With permission, I wish to make a statement on amendments to the Electoral Administration Bill. The Government intend to amend the Electoral Administration Bill, currently before the House of Lords, to make it compulsory for political parties to disclose any loans they receive. That is an issue that affects all political parties—[Laughter.] I hope that the Government, all the political parties of this House and the Electoral Commission will be able to work constructively together to find a solution that allows for transparency and fairness.

My intention is to achieve as great a transparency for loans made to political parties as applies to donations under the regime in the Political Parties, Elections and Referendums Act 2000. My right hon. and learned Friend the Secretary of State for Constitutional Affairs has today written to the leaders of all political parties represented at Westminster, and to the Electoral Commission, seeking their views on the elements of a reporting regime, including whether it should be retrospective. I have placed a copy of his letter in the Library of the House.

The Prime Minister has announced that Sir Hayden Phillips will conduct a review of the funding of the political parties. The terms of reference of the review were announced earlier today, and I have placed a copy in the Library.

I thank the Minister for her usual courtesy in giving me early sight of her short statement. I welcome the inquiry into the funding of political parties under Sir Hayden Phillips and the terms of reference to which she referred, a copy of which is in the Library. An inquiry was inevitable, given the revelations of the past few days, and we are happy to give our full co-operation to Sir Hayden. However, why is he undertaking the review and not the Electoral Commission? It seems inexplicable. The Government set up the commission to oversee such matters. The Minister knows that the commission has produced a report already on the funding of political parties and it has a credibility on the issue that, frankly speaking, no politician or civil servant is likely to match. Despite Sir Hayden's ability, surely the commission was the obvious choice.

Is the Minister able to shed any light on how it was possible for such large amounts of money to enter Labour coffers in loans without the full knowledge of Labour's leading figures? Perhaps it is understandable that the Deputy Prime Minister would not be told, but can it really be sustainable that the treasurer of the Labour party was not informed? Why were the fundraising activities—[Interruption.] I hear the words "purer than pure", but I do not think that we need to go back to those long-ago days. Why were the fundraising activities centred on 10 Downing street rather than Labour headquarters? Does not that raise concerns that civil servants may have been put into situations too close to politics, and not for the first time under this Government?

The only leading figure who knew what was happening was the Prime Minister. Does the Minister agree that he acted wrongly in not being open with his colleagues, his party and the country? His behaviour caused the crisis.

The Minister says that loans should be declared and she wants to change the Electoral Administration Bill—[Interruption.] I will treat that positively and co-operatively. However, that Bill was in the House for months and nothing would have been done if Jack Dromey had stayed silent.

Can the Minister explain why Sir Hayden is apparently to have so long—until the end of 2006—to report? Does not that mean that further changes to the law will have to wait for 18 months, given the timing of the Queen's Speech? Does she agree that the matter is urgent? Does she also agree that the review of party funding must include trade union donations, just as much as company and individual ones?

An important part of solving the crisis should be cross-party co-operation—sitting down together to work out a fair and transparent system of funding and how to take honours out of the funding of politics. The Minister knows that my right hon. Friend the Member for Witney (Mr. Cameron) is writing today to the Prime Minister and to the right hon. and learned Member for North-East Fife (Sir Menzies Campbell) suggesting such talks. Will the Government sit down with the Opposition and other parties to discuss the important proposals put forward by the Conservatives to clean up party political funding?

I would have hoped that the hon. Gentleman could come to the House in a slightly more conciliatory fashion, given that my statement specifically says that we want all parties to be involved in the discussions.

The hon. Gentleman asks why Sir Hayden Phillips has been asked to conduct the review. The hon. Gentleman, like many Members, knows that Sir Hayden is an extremely well-respected and experienced civil servant, who has dealt with all parties and who will certainly look at the issue with a view to helping all parties to come to a proper conclusion.

The hon. Gentleman asks why the issue had not been included in the Electoral Administration Bill, but when discussions about party funding took place in 2000 no one in the House suggested that loans should be part of the Bill. That Bill is currently going through the House of Lords and we can include amendments to it this very week, so when he asks for urgency in the matter I can tell him that no one is acting with more urgency than the Government.

The hon. Gentleman asks that trade union donations be taken into account. He might want to reflect on the fact that not only trade union donations but donations from all sorts of individuals and institutions should be taken into account. He will remember that the Government prevented donations from people living outside this country ever being part of our party political system.

Finally, the hon. Gentleman asks why the report would be at the end of 2006. If it is possible for that timetable to be brought forward, no doubt it will be. However, I hope that in the spirit of co-operation, which he remembered to mention towards the end of his questions, he will make sure—as we want to do—that every political party, the Electoral Commission and all the stakeholders involved have an opportunity to contribute properly, so that we reach a decision that will sit properly and benefit our democracy for the future—[Interruption.]

rose—

Order. The House should recognise that it is probably under very close inspection from the public where this matter is concerned. We do our reputation no good if we trade insults from either side. Before further questions are put, I remind the House that the Minister is here in her departmental responsibility, answering for her Department and not for any political party.

From the Prime Minister's announcement of a general review of funding of political parties on Thursday to the Government's conversion to disclosure of loans to political parties on Monday is a welcome and, if I may say so, speedy direction of travel—even if Thursday's announcement was extremely late, given all the press that there has been in past years, hesitant, and made in undesirable circumstances.

I have four specific questions for the Minister, representing her Department. Does she and do her colleagues agree that loans are potentially much more significant in terms of influence on the political process than outright gifts, because people can renounce claiming them back or ask for them back, and therefore have much more influence during that process? Obviously, they need to be treated in the same way.

Do Ministers now agree that significant loans made in the past 10 years should all be disclosed? If that is not done, the public will not be able to judge what the link is between fees and funds on the one hand and favours on the other.Do Ministers now accept that in a modern, pluralist democracy, nobody should be able to buy their way into a seat in either of the Houses of Parliament? Do Ministers, from the Prime Minister downwards, agree that it is time that we converted the funding of political parties in Britain back to a system in which ordinary people influence and control political parties according to their interest and their commitment and not according to their wealth?

