In a letter to the Chairman of the Treasury Select Committee on 29 September 2004 (a copy of which was deposited in the Library of the House), I reported that the Metropolitan Police Service (MPS) was conducting an investigation—Operation Gestalt—into Customs and Excise's handling of a series of excise diversion frauds on the London City Bond in the mid-1990s.

I can today update the House on significant developments in the police investigation.

HM Revenue and Customs (HMRC) yesterday received confirmation that the Crown Prosecution Service (CPS) have considered a report from the MPS relating to allegations of non-disclosure to the Butterfield Review involving two very senior then serving officers, Terry Byrne and David Pickup, and also Sir Richard Broadbent, former Chairman of Customs and Excise. The CPS have concluded that there is insufficient evidence to charge any of these individuals with a criminal offence and that further work on this matter would not be justified.

The Chairman of HMRC, David Varney, has confirmed that the Department will now discuss with David Pickup a return to work in accordance with the Department's procedures. Terry Byrne retired from HMRC in November 2004 on reaching the age of 60.

I made clear in my letter of 29 September 2004, and HMRC has also consistently stated, that it would be wrong and unjust to prejudge the outcome of investigations, and that the term "under investigation" should not be taken to mean that charges would follow. This has been an extremely difficult and unpleasant period for the individuals concerned. It is, however, necessary that reports of serious alleged wrongdoing are properly and independently investigated.

The MPS's Operation Gestalt investigation continues. A total of 12 current and former HMRC officials at present remain under investigation. The Department has in place established contact and welfare arrangements to support those officers affected. The priority of the Department continues to be to ensure that: the MPS receive HMRC's full and active co-operation with the investigation; the rights of all individuals involved are protected; and the Department's ongoing law enforcement operations are maintained while the investigation is ongoing.

I have today published the Cabinet Office 2005 Autumn Performance Report (Cm 6725). Copies of the report have been placed in the Libraries of both Houses.

I am pleased to announce that we have been able to agree to a change to the already successful Skynet 5 PFI deal, to enable a revised risk mitigation approach to be adopted.

Rather than relying on space insurance to cover satellite loss in an unpredictable insurance market, as under the original deal the revised approach is built upon increasing the in-orbit constellation. Instead of two satellites in orbit, there will now be three satellites, with a part built fourth satellite available as a back up to a satellite loss throughout the satellite launch phase, which ends in late 2008. The MOD requirement will continue to amount to two satellites, which means that an in-orbit spare will be available; delay in building a replacement satellite in the event of a loss would therefore be avoided. Continuous operational capability can therefore be maintained.

This innovative approach to risk management is fully consistent with the aims of smart acquisition and it shows how a PFI deal can evolve over time, to continue to provide our armed forces with the best available capability at the right price.

The European Union Agriculture and Fisheries Council will meet in Brussels from 20 to 22 December 2005.

I will chair for the agriculture items and my hon. Friend, the Member for Exeter, (Mr. Bradshaw) will chair for fisheries issues. My hon. Friend, the Member for Dorset South, (Jim Knight) will be in the UK seat.

The Council is expected to adopt conclusions on the Commission's communication for simplification and better regulation of the common agricultural policy.

We also hope to reach political agreement on Community measures for the control of avian influenza and related expenditure under the veterinary fund.

We expect the Council to adopt the first stage of the European Community and United States agreement on trade in wine.

At the request of Germany, the Council will discuss the implementation of cross compliance rules under the CAP single payment scheme.

The Council will vote on a proposal to authorise the use of genetically modified maize variety 1507.

The main fisheries item is the annual negotiation on total allowable catches and fishing quotas for next year, where we hope to reach political agreement. We also hope to secure agreement on total allowable catches and quotas in the Baltic and recovery measures for sole stocks in the Bay of Biscay.

Under any other business, the Fisheries Commissioner will update the Council on proposals for restructuring the fisheries sector and on the EU action plan on simplification of the Common Fisheries Policy. The Agriculture Commissioner will update the Council on the outcome of the WTO negotiations in Hong Kong. Demark will raise the issue of export refunds for live bovine animals. Italy will draw the Commission's attention to the situation in the poultrymeat market, following the recent avian influenza outbreak in Europe. The Commissioner for Health and Consumer Protection will update the Council on that outbreak and outline proposals for an EU action plan on the protection and welfare of animals. Spain will draw attention to repeated outbreaks of the animal disease, blue tongue, arising from North Africa and request resources to control its spread.

