcomes for women and carers, and there remains the question of how to ensure an adequate and sustainable state pension for future generations. As Lord Turner said today,

"the problems in our pensions system will grow increasingly worse unless a new pensions settlement for the 21st century is now debated, agreed and put in place."

Put simply, we cannot afford to ignore the problems that the Pensions Commission has identified. We must instead ensure that future generations can sensibly plan for their retirement. The choice is not between the status quo and reform; it is a question of how we act—not whether or when.

The Pensions Commission was very clear in its first report last year that there is not currently a pensions crisis, and it made that clear again this morning. But the pensions of tomorrow clearly depend on decisions that people make to save today. It has argued that a failure to respond to this challenge would lead to a crisis in 20 years' time. If we do nothing, future pensioners will be 30 per cent. worse off relative to workers than they are today.

The commission has put forward a comprehensive package of reforms to address those challenges. In relation to state provision, it recommends

"a reform of State pension provision to make it simpler to understand and less means tested than it would become if current indexation arrangements continued."

It makes it clear that there are a variety of options to secure its objectives. Its preferred way forward is a higher basic state pension indexed to average earnings growth, ideally starting in 2010 or 2011 as the public expenditure benefits of the rise in women's state pension age begin to flow through. The commission has also proposed a universal basic state pension based on residency rather than contributions.

The trade-off would be a higher state pension age. That would be phased in gradually in proportion to the increase in life expectancy. For example, it could rise to 66 by 2030, 67 by 2040, and 68 by 2050. Those changes would not affect anyone aged 50 and over. Furthermore, based on the commission's assumptions, today's 41-year-old could face only one additional year of working age, a 32-year-old two years, and a 23-year-old three years.

Those changes are designed to underpin a major extension of workplace savings. Here, the commission recommends a new, simple, low-cost savings scheme. All employees would automatically be enrolled into either a high-quality employer pension scheme or a newly created national pensions saving scheme, but with the right to opt out. Employers would be required to make a matching contribution. The commission also makes proposals to tackle inequality in the pensions system, especially for women and carers.

The Government welcome the broad framework of the Pensions Commission proposals and options and believe that they are the right basis for the debate to come. There is much to be discussed and decided about the detail of that framework. Our response will be based on the five key tests that I set out last week.

First, do the proposals promote personal responsibility? The role of the state is to provide a floor through which no one can fall but, as we have made clear, the primary responsibility for security in old age must ultimately rest with individuals and their families.

Secondly, are the proposals fair? Our future system must continue to protect the poorest. It must be fair to women and carers, employers and workers in the public and private sectors and those who have saved.

Thirdly, are the proposals affordable? Several points in them raise the prospect of additional Government spending. For example, there is the re-linking of the basic state pension to earnings, scrapped by the previous Conservative Government. There is also the proposal to make the basic state pension universal from the age of 75, which would benefit many women pensioners. We therefore have to test all the costings. We cannot make decisions without first determining the affordability of the proposals and there is no point in us or anyone else making commitments on anything other than a sensible and sustainable financial basis.

As the Chancellor has made clear, there will be no relaxation in our fiscal discipline and we will not put the long-term stability of the public finances at risk. That test will be central. A near 50 per cent. increase in the number of pensioners between now and 2050 presents obvious challenges and choices for the country about the proportion of its wealth that should be used to support retirement.

Fourthly, do the proposals simplify the system? Any credible package of reform must represent a clear deal between citizens and the state so that people know what the Government will do for them and what is expected of them in return.

Fifthly, are the proposals sustainable? People must have the confidence to plan for their retirement. An enduring national consensus must be our goal.

The Pensions Commission's first report last October was a comprehensive analysis of the UK pensions system. I believe that today's report is an important milestone on the way to a lasting pensions settlement. I should like to put on record on behalf of the Government—and, I hope, the House—our thanks to Lord Turner and his fellow commissioners Jeannie Drake and Professor John Hills for their work during the past three years. They have made a tremendous contribution to one of the most important public policy challenges that face the country today.

The publication of the Pensions Commission's second report today marks the beginning of the new national debate, not the end. As far as the specific recommendations are concerned, we are ruling nothing in and nothing out. We will welcome ideas and proposals from the political parties, employers, trade unions and everyone with an interest in the future of our pensions system.

In the next few months, we will examine in detail the commission's policy recommendations. The Pensions Commission has called for a national debate about the right way forward to start as soon as possible. I agree. We will therefore undertake a major consultation exercise, talking to people of all ages, in all parts of the country. I have asked the Pensions Commission to continue its involvement in the debate in the next few months as we move from diagnosis and analysis to proposition and decision. I want the debate to involve every section of our community as we work towards the publication of a White Paper in the spring.

Previous Labour Governments have risen to the challenge of securing long-term reform of our pensions system to meet the challenges of their time. From Clement Attlee to Barbara Castle, crucial decisions have been taken by politicians who could see the benefits of long-term reform. I believe that it is our turn now to see the scale and depth of the challenge in the way that previous generations of politicians viewed such challenges. This should be our benchmark in laying the foundations for reform in the 21st century.

The need to get it right is clear; the responsibility to do so is even clearer—for this generation and the next.

We thank the Secretary of State for his remarks. Given last week's noises off, he is to be congratulated on even having been invited to make the statement on the Government's behalf. He will also rightly be thanked for, unlike the Chancellor, not having sought to undermine the Turner report even before the public had been made aware of its contents. Does the Secretary of State agree that it was quite unprecedented for the Chancellor—perhaps even without consulting the Secretary of State—to seek to sabotage the report in that way? It must be the first book in the history of publishing to have been rubbished by one of its publishers before it even appeared on the bookshelves.

The Conservatives very much welcome Adair Turner's report. It is a powerful, professional and persuasive document, and, like the Government, we wish to devote considerable time to analysing its recommendations. As the Secretary of State will be aware, the commission was appointed because of a savings crisis in this country. He might like to remind the Minister for Pensions Reform, who claimed again on Monday that there was no crisis, that that will not sound convincing to the 70,000 to 80,000 future pensioners who have already been told that all or most of their pensions simply will not be paid in the years to come. Indeed, to allege that there is no crisis flies in the face of what Lord Turner says in the Pensions Commission report published today. He says that

"private pension provision is not growing: rather it is in serious and probably irreversible decline."

If that is not evidence of a crisis, it is difficult to understand what is. It is all very well, after eight years, for the Secretary of State to say, "Now is the time for pension reform". One has to ask where the Government have been over the past eight years.

The Conservatives will judge not only the Turner report but the Government's response against three important criteria. First, will they offer to future generations of pensioners the security and standard of living that they are entitled to look forward to? Secondly, will the report and the Government's response deal with the fundamental problem of women's pensions in a way that will resolve that difficulty in an acceptable fashion? Thirdly, will the Government's response to the Turner report treat fairly both public and private sector employees? Only on the basis of common treatment based on fair principles are the difficult proposals in the report ever likely to be acceptable to the British public.

Against that background, I have four questions for the Secretary of State. The first relates to the recommendation that the retirement age should in future be around 67 years of age. Does the right hon. Gentleman accept that the Government have made it enormously difficult to persuade the public that they should continue working until the age of 67, when that same Government have simultaneously agreed with the trade unions that, for the next 40 years, their own employees should be able to continue to retire at 60? Does the Secretary of State agree with the Chancellor, who said only a couple of days ago that more work needs to be done on this matter? Does he accept that it is simply not feasible to imagine that, for the next 40 years, a retirement age of 60 will be available to the Government's own employees while the rest of the nation is expected to accept quite different criteria?