I welcome the hon. Gentleman to his new position dealing with constitutional affairs.

Some people would ask why loans should be regarded as more significant than donations—after all, a commercial loan has an interest rate attached to it, so some would argue that a donation would be a more influential form of funding. However, Sir Hayden's review will take account of all of those issues.

The hon. Gentleman asked about publicising loans made in the past 10 years. I cannot say at this stage whether there will be retrospectivity—if that is the correct word— in that respect, but I understand that the Labour party is today publicising all those people who have given it loans. I hope that his party and the others in the House will do the same.

Finally, on the hon. Gentleman's question about anyone being able to buy a seat in this House or any other, we would all deprecate any suggestion of that happening.

I welcome what my hon. Friend has said today and recognise the changes in relation to political donations that the Government have brought about—changes that the Tories refused to make prior to 1997. Is it not essential at long last to separate the giving of large donations to political parties and the award of peerages and knighthoods—a practice that we know has been going on for years? I believe that the public want a clear separation between the two, and I hope that our earlier reforms will be consolidated by further changes during this Parliament.

My hon. Friend is absolutely right: it is important that we separate the two and that the two are seen to be separate. In the past few days, we have learned that perception is always key in politics and that it is important to give the public the reassurance that everything done in this House and in the other place is done openly and with transparency. We are introducing amendments to ensure not only that that is the reality, but that that is the perception, as well.

I have great sympathy with the Minister because I assume that, prior to Jack Dromey blowing the whistle last week, she was kept in the dark, as was the treasurer, the Deputy Prime Minister and the chairman of the Labour party. The Minister says that we will have transparency in relation to loans. That is right, but should we not also consider limiting the level of loans and barring any Minister from giving any loans to any political party?

The question of a limit will be discussed during the review, and I hope that all hon. Members and political parties will play an active and constructive part in it. I have had discussions with various colleagues over the past few days about the funding of political parties, and there are almost as many views on the subject as there are Members of Parliament. I welcome the debate, I hope that it will be constructive, and I look forward to hearing from the hon. Gentleman.

Welcome though today's announcement is, does my hon. Friend agree that we need to go much further if we are to re-establish public confidence in the funding of political parties? Will Sir Hayden Phillips consider, among other things, imposing a far more drastic cap on what can be spent nationally by political parties, and imposing a very drastic cap on what can be donated by individuals? Could he look at whether small donations should be made tax deductible for the political party of one's choice, as that is the one form of funding of political parties that the public might support? I appreciate that some of those matters are for my hon. Friend's many superiors, but will she undertake to pass the word on?

I am grateful for my hon. Friend's remarks. I thought that we were a little more egalitarian in this party than to espouse the idea of having superiors but, nevertheless, I accept what he said. It might be helpful if I briefly tell the House that Sir Hayden's review will examine the case for state funding, including whether or not it should be enhanced in return for a cap on the size of donations. He will consider, too, the transparency of funding of political parties, so I hope that that covers some of the questions asked by my hon. Friend.

I remind the House that Sam Younger said in The Times:

"Political parties are important in a democracy. They need funds in order to organise themselves, develop policies and put themselves forward to the electorate."

It is a question of getting the balance right between state and private funding, and that is part of the debate.

Why did the Minister decide to make her statement today?

Because the Prime Minister and the Government thought that it was important, given that the Electoral Administration Bill is proceeding through the House, to take the opportunity to make a statement at this time.

Is my hon. Friend aware that, contrary to all the talk in the media, the sad fact is that over the past 20 years or more there has been a disinclination among the public either to join parties or to contribute to them? They then complain, wherever the money comes from. Can I suggest to my hon. Friend that the last people we want lectures from are the party of Ashcroft, Aitken and the rest? We do not need any lectures about a Swiss rollover by the Liberal Democrat— but if we did go further we could abolish the House of Lords and the honours lists so that there would not be very much left to buy.

My hon. Friend leads me very temptingly down a path that it is not appropriate for me to take, given the nature of the statement. It deals with the funding of political parties, so he is quite right to refer to other political parties. This is something in which we all have a stake, so we should all work on it together. As for the reform of the House of Lords, he will wish to know that we look forward to proceeding with change there very speedily indeed.

The Minister just said that perception is important in politics, so does she agree that the public perception of this sorry affair is that the Prime Minister has been caught red handed, selling peerages in return for party funding?

The Prime Minister, in his statement last week, took responsibility as the leader of the Labour party. I think that that was right and proper, and something that I would expect him to do.

I welcome the Minister's statement today. It is quite right that all political parties should declare any loans that they receive and it is right to review party political funding, but I would err on the side of caution in going down the road of state funding for political parties, which would go down like a lead balloon with the public. The way forward has been mentioned already—we should make the cap on spending at elections much lower than at present. I am sure that members of the public will not mind if they only receive one DVD instead of three. [Interruption.]

Of course, as my right hon. Friend the Leader of the House says, it might depend on whom those DVDs are from. However, I hear what my hon. Friend says about state funding. She reflects a view that, I suspect, is held quite widely. That is part of the reason why the debate about getting the balance right is important. As I have already said, a reference to the cap on funding is in the review.

I am of the view that most party political funding is wasted anyway on embarrassing and probably counter-productive advertising campaigns and dubious spin doctors, on the part of all the major parties. Was the hon. Lady, in her response to my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth), seriously trying to tell the House that the occasion of her statement today had nothing whatever to do with the scandal and revelations of the past few days? If so, I fear that she may be unnecessarily damaging her own credibility, as well as setting a very poor example of candour in the House. Does she accept that not to reveal a loan, as a financial relationship, is thoroughly disingenuous and misleading?

Obviously, the discussions that have been taking place over the past few days are ones to which we must all respond. It is not perhaps in the hon. Gentleman's best interest to try to say that this is something that affects only one political party—[Interruption]—or to imply that that is so. I hope that he agrees that it is necessary for us all to work together.