States Party to the Biological and Toxin Weapons Convention (BTWC) met in Geneva, 5–9 December. The purpose of the meeting was to discuss and promote common understanding and effective action on the content, adoption and promulgation of codes of conduct for scientists.

The States Party to the BTWC agreed by consensus a politically binding report where, inter alia, States Party stressed the need to undertake activities at the national and international levels and recognised the following:

(a) while the primary responsibility for implementing the convention rests with States Party, codes of conduct, voluntarily adopted, for scientists in the fields relevant to the convention can support the object and purpose of the convention by making a significant and effective contribution, in conjunction with other measures including national legislation, to combating the present and future threats posed by biological and toxin weapons, as well as by raising awareness of the convention, and by helping relevant actors to fulfil their legal, regulatory and professional obligations and ethical principles;

(b) codes of conduct should reflect the provisions of the convention and contribute to national implementation measures;

(c) a range of different approaches exists to develop codes of conduct in view of differences in national requirements and circumstances;

(d) codes of conduct should avoid impeding scientific discovery, placing undue constraints on research or international co-operation and exchange for peaceful purposes;

(e) science should be used for peaceful purposes only but has the potential to be misused in ways that are prohibited by the convention, and therefore codes of conduct should require and enable relevant actors to have a clear understanding of the content, purpose and reasonably foreseeable consequences of their activities, and of the need to abide by the obligations contained in the convention.

Further, States Party recognised that all those with a responsibility for, or legitimate interest in, codes of conduct should be involved in their development, promulgation and adoption and agreed on the value of codes of conduct applying not just to scientists, but to all those involved in scientific activity, including managers and technical and ancillary staff.

On the content of codes of conduct, recognising the principles listed above, States Party agreed on the importance of codes of conduct being:

(a) compatible with national legislation and regulatory controls and contributing to national implementation measures;

(b) simple, clear and easily understandable both to scientists and to wider civil society;

(c) relevant, helpful and effective for guiding relevant actors in making decisions and taking action in accordance with the purposes and objectives of the convention;

(d) sufficiently broad in scope;

(e) reviewed regularly, evaluated for effectiveness, and revised as necessary.

On the adoption of codes of conduct, recognising that it is important to build on and co-ordinate with existing efforts and avoid imposing burdensome and duplicative measures, the States Party agreed on the value of:

(a) demonstrating the benefits of codes and encouraging relevant actors to develop codes themselves;

(b) using existing codes, mechanisms, frameworks and bodies as far as possible; and

(c) tailoring adoption strategies according to the needs of each relevant sector.

On the promulgation of codes of conduct, recognising that codes of conduct will be most effective if they, and the principles underlying them, are widely known and understood, the States Party agreed on the value of continuous efforts on promulgation through appropriate channels.

States Party were also encouraged to inform the Sixth Review Conference in 2006 of any actions, measures or other steps that they have taken on the basis of the discussions on codes of conduct to facilitate the conference's consideration of the work.

The preceding meeting of experts held in Geneva in June 2005 had prepared the way for this political decision making. At this earlier meeting, levels of attendance and participation were excellent with 82 States Party contributing to international discussion and sharing of expertise on codes of conduct for scientists. States Party were also able to benefit from the input, expertise, and experience of a number of international and non-governmental organisations and science stakeholders. A multi-agency delegation represented the United Kingdom. Sir David King, Chief Scientific Adviser, made a well-received presentation on his code of ethics for Government scientists, which is currently being piloted across Government. UK officials also made four presentations on different aspects of the subject.

Ambassador John Freeman, on behalf of the United Kingdom, led the international work on this subject in 2005 and chaired both the meeting of States Party and the meeting of experts. I am sure Members will join me in expressing appreciation for the work and efforts of Ambassador Freeman to achieve consensus on a report that reflected the large measure of agreement that exists on the subject under discussion. Moreover the level of active participation and engagement over the last three years of the current work programme is an indication to us that States Party recognise both the importance of the selected subjects and also the value of the work programme more generally in contributing to strengthening the convention.