My second question is on the proposal that future accruals of the state pension should be based on a universal residence principle—a fundamental change in the way in which pensions have been dealt with over the past 60 years, and over time would effectively bring an end to the contributory principle. Whether or not the Secretary of State believes that that is desirable in principle, he should indicate whether the existing information available to Government would enable a residence qualification to be monitored effectively. As the Turner report says, unless that is feasible, the recommendation could not be taken forward in practice.

My third question relates to the proposed national pension savings scheme. We welcome the fact that Lord Turner and his colleagues have drawn back from the original suggestion that it should be made obligatory for employees to pay towards such a scheme. The report contains an extraordinary anomaly, however, because while auto-enrolment will mean that every employee will have the right to decide whether to opt in or out of such payments, employers will be given no such freedom. Does the Secretary of State agree that it is a substantial anomaly, at the very least, that those who will benefit as a result of such a pension scheme can choose whether to participate in it, but those who will not benefit are given no such choice?

My fourth question relates to the other radical proposal in the report. As the Secretary of State will be aware, existing schemes such as stakeholder schemes have a cut-off point so that those with five employees or fewer do not have to participate. Lord Turner recommends that all employees should be part of the national pension savings scheme, and that there should be no amelioration for very small businesses. Does the Secretary of State agree that that will be a matter of great concern to the Federation of Small Businesses? There are serious questions, at least during a transitional period, about whether many small businesses could cope with such a requirement. Will he also take into account the fact that the views of charities and voluntary organisation will have to be canvassed in order to ensure that they are not unfairly treated?

We believe that it is enormously important—in this respect, I share the Secretary of State's view—to try to achieve a national consensus, if that is possible, on the issue of pensions. People's security and future sense of stability will be assisted if such a national consensus can be achieved. The Secretary of State should recognise that the origins of the Turner commission lie in the savings crisis. Does he agree with the Institute of Chartered Accountants, which has said that the single most important contribution—[Interruption.]

Order. The behaviour of the hon. Member for Bolsover (Mr. Skinner) is intolerable. He should allow right hon. and hon. Members to put their case without interruption.

rose—

Order. I can hear what the hon. Gentleman says, as he speaks so loudly. He does not need to repeat it.

As the hon. Member for Bolsover (Mr. Skinner) is a very worthy pensioner, he should listen carefully to the exchanges taking place.

Does the Secretary of State agree with the Institute of Chartered Accountants that the single most important cause of the crisis in savings was the decision that the Chancellor of the Exchequer took eight years ago to remove the tax relief on the dividends of pension funds? Is not it indefensible that the Chancellor, who is the prime cause of the savings crisis, should now try to sabotage those who are trying to resolve the problem, which is largely of his making?

There was some evidence in the right hon. and learned Gentleman's remarks that he is prepared to study seriously Lord Turner's proposals, and I welcome that. I also welcome his suggestion that he supports the search for a national consensus. I conclude from his remarks, however, that there is quite a lot more work to be done if we are to secure it. I will not get into the tittle-tattle that he raised at the beginning of his remarks, because this is a serious debate, and I will not demean it by peddling rumours and all the nonsense to which he alluded. We do not do ourselves credit if we do that.

The right hon. and learned Gentleman asked what we have been doing for the past eight years. We have been putting right the Tory mistakes, and tackling the problem of pensioner poverty, which, as Lord Turner acknowledges, has been a significant advance in our pensions system. Why will not the right hon. and learned Gentleman acknowledge that? I agree about the importance of tackling the inequalities in relation to women in the pension system, and Lord Turner proposes a number of ways of doing that. We will study all those proposals carefully.

The right hon. and learned Gentleman said that there was a pensions crisis. I can only point out to him what Lord Turner says on page 345 of his report:

"there is no immediate crisis."

I made that point in my remarks. We must tackle these matters seriously, and there will be a problem if we do not take action today. Surely, at the very least, that should be common ground in the House.

The right hon. and learned Gentleman raised four specific points. He alluded to his concerns about public sector pensions. We stand by the deal that we have secured. He and his hon. Friends have been confusing several totally separate issues. Nearly half of all occupational pension schemes in the private sector provide a retirement age of 60 for current scheme members. Many employers in the private sector have been closing defined benefit schemes to new entrants, which is the policy decision that this Government have taken. I am surprised, as I said to him last week, that he wanted to raise the issue, as his party had a chance to make its position clear at the last election on whether it would extend new retirement ages to existing civil servants. The Conservative party made that clear:

"People are right to raise concerns over the Government's planned reforms to civil service pensions . . . We appreciate, for example, that there is genuine concern over extending the public sector retirement age, especially in high-risk and physical public service occupations, and we will listen to any practical concerns people have."

As I understand it, he is saying today that we should have imposed a higher retirement age on civil servants, which is flatly contradicted by his party's stance during the general election. We can therefore discount completely his remarks in that regard.

On the right hon. and learned Gentleman's second question about universal residence-based criteria for entitlement to the basic state pension, it is true that that is what the Turner commission proposes. That, too, needs to be considered seriously. As I understand it, it proposes to keep a contributory basis for the state second pension, which would continue to be national insurance based. Obviously, we must consider all those proposals carefully. I have made it clear to the House that we are not making any announcements about any of those details today. I will have to say something similar in relation to his previous points about the national pension savings scheme, and his point about stakeholder pensions and the difference between NPSS and stakeholder pensions.

It is true that Lord Turner proposes that once an employee has exercised the right to stay in a new low-cost pension scheme, the employer would be mandated to pay a 3 per cent. contribution towards that savings plan. Again, we will have to consider that proposal seriously, and we need to be mindful of the variety of different views that, I am sure, will be expressed.

In relation to stakeholder pensions, as the right hon. and learned Gentleman knows, there is a cut-off for small employers. The Pensions Commission proposes that there should be no similar exemption for small employers in relation to the new low-cost savings scheme that it proposes. That, too, will need to be considered very seriously, as we reflect on what Lord Turner has to say and what emerges from the national pensions debate.

I congratulate Lord Turner on his report. We agree with its basic analysis and long-term vision of the pension system. We, like the Conservative party, are willing to work with the Secretary of State to find a consensus on reforming the pension system, if he is able to find a consensus within the Government with which it is possible to work. May I test the extent of that consensus by asking him whether he agrees with the Turner report's conclusion that the existing pension system is not fit for purpose looking forward? Similarly, would the Chancellor agree with those words from Lord Turner's report?

Do the Secretary of State and the Chancellor of the Exchequer share Lord Turner's analysis that significant future growth of means-testing would undermine voluntary private pension provision by the very groups of people most in danger of under-provision?

Does the Secretary of State agree that the Chancellor and his lieutenants were wrong to brief that the Turner proposals were unaffordable? Will he acknowledge that Lord Turner addressed that directly in his report?

Does the Secretary of State accept that we face a choice between two alternatives? We can choose either the complex means-testing system introduced by the Chancellor in 1997 and designed initially to deal with the issue of poorer pensioners, or the simple system described by Lord Turner, which would give people responsibility for individual savings on top of a better state pension. Are not both the Chancellor and Lord Turner talking about affordable systems, and is not the real issue which is likely to be more sustainable in the years ahead?

Does the Secretary of State agree with Lord Turner and me that it would be unsustainable for 70 per cent. of pensioners, or more, to retire in 2050 and have to claim means-tested benefits? Would it not be ludicrous to suggest, as the Chancellor seemed to in his leaked letter, that a Labour Government would consider breaking the link between earnings and means-tested benefits for some of the poorest pensioners in Britain? Is that not utter nonsense?