As I said earlier, it is important to re-engage the public in democracy. It is important that they see that we are transparent in the way that we are funded. There is a dichotomy: we do not want political parties to be funded by shady individuals from abroad; nor do people necessarily want to pay for them through their taxes. We must find a way that gets the balance of party political funding right—whether partly through the state or partly through private donations—but whichever way that is done, it must be transparent, and that is what we hope to achieve.

Has the Minister noticed that Sir Hayden has been honoured? Is there not a case for appointing a real person to conduct the review, rather than a member of the establishment, the glitterati, that magic circle that runs the country, whether it has a Labour or a Tory Government? Will she support an amendment to disqualify from getting a peerage anyone who makes a substantial loan or payment to a political party? That is what is necessary, and on that, with the greatest respect, the Prime Minister—she might find this hard to believe—is wrong.

I think that all political parties in the House that propose people for appointment as working peers would say that they put forward the names of people who have contributed greatly in public life, so I would not want to go down the road of banning every form of donation. I am sure that Sir Hayden will be more than delighted to hear my hon. Friend's views on what should be in the review.

The hon. Lady's statement is most welcome today, but it would have been even more welcome if it had been made before last week's revelations. She referred twice in her statement and once in an earlier response to the word "transparency". In the interests of transparency and gaining some ground back on the way in which the public consider politicians in general, can she tell the House whether there will be an investigation of recent events by the Labour party under the Honours (Prevention of Abuses) Act 1925?

There has been no abuse under the 1925 Act.

"We didn't publish the names, because that was not the law, and we've complied with the letter of the law, we've followed it absolutely."

That was said by the hon. Member for Tatton (Mr. Osborne) on a broadcast made yesterday. The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) should be aware that the 2000 Act allowed for loans to be made in the way that they have been made. We are tabling an amendment to the Electoral Administration Bill to ensure that there is transparency.

I welcome the Minister's statement and her announcement that the Labour party is opening its books in respect of the loans and gifts made to it. Embarrassing as it may have been to Labour party members to discover that we were in receipt of loans, will my hon. Friend confirm that although Labour Members knew next to nothing about those loans, the House knows absolutely nothing about loans and gifts made to the Tory party during the same period? Will she confirm that the terms of Sir Hayden's inquiry will include a 10-year retrospective on loans as well as gifts, and that it will explore the terms of loans and whether they varied during the period of the loan? Will he make recommendations on the most effective way of severing any connection between financial assistance to political parties and the honours system?

My hon. Friend is right. It might be appropriate to remind the House that it was this Government who brought in the 2000 Act and set up the Electoral Commission. We have said that we want to make the system even more transparent. I know nothing about loans to the Tory party and it is not my place to make any comment on them from the Dispatch Box. Nevertheless, I can assure my hon. Friend that Sir Hayden's review will be able to examine funding right across the board and, if he comes to a conclusion about the retrospective nature of that funding, I am sure that he will bring it to the attention of the House.

Given that it is vital to dispel any notion that the funding of any political party secures access to the legislature, is it not the most important and urgent responsibility of the Government to bring forward proposals for a predominantly elected House of Lords, because that is the only credible and defensible basis upon which to constitute the upper House in the 21st century?

As I mentioned earlier, the reform of the House of Lords is a matter that we are studying closely. I hear what the hon. Gentleman says. I know that there are various views in the House. I may not entirely share his views in that respect. It is relatively new for the Conservative party to believe in a non-elected House—

Not for me. I have always believed that.

It may not be new for the hon. Gentleman, but that is a debate that we can continue.

Is my hon. Friend aware that we on the Labour Benches are entitled to be proud of the 2000 Act, which introduced a new procedure for donations? Acknowledging that there is a loophole that allows parties to receive commercial loans, does my hon. Friend accept that her statement—[Interruption.] Opposition Members might allow others to speak. I think that they are a little on the defensive. [Interruption.] Yes, I do. No one tried to amend the legislation before. Will my hon. Friend confirm that we are going for maximum transparency in respect of all loans and all donations to all political parties as soon as possible?

My right hon. Friend is right. When the Act was passed in 2000, no one in the House thought about the effect of loans. As my right hon. Friend the Secretary of State said earlier today, the system has not been cleaned up enough and we need to change it. That is why we are introducing the amendment to the Electoral Administration Bill. We have a proud record of trying to bring about greater transparency, and we shall continue to do so.

Does the Minister think that the British public should regard this Government and their Prime Minister as whiter than white? If not, what advice would she give to the Prime Minister about his future?

The Prime Minister, along with this Government, has made radical changes in this country. We have introduced the minimum wage, put more money than anyone else has done before into hospitals and schools, reduced unemployment and made the economy more sound. The record of this Government and Prime Minister is second to none, and I ask the hon. Gentleman to reflect on that before he goes any further.

I listened very carefully to the answers given to the hon. Member for North Southwark and Bermondsey (Simon Hughes) and my hon. Friend the Member for Nottingham, South (Alan Simpson). Does the Minister accept that, in disclosing the nature of the loans given over the past 10 years, we need to know why the people making those loans thought it necessary to keep their names secret; what conditions were placed on them by the people making the loans; what interest rates were paid on them and whether those interest rates have varied during that period? If there is to be any confidence in the political system, it has got to be absolutely open and above board as to why people felt it necessary to keep their names secret while making any loan to any political party.

There are a variety of reasons why people wish to keep their names secret when they give loans or even donations to political parties. I think we are all pretty much aware of what they are. However, we feel that we need to go further than we went in the 2000 Act, which is why we are bringing forward the amendments. I hope that my hon. Friend will also contribute to the debate on how political parties should be funded. The bottom line, if I may put it that way, is that we make things as transparent as possible, so that people have confidence in the democratic process and so that political parties re-engage with the public in the way that we would all like.

I beg to ask leave to move the Adjournment of the House under Standing Order No. 24, to discuss a specific and important matter that should have urgent consideration, namely, the announcement last Thursday of up to 1,200 staff reductions at the University hospital of North Staffordshire. I apologise, Mr. Deputy Speaker, if I am a little out of breath; I thought that the statement would continue rather longer.