At the meeting of States Party, delegations also agreed the dates for a preparatory committee to the Sixth Review Conference of the convention in 2006. The preparatory committee will be held in Geneva, 26–28 April 2006. The Sixth Review Conference will be held in Geneva, 20 November–8 December 2006, with the precise dates to be confirmed by the preparatory committee.

The UK is one of the three depositaries to the convention and will continue to work co-operatively, both nationally and internationally, through 2006 in preparation for a successful conclusion to the Sixth Review Conference.

I will keep the House informed of developments and outcomes in 2006.

Copies of the British Council Annual Report, incorporating the Trustees' Annual Report and Accounts, for the year ended 31 March 2005 have been placed in the Library of the House. During the period the Council received £172.065 million grant in aid from the Foreign and Commonwealth Office.

The Employment, Social Policy, Health and Consumer Affairs Council met on 8–9 December. The Secretary of State for Health chaired the meeting and I represented the United Kingdom. Items on the agenda relating to health were covered on 9 December. Items for discussion were: human health aspects of pandemic flu; proposal for a Regulation of the European Parliament and of the Council on medicinal products for paediatric use; and the European Commission's Green Paper: "Improving the mental health of the population, Towards a strategy on mental health for the European Union".

The policy discussion on the human health aspects of pandemic flu focused on areas of EU co-operation to complement existing work on this topic. Member States acknowledged that the first and most vital step was the completion of national contingency plans. On the issue of risk communication with the public, Council agreed that, while this was primarily a Member State responsibility, there was a need for clear co-ordination between Member States, the Commission and the European Centre for Disease Prevention and Control to avoid confusing messages. The Commission reported the experiences of the common ground simulation exercise on pandemic flu.

The Council also discussed the issue of increasing production capacity for both antiviral drugs and vaccines. On vaccines, Council stressed the importance of increasing the research effort into the development of new vaccines. On antivirals, Ministers agreed that building up production capacity was primarily for Member States, but outlined that further consideration should be given to the available options for dealing with a pandemic influenza outbreak including the feasibility and added value of the EU holding a targeted strategic stockpile of anti-viral drugs.

The presidency issued conclusions on the human health aspects of pandemic flu.

There was a qualified majority in favour of a political agreement to the proposed regulation on paediatric medicines.

The Council gave a supportive steer to the Commission on its recent Green Paper on improving mental health.

Ministers took note of Presidency information on: Proposal for a Decision of the European Parliament and of the Council establishing a Programme of Community action in the field of Public Health and Consumer Protection; Health inequalities and patient safety; and Council Public Health Working Party meeting at senior level.

Member States also took note of information from the Commission on: A coordinated approach to the fight against HIV/AIDS in the European Union and the neighbouring countries; Commission High Level Group on Health Services and Medical Care; Framework Convention on Tobacco Control; and International Health Regulations.

Ministers also had an informal discussion on promoting healthy diets and physical activity.

I am announcing today statistics relating to Antisocial Behaviour Orders (ASBOs).

An ASBO is a civil order which protects the community from behaviour that has caused or is likely to cause harassment, alarm or distress to one or more persons not of the same household as the perpetrator.

ASBOs were introduced under the Crime and Disorder Act 1998 and have been available since April 1999.

ASBOs can be issued to anyone aged 10 years or over. They impose restrictions on the behaviour of individuals who have behaved in an antisocial way and protect communities from often long-standing and highly intimidating activity.

Breach of an ASBO is a criminal offence and can lead to custody. The maximum penalty for breach of an ASBO is five years imprisonment or a fine of up to £5,000 for an adult offender.

The Home Office is notified by all courts of ASBOs issued. As I indicated in my statement on 3 November, Official Report, columns 52–53 WS, a joint exercise between the Court Service and the Home Office is under way to refine and improve further the collection of these data.