Does the Secretary of State agree, again, with Lord Turner and me that it is also ludicrous to expect, as the Chancellor seems to, that the share of national income devoted to pensions will remain static over the next 40 years despite a 50 per cent. increase in the pensioner population? Does he agree that the Chancellor should not be allowed to wreck a consensus on pensions reform that includes not just those in different parts of the House, but every major body that made representations to the commission?

Does the Secretary of State agree that if there is a higher state pension, the trade-off will have to be a significantly better state system that is fairer to women and takes people out of means-testing? Does he agree that so far the Government, including his right hon. Friend the Secretary of State for Trade and Industry, have made a pig's ear of the reform of public sector pensions, which will make the Turner proposals much more difficult to introduce? Does he agree that sooner or later the Government will need to go back and think about the affordability and sustainability of public sector pensions if they are to reach a conclusion that is sustainable and fair to everyone in Britain?

A consensus is emerging in Britain about the way in which pensions policy should develop. Sadly, it seems to be a consensus with which only one man is out of step: the Chancellor of the Exchequer. Does the Secretary of State agree that it would be a tragedy for people in this country—for every pensioner in this country—if we missed the opportunity to secure a national consensus because of the veto of one powerful man in the Cabinet?

We established the Turner commission with the precise objective of reaching a national consensus on the long-term future of our pensions system. I find it bizarre and regrettable that the hon. Gentleman should seek to turn Turner, as it were, into a negative. We have made clear today that we will study every aspect of the commission's proposals carefully and in detail with Members and with people outside, which I think is the responsible thing to do.

As far as I am aware, the only people who have pre-empted any of Lord Turner's recommendations are the hon. Gentleman and his party, and I am afraid that, in true Liberal Democratic fashion, they got it hopelessly wrong. The hon. Gentleman's principal proposals on citizens' pensions were expressly rejected by the Pensions Commission, as we read on page 9 of the report. [Interruption.] The hon. Gentleman will not have another chance to speak on this occasion, but his hon. Friends may, and we will of course continue the debate. I fear that it may run and run.

The hon. Gentleman asked a number of questions about public expenditure, and about the affordability and sustainability of the package. All those decisions will form part of the debate that we shall have, and the options that we decide are sensible will have a profound bearing on the impact on public spending. I will not trade figures or get into an argument about them today, because I think that that would be premature.

I consider that any unpredictable expansion in means-testing would be a bad idea. We must look at the issue in the round, and we must look at Lord Turner's proposals. We must not, however, lose sight of one important and fundamental fact. Targeting additional support on the poorest pensioners was the right thing to do, and we did it in the face of opposition from the hon. Gentleman and his hon. Friends. Lord Turner has made it absolutely clear that it was the right thing to do, and it has made a significant difference to millions of pensioners. Now we need to move on to the long-term settlement.

Will the Secretary of State convey my thanks to the Pensions Commission for its work? Will he also use the first opportunity he has to assure the Chancellor that all Labour Members, and the vast majority of people in the country, thought the Chancellor was right to concentrate help on the poorest pensioners, in record terms, after we were elected in 1997? That, however, is not a long-term strategy when we expect to see 70 per cent. of pensioners being means-tested and a bill rising to 13p in the standard rate of tax.

I welcome my right hon. Friend's statement that today marks the next stage in our debate. Does he accept that that debate is likely to revolve around the question of whether we should opt for a higher state pension and increased taxation to pay for a decent minimum, or an increase in the retirement age with increased savings? Labour Members need to make a decision and enact it in the current Parliament. If we think that we can kick pensions reform into the long grass until after the next election, we may find that the electorate believe that many of us should join it.

I am grateful to my right hon. Friend for his opening remarks and, indeed, for all that he said. Obviously we shall need to examine the commission's proposals in detail, along with the means by which they can be implemented.

My right hon. Friend mentioned means-testing. We shall have to examine the specific issues raised by Lord Turner and his fellow commissioners, because it would be impossible for us to deal with the country's long-term pension needs without doing so.

I accept my right hon. Friend's point, and I look forward to his contribution to the debate, which I am sure will be significant.

Can the Secretary of State guarantee that he will not rewrite, in any way, the deal allowing public sector workers to retire at the age of 60 for the next 40 years?

We have made it clear that we will not revisit that deal.

I commend Lord Turner for the national pension scheme in particular, and ask the Secretary of State to give it serious consideration.

Witnesses from the financial services industry who gave evidence to the Treasury Committee for its report "Restoring confidence in long-term savings" asked for compulsion, but the stampede from defined benefits to defined contributions and the accompanying smaller contributions from employers mean that more of the risk is borne by individuals. On grounds of equity and risk, will the Secretary of State seek a sensible compromise from all parties to ensure the desired outcome in relation to the contributions of employers, employees and other individuals?

We need to think about all those issues. Lord Turner and his fellow commissioners submitted a specific proposal relating to the national pension savings scheme, but when Members study the report in detail over the next few days, they will see that it proposes a number of other ways of securing the same objective.

I hope that Members and people outside will focus on the important question of how society can do more to encourage people to take responsibility for securing their retirement income in old age. It is at the top of the list of our priorities, and I think that our debate on that part of the report will define the overall framework on which we ultimately decide.

Does the Secretary of State accept that the commission's proposals assume that the generation consisting of today's schoolchildren will pay higher taxes than we are prepared to pay, and will contribute a significantly higher proportion of their gross domestic product to state pensions than we are prepared to contribute? There is legitimate room for debate about whether that is affordable without damage to the future competitiveness of the British economy. Given that after eight years in office the Government obviously have no pensions policy of their own, does the Secretary of State accept that the alternative is to do more to encourage personal and private provision of pensions and more personal and private accumulation of savings? That will involve a complete reversal of the Chancellor's policies of the last eight years, in which he has raised taxation on pension funds, reduced incentives to enter tax-free savings schemes, and extended means-testing so far that he has positively discouraged everyone of modest means from going into savings at all.

I have a great deal of respect for the right hon. and learned Gentleman, but I think that he is completely wrong when he said that the Government had no pensions policy. That is palpably not the case. As to his points on taxation and public spending, he is charmingly inviting me to announce the Government's proposals on the Turner report right now, but I am clearly not in a position to do so. I have made it clear that we have a principal responsibility, as a sensible Government, to ensure that we manage public expenditure within the rules laid out by my right hon. Friend the Chancellor of the Exchequer, and we certainly intend to do that.

Does my right hon. Friend agree with the Turner commission that voluntary contributions for both employees and employers are not the way forward? If there were an element of opting out, it would prove enormously successful. Crawley residents joined me on a citizens panel on this issue and they totally agreed that there should be a system to allow people to opt out, and I have the results with me, though it is not a weighty tome. Will the Secretary of State seriously reflect on that in the ensuing deliberations on this matter and will he thank the Turner commission very much for echoing what Crawley residents were saying?

I am certainly not going to contradict anyone from Crawley, as that would not be sensible. My hon. Friend will see that the Pensions Commission proposes auto-enrolment, which will provide the option for employees to decide not to invest in any of the low-cost saving schemes or existing employer pension schemes. The Pensions Commission estimates that about 30 per cent. of staff may well want to exercise their right to opt out, but we will be studying such matters of detail very carefully over the next few months.