My local hospital is one of 18 NHS trusts in the country earmarked in January by the Secretary of State to receive the attention of turnaround teams. It is the first to announce its financial recovery plan. Locally, of course, the cuts are devastating. They include 573 nurses, midwives and auxiliaries, and one in five of all nursing staff. The situation at the hospital, however, illustrates more fundamental issues about governance, management and control across the NHS.

This was a hospital that was allowed to drift by its strategic health authority and the NHS Executive, and right up to the desk of the former NHS chief executive, the soon-to-be Lord Crisp. It was allowed the luxury of letting its former chief executive serve one year's notice before quitting for personal reasons. Even then, last year, it could appoint only an acting chief executive, who was moved on in January. That followed the resignation of the chairman and all the non-executive directors days before Christmas. Throughout this period, it employed accounting staff who evidently found numbers troublesome. That is all the more surprising as the numbers have to add up for a brand-new private finance initiative hospital that has been planned for years.

Since Christmas, local MPs have been trying to get to the bottom of the hospital's projected £18 million deficit this year. We have failed to be able to do so. At a meeting in mid-February, we were promised the details by the SHA, but instead, all we had last Thursday, out of the blue, was talk of £43 million savings over two years. The document issued to staff giving 90 days' notice of redundancy is a disgrace in content and tone. This is a hospital, not a business going bankrupt. This is no way to secure the continued staff good will on whose basis our NHS operates. Despite its consequences, the notice was issued on no higher authorisation than that of the acting chief executive of the hospital. Much of the deficit is down to national policies, the consequences of which are coming home to roost. A great deal of change is taking place, but it is important that the response to the deficits does not veer out of control.

I have listened carefully and, in the circumstances, sympathetically to the hon. Gentleman. I must give my decision without giving any reasons: I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 24, and I cannot therefore submit the application to the House. However, I am sure that he has noted that there is an estimates debate this afternoon on the NHS financial deficit, and I commend that thought to him.

On a point of order, Mr. Deputy Speaker, The Mail on Sunday yesterday contained an article that included what were purported to be details of the living away from home allowance claims made by a right hon. Member of the House. I have absolutely no idea whether those details were correct or whether the complaints made about them are sustainable—they may have been completely invented. If there has been a leak from the Fees Office—prima facie, someone in the Fees Office may have sold information available to them in the course of their duties—will you ensure that an inquiry is undertaken to remove that terrible suspicion from people who serve the House on the whole extremely honourably and well?

I have no reason for supposing that there has been any lowering of standards by an Officer of this House, and I did not necessarily take that implication from that article, which I also saw. There is a procedure to deal with that matter, and if there is any ground for suspicion, I am sure that it will be brought up in the proper manner with the Parliamentary Commissioner for Standards.

On a point of order, Mr. Deputy Speaker, may I draw your attention to a statement made by the Leader of the Opposition at Prime Minister's Question Time on 15 March:

"We believe in parliamentary scrutiny—I know that the Prime Minister probably cannot even spell those words, but we happen to think that it is important."?—[Official Report, 15 March 2006; Vol. 443, c. 1452.]

May I subsequently draw your attention to the Ninth Standing Committee on Delegated Legislation, which considered the important Civil Proceedings Fees (Amendment) Order 2005, because not a single Opposition Member turned up and the matter was discussed in their absence? Should the Leader of the Opposition be admonished for misleading the House?

That is not even a point of order for the Chair.

On a point of order, Mr. Deputy Speaker, in view of the importance of this matter to many hon. Members, have you received any indication from the Government that a Minister will come to this House to make a statement or answer in detail on the ill-considered and apparently inconsistent merger of police forces?

I have not received notice of an intention to make an oral statement to the House, but I note that the Home Secretary is due to make a written ministerial statement this very day. I know nothing else at the moment that relates to hon. Members' understandable interest in the matter.

On a point of order, Mr. Deputy Speaker, I seek your guidance. Given that last Thursday afternoon, in a move that was certainly unusual and arguably somewhat discourteous, the Government withdrew from the consideration of the House their own business, namely Lords amendments to the Immigration, Asylum and Nationality Bill, have you received an indication that a Minister intends to come to the House and tell hon. Members when we will have an opportunity to debate the business that we were supposed to consider on Thursday afternoon?

I have no such information that I can share with the hon. Gentleman, but it is possible that the matter will be alluded to in the next business statement, or perhaps he can contrive that it should be.

Further to the advice that you gave me a moment ago, Mr. Deputy Speaker. You said, rightly, that if there is any suggestion of an abuse by a Member in the allowance system, that is a matter for the Parliamentary Commissioner for Standards to investigate. Of course, I accept that that is right. My point, however, related to the possibility of corruption by a member of the staff of the Fees Office. I am not aware that the parliamentary commissioner has any jurisdiction over employees of the House of that kind, and my question to you really concerns what procedure might be available to investigate such a suspicion if unfortunately it were to arise as a result of the article to which I referred.

The hon. Gentleman is now making a very grave allegation, having previously said to me that he had no idea whether there was any truth in the matter at all. I think that one should be very careful in making an allegation against someone who cannot answer back to this House. If there is any breath of a suggestion of impropriety on the part of a member of staff, I am sure that the head of the department, at the very least, will examine that possibility to see whether there is the slightest bit of truth in the matter. I think that it is probably better left there.

I have imposed a time limit of 10 minutes on Back-Bench speeches which applies after the opening speech.

I am grateful, Mr. Deputy Speaker. Because of that time limit, I shall do my utmost to keep my own remarks to 10 minutes, as I know that many Members want to speak in both debates.

The motion before us seeks the House's approval for the Ministry of Defence's spring supplementary estimate—a request for an additional £1,890 million, of which the largest part is to meet the costs of peacekeeping in Iraq and Afghanistan. I know that in making a speech one is meant to begin at the beginning, but I wish to begin at the end, so I shall go straight to the conclusion of the Defence Committee's report:

"We do not propose that the House should refuse the request for resources set out in the MoD's Spring Supplementary Estimate. On the contrary, we believe it is essential that peace-keeping operations in Iraq and Afghanistan should be properly funded."