Data on the number of ASBOs issued are updated quarterly. New figures for the period up to June 2005 are now available. These figures show that for the period between April 1999 and June 2005 the total number of ASBOs issued (as reported to the Home Office) was 6,497. The number of ASBOs issued in the quarter April to June 2005 is 14 per cent. of the total number of ASBOs issued over all quarters and represents an increase of 48 per cent. on the same quarter last year. However, this represents an increase of 1 per cent. on last quarter's figures so the rate of increase is slowing.

Of those ASBOs issued, 54 per cent. were to adults and 43 per cent. to juveniles (3 per cent. of ASBOs are age unknown).

Some 47 per cent. were orders on application and 53 per cent. were orders on conviction.

I have placed with the Libraries of both Houses a briefing note containing information about ASBOs and the ASBOs statistics issued today.

The National Probation Service has today published its Annual Report for 2004–05. The Prison Service and the Office for Contracted Prisons published their Annual Reports and Financial Accounts for 2004–05 on 19 July. Copies of all the Annual Reports have been placed in the Library.

Performance against all the National Offender Management Targets for 2004–05 is indicated in the table below. A full breakdown of the performance of both public and contracted prison establishments, in relation to applicable Key Performance Indicators (KPIs), will be placed in the Library. The breakdown includes updated figures for those establishments managed by the Office of Contracted Prisons.

Performance Against the National Offender Management Targets for 2004–05 -- Public Protection Targets

The Justice and Home Affairs Council was held on 1–2 December in Brussels. I chaired the meeting along with my right hon. and noble Friend the Secretary of State for Constitutional Affairs and Lord Chancellor. My noble friend Baroness Ashton of Upholland also represented the presidency.

I introduced the counter-terrorism coordinator's six-monthly report (doc 14734/1/05), the EU CT Strategy (doc 14469/4/05) and the EU Strategy and Action Plan to combat radicalisation and recruitment to terrorism (docs 14781/1/05 and 14782/05 RESTREINT). It was concluded that EU-level co-operation, including Europol and Eurojust, was an important component of member states' approaches to counter-terrorism. The six-monthly progress report and the EU Counter-Terrorism Strategy was sent to the European Council on 12 December. The Strategy and Action Plan on Radicalisation and Recruitment were also agreed.

Following on from discussions led by the Prime Minister at the Hampton Court summit, I emphasised that the presidency was very pleased that the issue of migration had been discussed, stressed its political importance and invited the Commission to present their communication "Priority actions for responding to the challenges of migration: first follow-up to Hampton Court". The Commission set out the three main pillars of the Communication: the need for a comprehensive approach covering all aspects of migration; the improvement of operational co-operation between member states, particularly in the Mediterranean; and the need to improve co-operation on migration with third countries of origin and transit, particularly sub-Saharan African countries.

Member states welcomed the communication emphasising its balanced and thorough approach. Member states who intervened strongly supported the focus on Africa and the Mediterranean, though some also noted that it was important not to forget the importance of other geographic regions, such as Russia and the Eastern Neighbourhood. Adequate resources were considered particularly important for demonstrating real political will to implement actions.

The Mixed Committee was chaired by Iceland and they invited the presidency to bring forward a compromise proposal on the Exchange of Information and Intelligence between Law Enforcement Authorities, including a new recital on the application of Article 11(2) (indicating that it should be interpreted so as to allow for the exchange of information on at least minor offences linked to terrorism and organised crime) and a Council declaration (noting that Article 11 would be reviewed on the basis of a report from the Commission). I was pleased to note agreement to a general approach on the draft Framework Decision (as in document 13986/5/05 CRIMORG 124) with the two changes agreed.

The draft Directive on Data Retention was discussed throughout the second day of the Council and I am pleased to be able to say that, on this vital piece of legislation for the EU's citizens, we were able to reach an agreement as to the Council's position. The new text proposed: language on the retention for the purpose of serious crime, where that term was defined by national law; the inclusion of data on unsuccessful call attempts (connected unanswered calls) only where it is stored or logged for business purposes; the exclusion of unconnected calls; limited provisions on data protection, data security; and sanctions against abuse of powers to access retained data. The European Parliament held a debate on data retention on 13 December and voted on 14 December to adopt amendments identical to those of the Council.