I declare an interest in the pensions industry and I wish the Secretary of State well in finding a solution to its problems, which have largely been created by the present Government over the past eight years. May I tell the right hon. Gentleman that he will not succeed in his search if he shackles himself to the deal with the public sector unions, which will allow public sector employees to retire at the age of 60? A great deal of sacrifice is expected from everyone, as there is no such thing as a cheap pension. If he allows the combination of a complacent Secretary of State for Trade and Industry and the bullying and blackmailing attitude of a union before an election in threatening a strike to dominate the starting point of his search, he will not succeed.

The hon. Gentleman started well enough, but I am afraid that it got worse quite quickly. He raised his concerns about public sector pension provision and people are aware of the detailed proposals about that. However, the hon. Gentleman and Conservative Members more widely are confusing two wholly different things. They are confusing the state pension age with the occupational retirement age under these schemes. I tried to make it clear in response to the right hon. and learned Member for Kensington and Chelsea (Sir Malcolm Rifkind) that nearly half of all private sector occupational schemes have a retirement age of 60, and we should not lose sight of that. It is quite wrong to stigmatise the agreement that we made with the public sector in the way that the hon. Gentleman has. I hope that what he said is not a foretelling of his position on the search for a national consensus, as it seems to me that he has already made up his mind.

I congratulate Lord Turner—or, as we call him in Wolverhampton, the other Lord Turner—on his report. My right hon. Friend may be a little optimistic in envisaging a White Paper next spring, as the public debate may need to go on rather longer than that. On the matter of affordability, I urge him and the Government to look again into the matter of tax relief on pension contributions. His own Department's evidence is that it has no bearing whatever on encouraging savings for pensions and it is the most regressive income tax measure in this country, with 50 per cent. going to the top 10 per cent. of income earners and 25 per cent. to the top 2.5 per cent. of earners. It is £14 billion of forgone taxation, which would be better spent on poorer pensioners.

I certainly think that we should continue to work on the assumption that we will produce our proposals in the spring. The Prime Minister and I have made that very clear. It may well be difficult, but we should do all we can to ensure that it happens then. The Turner report deals in some detail—I think, in chapter 9—with some of the issues that my hon. Friend mentioned, and we will all need to study those proposals carefully. Ultimately, any issues to do with taxation are a matter for the Chancellor.

Lord Turner specifically said that he did not recommend a major reform to the overall system of tax relief. Will the Secretary of State confirm that in the forthcoming debate that issue will be ruled in, rather than ruled out?

I think that Lord Turner is quite right to refer to the issue in those terms, because, as we suspect, any changes would have a significant administrative burden, particularly in respect of defined benefit schemes. We would need to think very carefully indeed before deciding that we wanted to proceed with that.

May I tell my right hon. Friend that the debate will be welcomed by many groups in my constituency—particularly, dare I say it, among health service workers in Scotland—because it may help to resolve the anomalous position of part-time women workers, people living in single-sex relationships and others that do not benefit from pension provision on the death of their partner? Does he acknowledge that the former director-general of the CBI and the president of the TUC were on the commission, thereby making it a unanimous report?

Yes, certainly, I can confirm that the recommendations in the report were all unanimous. I also agree with my hon. Friend that it has long been recognised that there is a problem in the present pension arrangements as they apply to women. It is now clear that we will have broadly reached convergence between men and women in respect of entitlement to the basic state pension by 2025, but I do not believe that it is acceptable for us to wait until then before taking any further measures.

Does the Secretary of State agree that Lord Turner's main and correct conclusion is that Governments must either encourage or require people to save more or work longer? Was that not as obvious eight years ago as it is today, so why have the Government done nothing for eight years—nearly a fifth of people's working lives—to encourage more savings and have instead drawn off £5 billion a year from their savings? Will not this Government's record be as damaging to the savings of the nation as Robert Maxwell's was to his employees?

No, I do not accept any of that. As to the hoary old myths that are traded by Opposition Members about decisions taken back in 1997, let me make it absolutely clear that they were the right decisions and they formed part of an overall package of tax reform measures that were welcomed by the CBI at the time. They were partly designed to deliver, and succeeded in delivering, a significant improvement in respect of investment in British companies, so we should not be under any illusions about that. I have great respect for the right hon. Gentleman, who was a former Secretary of State, but he is mistaken and quite wrong to suggest that the Government have taken no measures since 1997 to encourage savings. As with similar comments made by the right hon. and learned Member for Rushcliffe (Mr. Clarke), that is palpably not the case.

My right hon. Friend said earlier that our complex pensions system produces unfair outcomes for women and carers, and many of us would agree. Will he assure the House that the Government's approach to pension reform will start to address those unfair outcomes and increase people's ability to accrue full state pensions through their caring?

Yes, I can give my hon. Friend that assurance. We take the view that we should look carefully into those issues in relation to Lord Turner's report, and we hope to introduce measures at the appropriate time that will deal with my hon. Friend's concerns.

I welcome the publication of Lord Turner's report, which must be the catalyst for real changes that will help today's as well as tomorrow's pensioners. Does the Secretary of State agree that forcing more and more older people on to means-testing and into the means-testing system is, for all the reasons that have already been set out by hon. Members, neither sustainable in the long term nor desirable? Does he also agree that one of the basic elements of the way forward must be the provision of a basic state pension, set at a level that raises people out poverty, which is not based on contributions and which is linked to rises in earnings? Is that not the best way to deal with pensioner poverty, especially among women?

I am grateful to the hon. Gentleman for his positive words of welcome for the Pensions Commission report. As to his further specific comments, he is inviting me to say whether we agree with every dot and comma of the report, but we simply cannot do that today; indeed, it would be wrong to do so. Clearly, we will have to address the issues that the hon. Gentleman has alluded to, particularly the future of means-testing; such factors will be an intrinsic part of the solution and the long-term settlement. We should not forget the very significant difference that the pension credit and the savings credit in particular have made to many millions of poor pensioner households. In the rush to condemn, there is a real risk that we forget to acknowledge those genuine achievements.

Does my right hon. Friend fully accept that, as other Members have said, means-tested topping up of the basic state pension is not a long-term viable option? I realise that he cannot give full answers today, but will he give a commitment to examining very closely the only real way out of this situation, which is to raise the basic pension to the pension credit level and to link it to national average earnings? Lord Turner makes it clear in his report that that is affordable. How, moreover, will my right hon. Friend deal with the very real problem of the many women who are entitled to derive benefits not on their own account, but simply because they are married and opted for reduced contributions before 1977?

With due respect to my right hon. Friend, I tried to make it clear in my statement that in our view, the broad analysis and framework in the Pensions Commission report is right, but we will have to look very carefully at its implications for public spending and affordability over the medium to long term. It would be remiss of me not to point that out, and such considerations will be a central part of our response to Lord Turner's report. That report also makes it clear that Lord Turner acknowledges the contribution made by targeted support for the poorest pensioners. I realise that I am sounding like a broken record on this issue, but it is very important that my right hon. and hon. Friends do not forget the contribution made by such measures and investment.

Will the Secretary of State confirm that he will consult on whether the new state second pension will be a fully funded, properly invested scheme, and will such consultation address the question of whether the Government or the private sector will do the investing? Will the terms of such a scheme be drawn up under private sector trustee laws, or will the Government direct such investment?

I am not sure that I can answer the hon. Lady's latter questions; I might need to take some specific advice first. We intend to conduct the national pension debate that I referred to in my statement on the basis of Lord Turner's recommendations, and of other recommendations made on the future of the state second pension and any other part of the pension system. Lord Turner is making a number of important recommendations on the future of the state second pension—for example, he proposes a broad convergence between the basic state pension and the state second pension, so that both are flat-rated by approximately 2030—and we need to consider them very carefully. He also proposes that funding continue to be provided by way of national insurance contributions. There are some big policy issues for us to consider, but I can assure the hon. Lady that all serious suggestions on the future of the state second pension, and any other part of our state pension system, will be looked at seriously during the national pension debate.