If anything, we are concerned that too little is being spent, not too much. The Defence Committee, of which I have the great honour to be Chairman, hopes that the House will approve this request for resources. We believe that our service personnel should have the equipment that they need. However, we have several concerns about the way in which the Ministry of Defence presents its estimates to Parliament and thought that the House should have an opportunity to consider them before it approves the spring supplementary estimates. We are therefore grateful to the Liaison Committee for agreeing that our report should be debated.

First, we are concerned about the inadequacy of the information that the Ministry of Defence provided to Parliament in support of the request for resources—a request for a very large amount of public money. The initial estimates memorandum, which all Departments provide to their Select Committees with the estimates, is printed in the evidence with our report. It does not add very much—only a breakdown between the operations for Iraq and Afghanistan. That is in table 1 of our report. We thought that that was not good enough and asked the Ministry of Defence for more information. Its more detailed breakdown is set out in tables 2 and 3 of our report. We hope that next time the Ministry of Defence will give that level of information in the estimates memorandum when the estimates are first published. That will give us enough time to report to the House, if necessary, in good time for the estimates day debate.

Secondly, we are concerned about the high level of contingency that is contained in the estimate. Tables 2 and 3 of our report show that the estimate contains £69 million contingency in resources and £77 million contingency in capital, so we asked the Ministry of Defence why such a large amount of contingency was necessary, especially at such a late stage in the financial year. The response was that it was

"due to the often rapidly changing operational situation"

and the

"need to be able to respond to the rapidly evolving threat to our forces".

The Defence Committee fully accepts the need for the Ministry of Defence to have financial flexibility to respond to changing threats, buy new equipment and so on when the operational need arises. There may be different views on whether it is a good thing to deploy in Iraq and Afghanistan, but there can be no such difference about the need for our forces to be properly and fully protected. Force protection, especially against increasingly sophisticated improvised explosive devices, is a matter of life and death for our service personnel as they serve this country in Iraq and Afghanistan. Equipment often needs to be developed at short notice. Urgent operational requirements cost a lot of money and we need to ensure that it is properly managed.

In January, the Committee visited the Defence Procurement Agency and were briefed by the special projects integrated project team on the acquisition of urgent operational requirements. We were impressed by the speed and efficiency of the acquisition process. The team's close connection to operations gave its members a strong motivation and they fed back lessons from the field. We were told that, in one project, the contract was let within three days of notification of the requirement and the equipment was in the field in three weeks. That is an extraordinary achievement.

We accept the need for flexibility, but that does not absolve the Ministry of Defence of the requirement to make proper financial forecasts. We shall look closely at the out-turn costs in the annual report and accounts to ensure that the Ministry is not routinely overestimating the costs of operations. Our report recommends that the annual report should contain significantly more detail on the cost of operations than it has done in the past.

Our third concern is about arrangements whereby the Ministry of Defence waits for the spring supplementary estimates before seeking Parliament's approval of expenditure on operations. I am afraid that we did not understand why the Ministry does that. It may be a surprise to some hon. Members that the Ministry makes no provisions in its main estimates for operations, even if they are well established. In effect, we are being asked to authorise expenditure in arrears.

The Ministry's explanation for that arrangement is that

"we cannot provide a detailed forecast at the beginning of the financial year that is accurate to the standards which we would normally place before Parliament for figures for that financial year."

In our view, the fact that the Ministry cannot provide information that is accurate to a high standard is no reason for not providing Parliament with any information at all. We therefore recommend that, in future, provisions for operations that are well under way should be made in the main estimates in the usual way—if necessary, with a large element for contingency.

We also recommend that the Ministry provide to our Committee regular updates of the cost of operations, in the same way as it provides information to the Treasury. That would be a welcome demonstration that the Ministry recognises the need for public accountability. It should give us the clear impression that it regards Treasury approval of its expenditure plans as no more important than parliamentary approval. Parliamentary approval should not be a rubber stamp.

Perhaps the attitude of the Ministry of Defence is influenced by the fact that funding for operations does not come from its allocated defence budget but is new money from the Treasury. However, it is all public money and it should all be subject to the usual process of parliamentary authorisation.

Our report deals briefly with the costs of operations in the Balkans. We recommend that, in future, provision for such operations should be set out in the Ministry's main estimates rather than transferred in from the Foreign and Commonwealth Office at the spring supplementary estimates.

Our report also touches on the future costs of the deployment to Afghanistan. It is not enough for Ministers to tell us that the cost of the deployment will be around £1 billion over five years and we will press the Ministry of Defence for more information on costs in our inquiry into the Afghanistan deployment.

I note that my right hon. Friend's excellent report calls for more information. A request was made by his predecessor in the spring supplementary estimate in 2005 for more information on the figures that had been provided, yet that information is not available. Why does my right hon. Friend think that his own request will be more successful?

Because we have a listening Minister and a listening Government. I am sure that, this time around, the Minister will listen in a way that perhaps did not happen last time around. The value of this debate, and my hon. Friend's timely intervention, is that it will ensure that that happens.

Finally, our report outlines the reductions in the overall size of the armed forces, set out in the votes A for the financial year 2006–07, which the House will be asked to approve after this debate. They reflect the significant draw-down in the size of the armed forces, particularly the Royal Air Force, in line with the Government's future capabilities decisions. We do not propose that the House should refuse to approve the votes A, though we do have concerns about the overstretch of elements of the armed forces and are looking closely at that.

I am sure that the Minister will respond to our recommendations in a positive spirit. I have no doubt that his commitment to democratic accountability is second to none and I hope that he will support our aim of encouraging greater transparency in the way in which his Department operates. We look forward to receiving in due course the Ministry of Defence's considered response to our report. The Defence Committee will look at the main estimates closely when they are presented to the House and we will bring any concerns to the attention of the House. I hope that the Minister will not again take parliamentary approval of the estimates for granted.