In the area of civil justice, the Council reached a general agreement on the text of the draft: Regulation Creating a European Order for Payment. Member states agreed that the proposal should be limited to cross-border cases. These are defined as being those in which at least one of the parties is domiciled or habitually resident in a member state other than the member state of the seized court. This is a significant decision with important implications for judicial co-operation in civil matters. It represents an emerging consensus among member states as to how "cross-border" should be defined. This will help to unblock progress on future measures. The European Parliament voted on 13 December to adopt amendments identical to those of the Council. This is the first complete civil justice procedure to be agreed by the EU and will make it easier to obtain judgments on uncontested claims across EU borders and so help the internal market grow further. Following the consensus reached at the Informal JHA Council in September, member states agreed to a number of key principles essential to a simplified, accelerated and cost-effective procedure for resolving small claims across European borders. Among other things, the procedure will be conducted primarily in writing, with modern communications technology used when a hearing is necessary; legal representation will not be mandatory; and costs will be kept proportionate to the claim. Finally, the Council agreed a common understanding on the draft Directive on Certain Aspects of Mediation in Civil and Commercial Matters. Promoting access to justice has been a key theme of the UK presidency. Civil justice issues have rightly achieved a higher priority than ever before in recent years, and the achievements in Council confirm the importance of their place in an agenda for citizens.

On the European Evidence Warrant, following a debate, member states were not able to remove all their reserves. The presidency concluded that it would not be possible to make further progress on the outstanding issues and remitted the dossier back to ambassadors. The incoming Austrian presidency said that it would give priority to completing work on the Framework Decision.

On Procedural Rights, the Council took note of the state of play on negotiations as in documents 14642/05 DROIPEN 59 and 14248/05 DROIPEN 54 REV 1. I noted that there had been substantial work on the draft Framework Decision over the last year but that it had not been possible to complete this within the UK presidency. Discussions are underway with the incoming Austrian presidency on how to take forward the need for a political debate on this dossier.

The Commission gave a brief update on the state of play in the technical development of SIS II at a central level indicating there were difficulties concerning the overall timetable of the project but that the Commission was committed to meeting the timetable. The Commission also noted it was open to making the draft legal instruments on the SIS II more flexible as some of the member states wished and was committed to ensuring the EU7 had sufficient financial support from the Schengen facility until SIS II was running in 2007.

Following a Commission presentation on the Interoperability of EU JHA Databases it was noted that they had been brought forward to meet the Council's timetable. The Commission considered both to be a contribution to making information available more widely with a view to implementing the principle of availability.

In the margins of the Council member stats also agreed intergovernmental Conclusions on security standards on identity cards. As an A point the Council also agreed the EU Action Plan on Human Trafficking. This is a focused plan which details the objectives, a timetable and assessment tools. It is aimed at establishing common standards best practices and mechanisms to prevent and combat trafficking in human beings, and will drive forward practical action and co-operation in the EU.

There was also agreement from JHA Ministers to commit to an additional €250 million for assistance and the provision of additional trainers and personnel to counter narcotics in Afghanistan. Ministers also agreed conclusions on the roll out of biometrics under the Visa Information System to countries of high risk.

I have decided to reduce UK budget support this year to Uganda by £20 million. Some £15 million of this money will be used to provide humanitarian relief in northern Uganda, and £5 million will be held back until after the elections in February (when a decision will be taken on whether to disburse it). Overall this will cut UK Poverty Reduction Budget Support (PRBS) to Uganda to £30 million, below the 2004–05 figure of £35 million.

The UK and Ugandan Governments signed a new Poverty Reduction Budget Support (PRBS) arrangement in December 2004 for a grant of up to £145 million over three years. This arrangement links budget support to reforms detailed in Uganda's Poverty Eradication Action Plan (PEAP), including macro-economic management and governance. The criteria which guide our disbursement are drawn directly from the PEAP and include both the "prior actions" agreed for the World Bank's Poverty Reduction Support Credit (PRSC) and specific indicators on governance.

We disbursed £35 million out of our £40 million allocation in 2004–05, but cut £5 million due to concerns about the progress of Uganda's political transition leading up to multi-party elections in 2006.