I thank my right hon. Friend for confirming that he accepts the inequities of the current system for women and I ask him to digest very carefully the recommendation that future accruals of basic state pension be done on an individual basis. It is essential that we abolish the outmoded, totally unacceptable and inequitable basis on which women get a pension: dependency on their spouse—if, indeed, there is a spouse. I also ask my right hon. Friend to note, when considering the recommendation that pensions ultimately become universal, the potentially great benefits for women. Does he further acknowledge that if universality offers the way ahead for the young, there is none the less a present and urgent need to reconfigure national insurance credits, so that women who are part-way through their careers do not suffer from these now well acknowledged inequities when they retire?

I am grateful to my hon. and learned Friend for that, and I pay tribute to the work that she and many other Labour Members have done in drawing attention to such problems. I can confirm that we will examine all those proposals in detail in the next few months. I accept the urgency of the situation and the need for reform in this very important area.

Does the Secretary of State accept that if the Government decide to go ahead with the Turner report's recommendation for a national pension savings scheme, it will be essential to have sufficient safeguards in place to prevent future occupants of No. 11 Downing street from mounting a smash-and-grab raid on what we hope will be a mounting pot of individual savings over many years? To pick up on the point made by my hon. Friend the Member for Beckenham (Mrs. Lait), it will be essential to avoid any kind of political interference in the management of that money.

Does the Secretary of State also acknowledge that if he accepts the Turner commission's recommendation to increase the retirement age, he will have to adjust the current age discrimination laws, which allow people above the age of 65 to be dismissed on age-related grounds? If we are going to ask people to work until 67 or 68, we will clearly need to adjust those laws.

The hon. Gentleman's last point is right, and we will need to revisit that issue if we accept any part of Lord Turner's proposal. At the risk of jeopardising the spirit of consensus and good will, all that I can say of his point about my right hon. Friend the Chancellor is: for heaven's sake, grow up.

Will the Government's proposals take account of inequality in our society? Is the Secretary of State aware, for example, that average life expectancy in my constituency is 68, and that enthusiasm there for an increase in the retirement age is therefore less than total? How does he intend to take account of these social factors?

I agree that we have to look very seriously at this issue. To be fair to Lord Turner, his report does provide a number of options that might help to ameliorate the problem that my hon. Friend refers to, and we need to study them very carefully. They include triggering entitlement to the pension credit at 67, 66 or even earlier. It is important, however, to correct a notorious headline in The Daily Telegraph of a few weeks ago, which said that if we pursued the policy that Lord Turner was likely to recommend—a stepped and gradual increase in the state pension age—20 per cent. of men would never get to the age of 67. That is completely untrue. It is likely that, with a pension age of between 65 and 67, a further 3 per cent. of men would not make it to 67. That is obviously a matter of regret, but the situation is not quite as bad as when Lloyd George introduced the basic state pension in 1908. Then, the pension age was 70 and average male life expectancy was 45. With hindsight, that looks like something of a fiscal con-trick.

Does the Secretary of State endorse Lord Turner's specific conclusion that the 40 per cent. marginal tax rate arising from the withdrawal of the pension credit undermines voluntary private saving, or does he insist—as his Ministers were doing until as recently as this Monday—that there is no evidence of any disincentive?

To be frank, I have yet to see any concrete evidence of a disincentive effect on saving, but the Department for Work and Pensions will shortly publish new research that might throw some light on this subject.

I greatly welcome my right hon. Friend's commitment to doing something concrete about poverty among women pensioners, who were structurally locked out of adequate pension schemes for now outmoded reasons. However, will he be cautious in dealing with blandishments concerning an exemption for small firms? If we build in another barrier to adequate pensions, we will probably end up reintroducing gender discrimination. In any case, such an exemption would be unacceptable for those working for small firms, who are often low earners.

We have made no decisions on Lord Turner's recommendation for a new, low-cost savings scheme for employees. He proposes no exemptions for small firms, but I have made it clear that we will have to consider that part of his report in the same way as other aspects of it. My hon. Friend will be aware of the changes that we have made in an effort to credit periods spent out of waged employment by women and carers, and I hope that they will make a significant difference. They apply principally to the state second pension, but they have made, and will continue to make, a significant contribution.

At the risk of incurring the Secretary of State's wrath, does he accept that pensioners would be better off with the compounded £60 billion to £70 billion removed by the Chancellor since 1997? If not, why not?

I am afraid to say that the hon. Gentleman needs to learn a lot more about this subject before he makes another contribution. It is much more complicated than that, and if he wants to study it further he should perhaps look at the Pensions Policy Institute's recent work on the alleged £5 billion figure. It is complicated, in the first place by increases—[Interruption.] Well, the hon. Gentleman either wants to listen or he does not, and I suspect that it is clear to all of us on this side of the House that he does not. One of the issues is longevity, and it would be foolish for him and others to pretend otherwise. Another factor is what has happened in the stock exchange over the past six or seven years, and the low level of interest rates has also been significant. The announcement about tax dividend credits was welcomed by business because it formed part of a wider overall package, and it is important to bear that in mind. I know one other thing—that the Opposition are not proposing to reverse that tax credit.

Does my right hon. Friend accept that there is little evidence that the reduction in the tax dividend credit, which actually began in 1993, has had any significant impact on pension levels? Was not the hon. Member for Witney (Mr. Cameron) telling the truth when he said that the leading companies in the FTSE 100 list had told him that the reintroduction of the tax credit would have no bearing on their decisions about company pensions?

I am very grateful to my hon. Friend for that clarification, and agree absolutely with him. I agree with something else that the hon. Member for Witney (Mr. Cameron) said recently—that Tory pensions policy would not solve the pensions crisis. I think that that is very right too.

The Secretary of State is proposing to bring out his White Paper next spring. By then, the Government will have had nine years to bring proposals forward. The point made a moment ago by my hon. Friend the Member for Broxbourne (Mr. Walker) was rather rudely dismissed, but nine times £5 billion does equal £45 billion. I understand that the calculation may be somewhat more complex, but I have studied the issues and understand advance corporation tax better than most hon. Members. Lord Turner makes it clear that the deficit is about £57 billion, of which £45 billion could be taken from the ACT change and raid carried out by the Chancellor of the Exchequer. What does the right hon. Gentleman think about that?

Again, we have spent a lot of time on this matter this afternoon. The hon. Gentleman obviously likes to read widely on the subject, so I recommend that he take a look at the material produced recently by the Pensions Policy Institute. That would require him to revisit all the figures that he has quoted to the House today. If he has a chance to look at Lord Turner's report, he will see that he declines to give a figure for the pensions savings gap that in any way resembles what the hon. Gentleman has quoted. Lord Turner says that that is not possible, and I agree.

Does my right hon. Friend agree that the vast majority of the 2 million pensioners whom we have lifted out of poverty since 1997 are women and carers? I welcome what the right hon. and learned Member for Kensington and Chelsea (Sir Malcolm Rifkind) said earlier, but I do not recall him saying the same sort of thing when I was a carer and part-time worker in the 1980s. Does my right hon. Friend share my concerns that simplifying and reforming the pensions system to make it less means-tested may threaten those women and carers whom we helped to receive bigger pensions? Must we not be careful, in any consideration of the Turner report, that we do not plunge those people into poverty again?