I commend the right hon. Member for North-East Hampshire (Mr. Arbuthnot) and his Committee on their important report. The sums of money in question are certainly large, although that is unsurprising in view of the scale of the operations involved, and of the recent commitments to increase them. I note with regret that some of the points that the Committee has raised were also raised a year ago, but have not elicited a response from the Government. It does not make sense for all this to be approved retrospectively. Of course, it is impossible for the Ministry of Defence to know at the outset of the year exactly what the costs of its activities are going to be over the year, but Parliament should surely be given more information than it has been given in the past.

From time to time, we are inevitably asked what our involvement in Afghanistan and, in particular, in Iraq has cost us in total. The Government have published the figures for expenditure on operations and on capital equipment in each of the past three financial years, and will no doubt do so for the current year. However, a press release from the MOD's Defence Analytical Services Agency last September made the important point that the costs of peacekeeping in Iraq are just that, and that anyone trying to keep an account of the total expenditure must realise that combat operations have not been included in the figures that have been quoted. Will the Minister therefore confirm whether the published figures include combat costs? He has said in a previous parliamentary answer that it is not possible to identify separately the cost of combat operations. He has also made the point that those costs span two financial years, as the combat activities began in March 2003. Are the Government really telling us that they are unable to make an assessment, or even an estimate, of combat activity costs?

A needs assessment was carried out in October 2003 by the World Bank, in which it considered the tasks that lay ahead for the allies. By that stage, the armed combat phase had ended, and it was looking forward to the costs of reconstruction. The figures being produced, it noted, worked on the following assessment at the outset:

"a main underlying assumption was that there would be a stable security environment that would allow international and local staff and consultants to move freely around rural and urban areas"

to carry out their work. Given that that is no longer the case, it is understandable that the cost of all that work has gone up and up. Has there been any assessment of the impact of that on the running costs, and on the various other organisations involved?

The Government have pledged a total of £544 million for the reconstruction work in Iraq. A lot of that money went through the international reconstruction fund facility for Iraq. In total, the World Bank estimated that $55 billion would be required. Of the $21 billion that America was going to pay, however, only $2 billion has been disbursed. I would be intrigued to know what the comparable state of play is with British finance. Three years on, with only two thirds of the American funds and just one sixth of non-American funds pledged having been disbursed, can the Minister tell us exactly how much UK money has been allocated? The latest report of the US Special Inspector General for Iraq Reconstruction said that the UK had pledged £250 million, and yet our Government tell us that the figure is £540 million. What proportion of the UK funds pledged have been spent so far?

With specific reference to Afghanistan, the Select Committee report asks for a breakdown of costs by financial year, and for more explanation of the £1 billion estimated cost over the five years 2005–06 to 2009–10. The Ministry has told us that it cannot go into that sort of detail. There was a report in The Sunday Times yesterday, however, about what purported to be a leaked Ministry of Defence document, saying:

"The objectives of the British mission to Afghanistan could take as long as 20 years to achieve, according to a confidential Ministry of Defence briefing".

That is no particular surprise, because the history of engagement by foreign troops in Afghanistan has never been happy, and no one should underestimate the task of the international forces now there. If the Ministry's own officials really think that fulfilling the objectives of the mission could, in principle, take as long as 20 years, what on earth do they think that it will cost? How can they state with such precision that it will cost £1 billion? From where exactly have the Government got the figures on which to base their request for that £1 billion?

Has sufficient money been allocated? The Select Committee Chairman said that if anything, the Committee was concerned not about the figures being surprisingly high but, in relation to some aspects, whether they were high enough. I wonder whether asking British and international troops to undertake some of the work envisaged has necessarily been assessed as the most cost-effective method. Has sufficient money been allocated in direct aid to the provinces in Afghanistan for training and capacity building for the Afghan national army and police?

The UK is the lead nation on counter-narcotics, but how much are the Government spending on that in Afghanistan? I am not referring to the consultancy and security teams: how much help have the Afghan Government received? What measurable targets have the Government for improving and enhancing Afghan military capability?

The Minister said in a written answer that the number of Taliban in southern Afghanistan could amount to over 1,000, but what is his assessment of their military capability? He also said that there were a range of illegally armed groups in the south, which must be the case, but that the number of people involved could not be determined. Has the Ministry really no estimate of the size and strength of those groups? Given that the British forces are expected to have a role in their disarmament and demobilisation, surely there must be some assessment of what those forces are up against.

Does the increase in the role that we will play in Afghanistan, in conjunction with ongoing work in Iraq, mean that United Kingdom forces will continue to work beyond the planned level in the defence planning assumptions? If that is to continue throughout the three years for which the Government expect the operation to last, there must be considerable concern about the effects on retention and recruitment. Is there any new evidence on the numbers resigning? What about the effects on the reserves, who have been over-tasked, and on the availability of specialists such as medical staff? There are also questions to be asked about a shortage of airlift, both fixed-wing and helicopters. A distinction should be drawn between helicopters that can lift troops in safety, and combat or reconnaissance helicopters that do not carry troops.

When the allied rapid recruitment force is due for relief next year, will the UK be stuck with the task of running the headquarters, or is there any realistic prospect that anyone else can take it over?

As we know, and have seen on our television screens, the Secretary of State has spent the last few days in Iraq visiting the troops there. Although he has said that there is not, as yet, a state of civil war—an assessment with which we would agree—he has nevertheless acknowledged that the situation is very serious, and that there is a danger of its tipping into civil war at very short notice. While many believe that the presence of British and American forces in Iraq is in a sense part of the problem, any suggestion of their rapid removal would only run the risk of tipping what is already a pretty desperate situation into precisely the civil war of which the Minister has warned.

The scale of the commitments in Afghanistan and Iraq is immense, and the challenges faced by the British forces in both countries are extremely worrying and difficult to quantify. No one would expect the Government to be able to say precisely what the cost will be, but serious tasks are being undertaken, and there is a risk of serious casualties. I think that what Parliament and the British public want is a sense that there really is a Government strategy. It is clear that the intervention in Iraq has caused many difficulties, but obviously we must deal with the world as it is now.