The disbursement decision for 2005–06, which has just been made, follows a further assessment of Uganda's performance. In a number of respects this is still strong. Growth in 2004–05 was 6 per cent. and Uganda is on track to meet almost half of the MDG targets, although additional efforts will be required to achieve them all. Negotiations of the PRSC with the World Bank have now concluded. Ten of the eleven "prior actions" have been successfully completed, but worryingly a "prior action" on the execution of the budget has only been partially met because expenditure on public administration significantly overran. Our governance assessment has highlighted concerns about: delays in putting in place the legal basis for multi-party elections; the continuation of state financing for the Movement system in a new era of multi-party politics; and more recently, and particularly worryingly, about issues associated with the arrest and trial of the leader of the Forum for Democratic Change, one of the main parties that plans to contest the election.

The decision to reduce the PRBS commitment to £30 million in 2005–06 takes into account the need to ensure that Uganda's budget is still able to finance key expenditures that are crucial to improve the lives of poor people.

The decision to reallocate £15 million to humanitarian assistance provided through the UN reflects our concern about the serious humanitarian situation in northern Uganda. This is not being fully addressed by the Ugandan Government or the finance that has so far been committed to humanitarian agencies. Our additional assistance will be focused on providing food and improving access to basic services, especially health care.

A decision on the remaining £5 million will be made after the elections in February.

We will continue to monitor Uganda's performance closely. I will make a decision on our PRBS commitment to Uganda in 2006–07 in the light of our assessment of Uganda's continuing commitment to the partnership objectives set out in "Partnerships for Poverty Reduction: Rethinking Conditionally".

The European Council on 15–16 December agreed to establish a 10th European Development Fund (EDF) to provide development assistance to African, Caribbean and Pacific (ACP) countries that are signatories to the ACP-EU Partnership (Cotonou) Agreement.

I am pleased to announce that the 10th EDF will provide €22,682 million (£15,536 million) over the period 2008–13. This is a significant increase on the value of the 9th EDF and the EDF will remain as an EU intergovernmental fund, both important objectives of the UK Government. The UK share of the 10th EDF will be 14.82 per cent. rising from a 12.69 per cent. share of the 9th EDF, reflecting our recognition of an upward trend in the effectiveness of the Fund, and our commitment to increasing EU assistance to Africa.

I believe that this represents a good outcome for our ACP partners and I am delighted that the UK Presidency was able to deliver this positive agreement after lengthy negotiations. Member States will now negotiate an intergovernmental agreement on the structure, allocation, programming and management arrangements of the 10th EDF. This will present an opportunity to further enhance the effectiveness of the EDF. I will keep the House informed fully on progress.

I am placing in the Libraries of both Houses a copy of a discussion paper, "The EU's contribution to the international response to the 2004 Asian Tsunami: Achievements, next steps and lessons learned".

The paper has been written by the Department for International Development and the European Commission to inform discussions at a high-level meeting in Brussels on 20 December 2005. The meeting will examine the international humanitarian and reconstruction response to the 26 December 2004 South East Asian tsunami, with a particular focus on the EU.

Invited participants include the European Commissioners for Humanitarian Aid and External Relations, representatives of the Council of Ministers, Members of the European Parliament, countries affected by the disaster, the United Nations, international financial institutions, the International Federation of the Red Cross and civil society organisations.

The paper examines EU activity in three main areas: financial assistance for humanitarian and reconstruction needs; support for peace building via reconstruction work; and reinforcing preventive measures, early warning and disaster preparedness. The paper highlights a number of issues that continue to influence the effectiveness of aid delivery. These include conflict sensitivity, co-ordination, monitoring, accountability, local ownership, communication, strengthening the humanitarian system, ensuring funds continue to flow, equity in distribution and early warning and disaster preparedness.

The aim of the meeting is to identify lessons learned from the EU's response that could guide the international community's response in the tsunami-affected countries and in other disaster-affected countries in the future.

I am pleased to announce that Her Majesty in Council has approved the appointments of Janet Paraskeva as the First Civil Service Commissioner and Janet Gaymer CBE as the Commissioner for Public Appointments. Janet Gaymer is also being appointed as a Civil Service Commissioner.

Janet Paraskeva is currently the Chief Executive of the Law Society. Janet Gaymer is currently a senior partner with Simmons and Simmons.