I agree absolutely. Over the next few months, we must look very carefully at those outcomes that we think are important and that we want to secure. I assure my hon. Friend that we will take no measures that will threaten the retirement incomes of the people to whom she referred.

On a point of order, Mr. Speaker. May I very gently seek your guidance about the status of the convention regarding the silence of the Whips? During the exchanges between the Secretary of State for Work and Pensions and my right hon. and learned Friend the Member for Kensington and Chelsea (Sir Malcolm Rifkind), the shadow Secretary of State, you firmly reproved one hon. Member for very loud heckling. However, you may not have been able to hear the very senior member of the Government Whips Office—I shall not name her, as she has left the Chamber—who kept up an almost compulsive and constant sedentary chattering. Moreover, today is not the first time that that has been observed. Is that in order for the proceedings of this Chamber?

Let me say to the hon. Gentleman that I can hear a pin drop in the Chamber, so he does not have to worry about what I heard. I have a policy: I pick up one at a time, and the next time round it will be the right hon. Lady to whom he has referred.

I beg to move,

That leave be given to bring in a Bill to make provision about the protection of abandoned inland waterways, and for connected purposes.

The Bill will safeguard opportunities for the restoration of inland waterways, especially canals, by ensuring a more consistent approach to planning and development activities that affect the original lines of abandoned waterways.

I should start by explaining how I came to attach importance to the need for this Bill. My constituency has a rich canal history. In the centre of Ashton-under-Lyne, the Portland basin is a vital hub in the national canal network at the confluence of the Ashton, Peak Forest and Huddersfield Narrow canals. The Ashton canal runs through Droylsden to Manchester to meet the Rochdale and Bridgewater canals, forming part of the Cheshire ring. In recent years, we have seen the successful refurbishment or restoration of all of these canals and, most recently, millennium funding has enabled the restoration of the Rochdale canal through Failsworth in the Oldham part of my constituency.

Yet there is a missing link in this canal success story, and I should declare an interest as a member of the society that is working towards the restoration of the abandoned Hollinwood branch of the Ashton canal. In some places, especially through the Daisy Nook country park, this canal has been cosmetically refurbished. In other places, it has been infilled and built on. What is more, the construction of the M60 motorway has severed the original line in two places. Despite that, the Hollinwood canal society believes that it can be restored. I agree, but we are realistic about the time scale, which could be as long as three decades. I know that similar challenges are faced by many hon. Members in their constituencies

The Government's commitment to the future of inland waterways was clearly stated in the transport White Paper and the "Waterways for Tomorrow" document explains that the Government want

"to promote the inland waterways, encouraging a modern, integrated and sustainable approach to their use."

The document highlights the benefits of inland waterways in terms of leisure and recreation, heritage, the natural environment and regeneration.

Planning guidance already exists in relation to inland waterways. Planning policy guidance note 12 states that local authorities might:

"wish to safeguard sites for transport related development which might otherwise be lost to other development, such as sites adjoining railway sidings or wharves alongside waterways and ports."

That is the problem, however: local authorities might wish to safeguard such sites but, then again, they might not.

In similar vein, PPG13 exhorts local authorities to work with all those concerned, including private operators, British Waterways and voluntary groups, to develop the potential of inland waterways. In drawing up development plans and determining planning applications, they are advised, among other things, to seek to protect and enhance the waterway environment,

"where these are viable options".

The difficulty is that planning guidance is just that—guidance, and not mandatory. It is open to interpretation by planning officers, and one planner's "viable" is another's "non-starter".

The waterways recovery group is one of the leading voluntary organisations involved in the restoration of canals. In the most recent edition of its magazine "Navvies", the editor makes clear the commonly held view among volunteers in this sector—that planners and developers often do no more than pay lip service to planning policy guidance. His article points out some of the difficulties. For example, PPG13 stipulates that new road construction should incorporate full provision for canals under restoration, yet it does not cover waterways that have the potential for restoration where work has not yet started. It does not cover diversionary routes that have been identified because the original line has already been compromised. It does not prevent roads being built so close to the canal line, alongside it rather than across it, that future restoration is rendered impractical and extremely costly.

I know, from what the hon. Member for Lichfield (Michael Fabricant) has told me—and I am glad to see him in his place this afternoon—that that is precisely what has gone wrong in his constituency, where ambitions to restore the Lichfield and Hatherton canals have been frustrated by the failure of PPG13 to place enough of an obligation on the local planning authority to protect the line of the canal from adverse development that has hindered its reconstruction.

One volunteer in my constituency has expressed frustration that preserving the line of a canal can hinge on whether the senior council officer with local responsibility for inland waterways is sympathetic and enthusiastic or cautious and pessimistic about restoration. Given the time scale involved in restoration, changes in personnel are inevitable and that brings the risk of inconsistency and uncertainty.

Another concern is the difference in approach towards urban, inter-urban and rural locations. Developers and planners see the benefit of waterside locations and urban sites are very likely to be restored within regeneration projects. In my own constituency, in Droylsden town centre, work has started on a multi-million pound marina, with quality housing alongside leisure and commercial developments. The line of the Hollinwood branch canal has been protected, for a short distance, as part of that scheme. Also, on the banks of the restored Rochdale canal in Failsworth, there are plans for a new district centre, including retail and waterside housing development. However, the relevance of regenerating small stretches of canal and canal-side properties within urban regeneration projects must be called into question if the original waterways between will never become navigable again. The whole point of a marina is surely that boats will visit.

Where the line runs through a rural or inter-urban setting, there is no developer interest and attracting funding is much more difficult. The burden often falls on volunteer groups to bid for funding. Volunteers devote an enormous amount of time to restoration of canals and lobbying of local authorities, funding bodies and others. Many of those volunteers have incredibly detailed knowledge and a great deal of technical expertise. Their work has had, and will continue to have, an invaluable impact on the restoration of canals. However, it is regrettable that the future of inland waterways is so heavily dependent on the existence, skills and abilities of local volunteer groups. In areas where there are no volunteers diligently checking every planning application, the danger is that the lines of more and more abandoned waterways will be permanently compromised.

So, the problems are the lack of consistency of approach between local authorities; lack of consistency of approach between rural, urban and inter-urban areas; an over-reliance on the existence, skills and abilities of volunteers; the fact that construction projects that affect the line of disused inland waterways continue to be allowed, all too often without adequate consideration of the impact on the potential for future restoration; and the fact that PPGs are open to wide variations in interpretation and are guidance rather than being mandatory.

As long as guidance is applied in a patchy way, with variations in approach between one local authority and another and between urban, inter-urban and rural areas, the Government's vision of an integrated and sustainable approach to the use of inland waterways is at risk. The Bill will safeguard the future of inland waterways by preserving the lines of much of the abandoned network until such time as the funding, and the capacity of organisations such as British Waterways, is in place to effect the necessary restoration.

The Bill will establish a requirement for local authorities to consult all those concerned in the inland waterways industry—private operators, British Waterways and other navigation authorities and the voluntary sector—to develop the potential of inland waterways in drawing up development plans and determining applications. In short, it will translate current guidance into legislation.

The Bill will establish a requirement for local authorities to preserve the lines of disused inland waterways to ensure the possibility of future restoration to a standard that meets the normal requirements of navigation. We must act now to prevent planning decisions continuing to be made that close the door forever on the eventual restoration of many of our inland waterways. I commend the Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by David Heyes, Andrew Gwynne, Kelvin Hopkins, Paul Flynn, Michael Fabricant, Dr. Brian Iddon, Andrew Miller, Lynda Waltho and Mr. Ian Austin.