Afghanistan has to be helped. That will cost more in cash and in casualties than it might have if the initial effort had been sustained throughout the period for which we have been there, but we cannot ignore what remains a twofold threat from drugs and terrorism. It is also true that Iraq and Iran cannot be compartmentalised or viewed entirely separately, given their geography and their history. Isolating Iran and a long-term occupation in Iraq can only deepen the problems. Difficult as it is, finding a way of re-engaging with Iran is absolutely necessary.

I hope that we can learn from the experiences of the past five years. Clearly, we cannot pull out of Iraq in a hurry; our work there is important—and perilous. As we take on a considerable new responsibility in Afghanistan, it will be Parliament's role to keep a very close eye on the situation. I welcome the Select Committee's report and the questions that it asks about finance. Parliament will be failing in its duty if we do not continue to hold the Ministry of Defence to account for the important work that it is undertaking.

I am grateful to the Defence Committee for producing the report before us, and I am also grateful for the opportunity to speak in today's debate. As the Chairman of the Committee, the right hon. Member for North-East Hampshire (Mr. Arbuthnot), pointed out, the report refers to the public being kept in the dark about how the money has been spent on Iraq—on which I want to concentrate today—and on Afghanistan. That is a very good point, and deserves an answer from the Minister and the Government. How do we know that we are getting value for money for what we have spent? As I say that I am chuckling ironically, because frankly, given the situation in Iraq, we are getting no value for money. One could argue that money is being spent on servicing the troops, and perhaps on reconstruction aid—but how do we know? How, moreover, do we know that we are getting good value for it?

That is a very serious point, given the spectacular corruption cases that we are starting to see in the United States. Custer Battles ripped off tens of millions of pounds-worth of the Iraqi people's money by supplying the Iraqi forces with broken-down trucks, and Robert Stein has received a prison sentence for rip-offs amounting to millions of pounds. I am pretty sure that the money spent by the Ministry of Defence does not involve such spectacular rip-offs, but how do we know? It is important that such issues be out in the public domain.

The Government maintain that we spent £3.1 billion on Iraq to March last year and in excess of £1 billion since then, so such spending totals well over £4 billion. But as the hon. Member for North Devon (Nick Harvey) said, that does not include combat costs—the initial costs of the war—which, presumably, are heavy, or other Departments' costs. Where are they listed? As the Select Committee said, we do not have clear-cut accounting. That money is our taxpayers' money, but what about the great deal of Iraqi money that has been squandered? Some £23 billion-worth of their money, which was held by the United Nations and handed over to the allied forces, has gone without any result. According to an article in The Independent last November, the Iraqi people could lose £200 billion-worth of oil resources under agreements that the allies are forcing through. Lots of money and resources are going down a bottomless drain; some of those are ours, but most belong to the Iraqi people.

Despite all that spending, the Iraqi people are actually worse off. An article by Professor Glen Rangwala, whom I have quoted in the House before, and who helped to expose the dodgy dossier, stated:

"The most thorough survey yet conducted on Iraqi life since the invasion arrived soon after the election. The United Nations Development Programme found that the average income in Iraq dropped by 44 per cent. in the year after the invasion—from £137 per person under the last year of economic sanctions, to £77 under occupation. The percentage of mothers who die in childbirth is now over four times greater in oil-rich Iraq than over the border in resource-free Jordan. Some 63 per cent. of Iraqis live in homes unconnected to a sewage system, resulting in a series of chronic diseases afflicting the population, in comparison to only 25 per cent. in a similar situation before US-instigated sanctions were imposed in 1990. The survey estimated that 223,000 Iraqis had chronic illnesses caused by the war. The number of women of working age who are in employment, a key indicator of female empowerment, is just 13 per cent."

I saw an article recently that showed that according to official figures, unemployment in Iraq is more than 60 per cent. I recall raising that matter soon after the occupation and saying that the situation needed to be dealt with if trouble was to be avoided. Instead, a rip-off was going on at a pace. All the contractors from outside—Halliburton and its cronies—took the jobs instead of the Iraqi people. As I said, recent figures show again that unemployment among Iraqis is well over 60 per cent. There has been no change. As we heard, only 13 per cent. of women are in employment in Iraq. That remains an appalling scandal. Iraqis are no better off.

Just this week there were some good articles in the New Statesman. Zaki Chehab's article begins:

"Kidnappings, power cuts, sectarian hatred, medical shortages, petrol queues, intimidation of women and a mass exodus of talent: all part of life in the new Iraq."

He writes:

"There is a scarcity of basic equipment that most hospitals store in ample quantities as a matter of course . . . The situation today, the professionals insist, is even worse than in the last years of the old regime, when essential materials were in short supply because of UN economic sanctions . . . The optimism has vanished, and reconstruction has proved to be an illusion.

There has been no visible improvement to any of the services that are basic to civil society: drinking water, electricity supply, functioning sewage systems, schools and hospitals. Drinking water used to be available from household taps, but that is no longer safe to drink. Potholes in the roads, which were a common cause of complaint in Saddam's time, not only still exist but are even bigger. There were occasional power cuts in the old days but generally the citizens of Baghdad enjoyed a regular supply. Now they are reduced to electricity for just one hour in every six each day."

Iraqis are worse off. I put that to the Minister, because after the occupation it was made clear by the then Secretary of State for International Development, my right hon. Friend the Member for Birmingham, Ladywood (Clare Short), that where there are difficulties, it is for the armed forces to make the situation safe and then carry out the reconstruction work. That is the Minister's responsibility, but the figures show that he has not succeeded. The reconstruction has been an abject failure.

We do not know where most of the cost has gone. The Government have talked about training the Iraqi police and the Iraqi armed forces. What about that cost? Is that something extra to be added to the costs that we have? Presumably we are not talking about the armed forces just doing their everyday job and the cost being included in that figure. If it is so important that we train the Iraqi police and armed forces, why have we not seen the figures for that? Actually, it is a pretty incredible thing to be doing, because they have cut off co-operation with us at the moment. In reality, we cannot be doing that—so where has the money allocated for that particular job gone?