In announcing these appointments, I would also like to record my appreciation to their predecessors, Baroness Prashar CBE and Baroness Fritichie DBE, who have come to the end of their terms of appointments. I am grateful to them for the contributions that they have made in ensuring the highest standards in their work.

In summer 2004, I commissioned Sir. Patrick Brown to undertake a review of the Business Appointment rules. The terms of reference were:

"To review the Business Appointment Rules to ensure that they are compatible with a public service that is keen to encourage greater interchange with the private and other sectors which is essential for effective delivery in today's public service. The review will consider the operation of the system, taking account of practice overseas. It will also consider the current machinery for dealing with applications and the necessary resources".

I am today placing copies of Sir Patrick's report in the Library of the House and would like to place on record my thanks to him for his careful consideration of the issues. The report makes a number of recommendations relating to handling of the business appointments rules for civil servants and other public servants. The report does not cover Ministers.

The Government are attracted to some of Sir Patrick's recommendations. However, it is conscious that the Public Administration Select Committee (PASC) is currently undertaking an Inquiry into the role and independence of the ethical regulation of Government, which includes the Business Appointments processes. We would therefore welcome the views of PASC before providing a substantive response to this report.

In particular, we would welcome the views of PASC on the proposal to transfer responsibility for business appointments processes for crown servants to the Civil Service Commissioners which would involve increasing the numbers of Commissioners and providing additional support. This would have a cost and would disperse the oversight and administration of the rules to more than one body.

The Government would also welcome the views of PASC on the proposals that there should effectively be one test and that where this test is satisfied that there should be one form of restriction placed upon public servants who are proposing to move to other jobs.

I chaired the extraordinary Competitiveness Council in Brussels on 13 December 2005 on the draft regulation for the registration, evaluation, authorisation and restriction of chemicals (REACH), and establishing a European chemicals agency. This followed the constructive debate held at the 28–29 November Competitiveness Council.

The Competitiveness Council reached unanimous political agreement on the draft REACH regulation following a policy debate based on the UK presidency compromise text and additional proposals presented by the presidency directly to the Council. The Council will formally adopt its common position at a later session once the legal text has been finalised. The common position will be forwarded to the European Parliament for a second reading under the co-decision procedure.

As the Prime Minister explained in his statement to Parliament of 19 December, the European Council of 15–16 December 2005 succeeded in achieving agreement on the next EC budget for the 2007–13 Financial Perspective. As part of the package, the Member States reached agreement on future Structural and Cohesion Funds spending for the 2007–13 budgetary cycle. The deal is now subject to an Inter-Institutional Agreement with the European Commission and the European Parliament.

The European Council has agreed that there should be a Structural and Cohesion Funds budget of €308 billion, representing 0.37 per cent. of EU Gross National Income (GNI), for the 2007–13 Financial Perspective. This will be focused on three Objectives: a Convergence Objective for regions with a Gross Domestic Product (GDP) below 75 per cent. of the EU average; a Competitiveness Objective for other regions; and a Co-operation Objective for cross-border and trans-national projects.

The agreement constitutes an increase of 31 per cent. or around €73 billion in comparison with the current Structural Funds budget of around €235 billion for the 2000–2006 Financial Perspective, excluding expenditure under the European Agricultural Guidance and Guarantee Fund (EAGGF) and the Financial Instrument for Fisheries Guidance (FIFG). The new Structural Funds budget is 8.3 per cent. less than in the Commission's initial proposals of July 2004. The reformed budget will enable the EU to address priorities in the new Member States while still maintaining some funding for richer Member States, in particular their poorer regions.

In summary, the European Council has agreed to allocate: €252 billion (or 81.9 per cent. of the Structural Funds budget) to the Convergence Objective, including €62 billion for the Cohesion Fund (for Member States with a GNI below 90 per cent. of the EU average) and €12 billion for so-called "phasing-out regions" (the regions that no longer qualify for full Convergence funding, but would have done without enlargement); €48 billion (or 15.7 per cent. of the Structural Funds budget) to the Competitiveness Objective, including €10 billion for so-called "phasing-in regions" (the regions that no longer qualify for full Convergence funding, and would no longer qualify even if enlargement had not taken place); and €7.5 billion (or 2.4 per cent. of the Structural Funds budget) to the Co-operation Objective.