Abandoned Inland Waterways (Protection) Bill

David Heyes accordingly presented a Bill to make provision about the protection of abandoned inland waterways; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 12 May, and to be printed [Bill 95].

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

I congratulate the Government on their sensible handling of the timetable for this legislation. This is one occasion on which there has been no issue of process, but there has been an issue of content. For that reason, I am sure that we can dispense with the business fairly quickly today, even though three important issues are up for debate. The first is the issue of the mode of trial.

Right hon. and hon. Members will recall that in Committee we had a debate about the specific question of how many judges should sit on the committees known as the Diplock courts. At the moment, as we all know, it takes one judge to operate the Diplock courts. The new clause seeks to alter the way in those courts operate by increasing the number of judges from one to three.

We had the option to table an amendment that would simply have repealed the entire Diplock court system, but we were aware that we would not have gained a consensus on that and also that there may still be a case for operating the Diplock court system because of the evils of intimidation and coercion that are well known in Northern Irish politics. However, Lord Carlile, who has informed much of our debate—the Government have listened to him considerably—suggested in his last report on the operation of part 7 of the Terrorism Act 2000 that three judges of the Crown court should sit in such trials, rather than one.

It is fair to recognise that Lord Carlile's assessment that Northern Ireland judges apply rigorous standards to the quality of evidence in non-jury trials still stands, but he suggested that a three-judge court would command greater confidence across the communities, without diminishing the credibility of the court system that we are discussing.

As we try to normalise Northern Irish politics and Northern Irish law, we believe that it is necessary to do all that we can to normalise the court system. So I agree with Lord Carlile that such a move would help to secure greater confidence in how the criminal justice system operates in scheduled-offence trials in Northern Ireland. We believe that the Government should seriously consider how best to move the situation forward and should certainly take on board Lord Carlile's suggestion.

In the scenario that the hon. Gentleman envisions, with three judges sitting, would decisions have to be reached unanimously, or could they be reached by majority vote in cases of a difference of opinion?

I was just about to come to that point, because it arose in Committee. My hon. Friend the Member for Solihull (Lorely Burt) said that she thought that the decision needed to be unanimous. On consideration, and after discussion with colleagues and others, I concur. A unanimous judgment would be a check step that would guarantee that the body of evidence was robust. The argument against a unanimous vote would be that a majority vote was sufficient insurance, because at least two judges would have to agree. In my judgment, it should be unanimous. However, those details do not have to be decided now as they could be dealt with by a statutory instrument that would establish the standing orders for the procedure.

In the previous debates on this point, the Minister cited cost as a reason not to have three judges. He said that in Lord Carlile's 2003 report

"he estimated that 10 additional judges would be required to produce the same criminal justice system. Those judges would have to be recruited and trained, and accommodation would have to be provided for them. If necessary—of course we would do this if we were to move to that system—steps would have to be taken to protect their security. That would have significant financial implications."—[Official Report, Standing Committee E, 8 November 2005; c. 25.]

May I develop the theme of costs? Lord Carlile was talking about 10 judges in 2003 and although only two years have elapsed since then considerable progress has been made, so one would hope that the necessity for the number of Diplock courts envisaged by Lord Carlile might be less than it was. I would also like to make the point that—

Order.

I beg your pardon, Mr. Deputy Speaker.

Order. I have not finished with the hon. Lady. She must understand that there is a distinction between an intervention and a speech. If she really wants to develop a point, perhaps she would be better off trying to catch my eye later in the debate.

Nevertheless, the point made by my hon. Friend the Member for Solihull (Lorely Burt) is valid. We are constantly told that the situation in Northern Ireland is normalising, so the estimate of 10 may be on the high side. There is a second point, which relates to other legislation that we have been discussing recently where the Government want to set up an entire, parallel quasi-judicial system to deal with on-the-runs, which will be a colossal expense. It is not acceptable for the Government to rail against the relatively modest investment in a three-judge Diplock court system while advocating an entire parallel system, at relatively high expense, for that other legislation.

The hon. Gentleman will recall that during Second Reading of the Northern Ireland (Offences) Bill, the Secretary of State claimed that one reason why the Government were not able to go through a full judicial process for terrorists who were on the run was that it would create major problems in the judicial system in Northern Ireland. What implications does that have for his proposal that three judges should sit in such proceedings?

I thank hon. Friends for their contributions, because as they make them we are covering all the points. In response to the hon. Gentleman, I recall the Secretary of State for Northern Ireland saying, only seven days ago, that he did not want to use the existing court structure because the on-the-runs legislation would "jam up" the courts, so if that is the state of shortage of judges in the Northern Ireland court system, the Government should be investing in extra judges in any case. There is a strong case for resolving both issues by ensuring that there are sufficient judges to administer the existing responsibilities and requirements of the judicial system in Northern Ireland, together with the on-the-runs—a matter that we shall discuss at another time—and the three-judge Diplock court system that we are proposing.

In essence, that is our case. We have given the Government some time to consider it and I hope that the Minister, on reflection, will accept that the new clause is wholly reasonable; the costs would be modest and it is very much in the interests of justice in Northern Ireland. Should the Government hold out against the new clause, it will be necessary for us to divide the House.

We discussed this matter in Committee. The official Opposition have some sympathy with the point made by the hon. Member for Montgomeryshire (Lembit Öpik) and we have had various discussions about it.

I raised the point about unanimity in Committee although we did not discuss it much at that stage. We can see some difficulty with it. If there was a requirement for unanimity and there was a two-to-one vote in favour of the guilt of the person before the court, the majority verdict would obviously be guilty but the person would presumably be released. If there were no requirement for unanimity, I foresee further problems. If there was a two-to-one vote, there might be questions about which judge voted which way. Were they Unionist, loyalist, nationalist, Protestant or Catholic?

The initial appointment of the judges could also lead to difficulties. The number three does not divide equally, which is why it was chosen.

That is the point.

Indeed.

A further problem could arise: if one judge was a Protestant and the second a Catholic, how would the third appointment be made?

From the Alliance party.

Although the Alliance party may require an act of faith, it is not actually a religion.

I cannot possibly respond.

There could be an argument for considering the background of the judges, but the current system seems to be working reasonably well in practice, although I accept that trial without jury is wholly undesirable. It is acceptable—if that is the right word—only due to the difficulties in Northern Ireland, which unfortunately continue to exist.

The situation is working acceptably partly because it has as a back-stop the automatic right to appeal. Leave to appeal does not have to be sought; there is an automatic right of appeal in the present system, so although I promise the hon. Member for Montgomeryshire that the official Opposition have looked at the new clause and discussed it in great detail, we have decided on balance that we cannot support it.

New clause 1 would amend the Terrorism Act 2000 to provide that Diplock courts would in future consist of three judges of the Crown court. The business of the Crown court in Northern Ireland is dealt with by judges of the Court of Appeal, High Court and county court sitting in the Crown court in accordance with directions given by the Lord Chancellor.

Lord Carlile has recommended on several occasions that a three-judge court could be a replacement for Diplock courts. However, I remind the hon. Member for Montgomeryshire (Lembit Öpik) that Lord Carlile draws no firm conclusions and has stated that the decision is one for the Government. Indeed, the proper context is the 2004 report, where he says:

"My overall conclusion is that a 3 judge, non-jury court could"—

not "would" but "could"—

"function satisfactorily even if the judges were of non-equivalent judicial status. Nevertheless the present single-judge courts continue to offer a high standard of justice: there is no evidence of any deficit in the quality of single-judge courts."

Crucially, he continues:

"Having provided those conclusions, whether there should be a change is a matter outside my direct purview. It is a matter for Ministers, and the evolving political process. Political and economic judgments at that level are founded on broader considerations than my responsibilities as reviewer permit."

In Committee, the Minister may recall saying that when considering the necessity for a successor to Diplock the three-judge option might be tried. Why does he feel that we should wait until we are considering the successor to Diplock before looking at that option?

Because, with the respect to the hon. Lady, those matters must be more carefully thought through and not just dealt with by trial and error. Lord Carlile acknowledges that the existing system offers a "high standard of justice". Simply to work on the basis of "Perhaps it might be better" is not an entirely good way to proceed with criminal justice in Northern Ireland.

In his 2003 report, Lord Carlile also acknowledged that there would be resource and training implications if the three-judge approach were adopted. He estimated that 10 additional judges would be required. The hon. Member for Montgomeryshire raised questions about the parallel system that we are introducing for on-the-runs, but I suppose that I should say, Mr. Deputy Speaker, that I will not crave your indulgence by talking about that measure in the context of this Bill. Nevertheless, the fact of the matter is that 10 additional judges would cost several million pounds to maintain—the Court Service has produced that cost for us. If proceeding down that route were to produce a better system of criminal justice, of course we should consider it. However, until we know the full costings and are certain that that system of justice would be better, it would be foolish to throw out something at that even Lord Carlile accepts has a high standard of justice.

Leaving aside the merits of three-judge courts for one minute, can the Minister help us on the question of costs? Will he tell us how many cases have gone through the Diplock process each year over the past few years so that we can get an idea of the size of the burden on the judicial system that would be created?

If the hon. Gentleman will allow me, I will write to him specifically on that point. Given the analysis that we have seen, we think that the proposal of the hon. Member for Montgomeryshire would be more expensive than the existing system. However, as I said, if it were to lead to a better system of justice in Northern Ireland, it would undoubtedly be the right thing to do, but it is appropriate to consider value for money. What matters is confidence in the judicial system. The concerns are not insurmountable, and we are convinced that we could perhaps consider three-judge courts in the future.

As I said on Second Reading and in Committee, I am already committed to considering what, if any, replacement is needed for Diplock courts so that we can tackle the problems of intimidated jurors in paramilitary-style trials in the future. That is an important issue for the people of Northern Ireland. The future of certain types of criminal trial in Northern Ireland is a matter of significant public interest that merits the maximum possible scrutiny and debate. The Government would like to proceed with as much consensus as possible on any replacement arrangements for Diplock courts. Until the detailed inter-agency work that is under way on the issue has been completed, it would not be appropriate to discuss specific proposals or to commit to three-judge courts as a possible way forward.

The Minister says that he wants to consider costs and implications. What is the time scale in which any further proposals might be brought forward?

I might be able to answer the hon. Gentleman's question pretty much immediately. Although detailed proposals should be worked up by next summer, we would like to ensure that we are able to take on board a wide range of views, including those of the hon. Member for Montgomeryshire and representatives of other political parties, before any final decisions are taken. With that in mind, and taking forward the proposals that I made clear in Committee, this morning the Secretary of State wrote to the hon. Member for South Staffordshire (Sir Patrick Cormack), as Chairman of the Northern Ireland Affairs Committee, to make a commitment to pre-legislative scrutiny on any replacement for Diplock. Such scrutiny should facilitate the full debate that I believe the hon. Member for Montgomeryshire would like. It will allow us to take full account of all the issues involved, including costs, security and the question of majority or unanimous verdicts. We must consider those extremely important matters so that we can proceed carefully and appropriately and ensure that any arrangements that replace the present system are better than it, not worse. We look forward to hearing the views of hon. Members on the subject next summer.

I welcome the Minister's commitment to pre-legislative scrutiny. Why is he prepared to adopt that approach on future proposals, but not prepared to accept the suggestion that the much more contentious Bill on amnesty for on-the-runs should receive such scrutiny? That matter was raised in the House by no less a person than the Chairman of the Northern Ireland Affairs Committee, but the Government seem to have set their face against that approach.

I fear that I would be craving your indulgence, Mr. Deputy Speaker, if I started to discuss on-the-runs. However, as I have said, we believe that it would be entirely appropriate to use the Northern Ireland Affairs Committee for close examination of the proposals through pre-legislative scrutiny. For the purposes of this Bill, we think that the present system remains the right one for the next few months, so I urge the House not to accept new clause 1.

I thank hon. Members for their contributions to the debate. May I start by emphasising the importance of being consistent with Lord Carlile's advice? We are considering the words and judgments of the man who is paid to make independent assessments, so we should think seriously about recommendations and suggestions that he puts forward, even if the Government are not inherently disposed to support them from the outset. I assure hon. Members that my dedicated belief in Lord Carlile's contributions is not based on the fact that he was the Member of Parliament for Montgomeryshire until 1997, although that is a consideration.

I understand the concern of the hon. Member for Tewkesbury (Mr. Robertson) about religious and community affiliations in a three-judge system. Nevertheless, it is fairly easy to show that we could find independent judges from across the community who would be trusted as faithful adherents to the standards and principles that we expect from the judiciary.

Obviously, the Government have enormous respect for the work of Lord Carlile. However, when the hon. Gentleman makes his assessment of the matter, he must take Lord Carlile's 2003 report into consideration. Lord Carlile said that the fact that a three-judge court could work did not necessarily mean that it should be introduced.

That is why this is a matter not of principle, but of judgment. The judgment of the Liberal Democrats is that it is appropriate to take the advice on board. I do not condemn the Minister, the hon. Member for Tewkesbury or others for holding a different view, but it is important to put down a marker today on where we should go.

Let me return to the question of the affiliation of judges. The hon. Member for Tewkesbury rightly pointed out that there might be some consideration of whether there were one Protestant and one Catholic judge. It was suggested that the third judge could be an Alliance party member, but perhaps one Baha'i could be the third member of the panel. The problem is not insurmountable. We faced it all the time when constituting the various organisations that have been set up in Northern Ireland in recent years and we got through it. If the system were coupled with a requirement for a unanimous verdict, we would ensure that we would get a cross-community verdict from the judges. We must also bear it in mind that Diplock courts have been frequently criticised for requiring one individual to make a judgment on an offence that would be made by a jury in normal circumstances, or in other parts of the United Kingdom, but I shall not labour that point because it has been made several times before.

As for the number of judges that we need, I am still not persuaded that we need 10 judges to make the change. I am disappointed that, in responding to a question from the Democratic Unionist party, the Minister could not tell us how many times a Diplock court has been used in the past few years, as such information would be helpful.

As I have said, the Government fully respect Lord Carlile's advice. The hon. Gentleman regularly turns to that advice, and Lord Carlile suggested in his 2003 report that we would require

"at least ten additional judges, from whom membership for trials could be chosen".

We are therefore also relying on that evidence.

No doubt, Lord Carlile will learn how many times he has been cited in our debate and will have his own views on the matter. I will welcome that as the debate shifts to another place. However, circumstances have changed markedly in the past two years, and he was writing about the situation in 2003, not 2005. Nevertheless, this is a moot point because of the words that the Minister used only a few moments ago. I believe that he said that if it were to lead to a better system of justice for Northern Ireland, it would undoubtedly be a worthwhile thing to do. In my judgment, it would. The Minister is more cautious, and I understand why.