The Government have argued consistently that, following enlargement, it is right that the Structural Funds should be focused to a greater extent on the poorest EU Member States. Overall the 10 new Member States, together with Bulgaria and Romania, will receive a total of €158 billion in Structural Funds (or €174 billion including transfers to the EAGGF and FIFG). The 10 new Members will see a more than 250 per cent. increase in their Structural Funds receipts from an average of €7 billion per annum during the 2004–06 period to an average of €19 billion per annum in the 2007–13 period. We estimate this to be equivalent to an average increase in their domestic public sector expenditure of up to 7 per cent. In per capita terms, the new Member States will receive an average per citizen of around €1,500 in Structural and Cohesion Funds, and around €2,500 including other spending, over the next Financial Perspective.

The older EU Member States (the EU15) will face reductions in spending compared with current levels, reflecting their comparative prosperity and the need to support the economic convergence of the new Member States. However, the UK will continue to receive substantial funds for its poorest regions. We estimate that the UK will receive a total of approximately €9.4 billion (in 2004 prices) in Structural Funds receipts from 2007–13, in comparison with approximately €15.85 billion (in 1999 prices) in the current Financial Perspective, excluding funds now transferred to the EAGGF and FIFG.

Of this, the UK will receive approximately €2.6 billion in Convergence funding for its poorest regions. Cornwall and West Wales and the Valleys will receive full Convergence funding, while the Highlands and Islands will receive phasing-out Convergence funding averaging approximately two-fifths of the intervention rates for the UK's future full Convergence regions. The UK will also receive approximately €6.2 billion in Competitiveness funding for its other regions. Of this, South Yorkshire and Merseyside will receive phasing-in Competitiveness funding averaging approximately one-third of the intervention rates for the UK's future full Convergence regions. It will be for the Government, in agreement with the Commission, to decide how the UK's remaining Competitiveness funding should be allocated between its nations and regions. Finally, the UK will receive approximately €0.6 billion in Co-operation funding. The Government will also need to agree with the Commission how this should be allocated.

At this stage it is not possible to provide precise figures for the amounts to be received by UK regions. We will only know the precise figures after an Inter-Institutional Agreement has been reached on the final EC budget and once the European Commission has produced official Structural Funds allocations for the UK and its regions. Our initial estimate is that Cornwall is likely to receive full Convergence funding of approximately one-third higher than current allocations, West Wales and the Valleys should receive full Convergence funding approximately equal to current allocations, the Highlands and Islands should receive phasing-out Convergence funding of over half its current allocations, and South Yorkshire and Merseyside should receive phasing-in Competitiveness funding of approximately one-third of current allocations. These comparisons are in real terms and exclude allocations that have now been transferred to the EAGGF and FIFG.

In the light of this outcome, which means that the UK and its poorer regions will continue to receive substantial Structural Funds, the conditions for application of the domestic funding Guarantee, set out in the written statements to Parliament by the then Secretary of State, my right hon. Friend the Member for Leicester West (Ms. Hewitt), on 17 September and 11 December 2003, do not apply. As those statements made clear, the purpose of the Guarantee was to ensure that our nations and regions would not lose out if the Member States agreed a reform package where the Structural Funds were focused solely on the poorest countries, and it would apply only if the richer Member States no longer received Structural Funds allocations in the next Financial Perspective. It should be noted that spending on regional development from the UK's own resources already far exceeds the contribution from Europe as a result of increased allocations over recent years. Domestic regional spending allocations will be considered further in the Comprehensive Spending Review, taking into account the outcome of the negotiations, the needs of the regions and the overall fiscal context. The Devolved Administrations will receive the normal formula shares of changes in overall departmental provision.

As part of the reform negotiations, the Member States have agreed to strengthen the strategic focus of future Structural Funds spending by establishing Community Strategic Guidelines on Cohesion and National Strategic Reference Frameworks, which will set out the broad objectives for future programmes. The Government plan to consult on the UK's draft National Strategic Reference Framework early in 2006 and, as part of the consultation, they will also seek views on the methodology for allocating the UK's Competitiveness funding.