Let me quote from one last article from this week's excellent edition of the New Statesman. John Simpson writes:

"there is still no government in place, 90 days after the latest election. Where is the army"—

that is what the Iraqis are saying. The article continues:

"Where are the Americans? But the Americans know their presence at the site of an attack often makes things worse, and they are less in evidence now than they used to be. So why are they in Iraq at all, people ask."

That is a good question in such circumstances. Why are they in Iraq at all, and why are we in Iraq at all? There has been £4 billion—if that is the official figure—of wasted money. Not a penny of it should have been spent, and I do not think that we should spend a penny more. We should get out of Iraq.

I never thought that I would follow the hon. Member for Leyton and Wanstead (Harry Cohen) and have to confess to agreeing with a great deal of what he said. I begin by quite properly declaring an interest in a public company that does business in both Iraq and Afghanistan.

I welcome the debate not only for the reasons that my right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot) mentioned, but because, in an extraordinary way, this is the first opportunity since the general election that hon. Members have had to debate Iraq and Afghanistan on the Floor of the House. The conflict has been the single greatest political disaster that the United Kingdom has faced since Suez—indeed, it is far worse than Suez because that was over in a few weeks with relatively few casualties—and here we are, three years into it. It is right that we address not only the financial costs, but the implications for British soldiers. I hope that there will be more opportunities for such debates.

There is an important question whether the House should give its approval before this country goes to war. It is equally important that once a war has happened and there are ongoing consequences, the House should have the right to scrutinise properly the way in which the policy evolves, but that has not happened until now.

The background to the presence of British troops in Iraq is that the war was pre-emptive. The situation was unusual and we went into the war in unlikely circumstances. I do not automatically exclude the right to have a pre-emptive war. Of course, if one knows one is going to be attacked, one does not necessarily wait until that happens before taking action to stop it.

If there is to be a right of pre-emption that leads to British troops going to a country such as Iraq, with massive costs and casualties, we should bear in mind two fundamental considerations for both this country and the United States. First, if the United States and Britain have the right to take pre-emptive action, so, too, does every other country in the world. Any country throughout the globe that thinks itself threatened can, according to Washington and the present British Government, initiate a war simply in order to prevent one. Secondly, if pre-emptive wars are contemplated, one needs at the very least not just theories, ideas and suspicions, but solid evidence that can be shared with the public—preferably before the war, but at the very least after it—for why the action is appropriate. Those criteria have not been justified. One recalls Bismarck's remark in similar circumstances when he referred to the pre-emptive approach as being rather like committing suicide because of the fear of death. There are very serious consequences when starting a war in such circumstances, but they do not seem to have been taken into account.

I appreciate that the right hon. and learned Gentleman was not a Member at the time, but will he confirm that the official view of the Conservative party was to support the Iraq war?

Yes, the hon. Gentleman is correct. Although that is not my view, it was the official view. However, even my right hon. and hon. Friends had reason to assume that the Prime Minister knew what he was talking about when he said that there was conclusive evidence of weapons of mass destruction and other threats, but that has been seen to be completely bogus.

One should go to war only in one of three circumstances: because one has been attacked, as we were in the Falklands; because one has a treaty obligation to another country, as was the case in 1939 when Poland was invaded; or in very rare circumstances when there is great international consensus, preferably, although not exclusively, expressed through the United Nations Security Council. Such circumstances arose at the time of the first Gulf war when we were able to put together a massive coalition.

I do not say that the United Nations must automatically give its approval. Nye Bevan, of all people, once said:

"If there is one thing worse than my country right or wrong it is the United Nations right or wrong".

Of course, the United Nations is a fallible institution that is dependent on the will of its individual member states. However, we have gone to war at enormous cost to the Exchequer and more than 30,000 people have died, but we were not attacked, we were under no treaty obligation and there was not the proper degree of international legitimacy.

Now where do we go from here? I am conscious of the fact that we must look to the future if we are to reduce the huge burden, in terms of both manpower and cost. I do not argue that we should pull out right away because I was against the war. Indeed, in some respects, the opposite applies and I think that, having created this mess, we have a moral obligation to do our best to sort it out. But I have to say that the criterion that has to be applied is whether the continuing presence of British and US troops is making a useful and viable contribution, not only to today and tomorrow but to the eventual stability of that unhappy country.

There is a fundamental flaw in one aspect of the approach by the British and US Governments. The Secretary of State for Defence confirmed recently that the approach was gradually to hand over to the Iraqi national forces, the police and the army, and then withdraw our troops. In that way, it is hoped, everything will be for the best in the best of all possible worlds. In a normal situation in which one is assisting a Government who are fighting an insurgency, that would be a logical approach. The more the national Government increase their authority and the more they train their own army and police, the more they can be expected to deal with the insurgency themselves. But in the case of Iraq at this moment, that argument misses a fundamental consideration. This is not just an insurgency: it is an increasingly sectarian battle. There are three communities—Sunni, Shi'a and Kurd—all of whom have different interests and none of whom is committed to the concept of a single Iraq. The army and the police force in Iraq are also overwhelmingly Shi'a and Kurd. Therefore, the more powerful the police and the army become in Iraq, the less they are seen as safeguards by the Sunni minority and the more they are seen as an increasing threat to their interests. That is the fundamental inconsistency and why people are increasingly saying that there is no military solution to the problem. The solution, if there is one, has to be found in political terms, not in military terms.

I said that the situation in Iraq was the worst disaster for Britain since Suez, but it is the worst geopolitical problem for the US since Vietnam—indeed, including Vietnam, which already had an insurgency. Vietnam was already involved in a civil war before the Americans ever arrived. The Americans were trying to stop that civil war in the interests of the then Government in Saigon. The current crisis is entirely of our own making, and so far we have had five horsemen of the apocalypse. First, more than 35,000 people—Iraqis, Americans, British and others—have died. According to Mr. Allawi, some 50 or 60 more are killed every day. Secondly, we have in Baghdad, the most pro-Iranian Government that Iraq has had for 70 years, which was not one of the prime objectives of US foreign policy. Thirdly, the situation in Iraq is deeply Islamist rather than secularist. Saddam Hussein was a ghastly, vicious tyrant, but he was a secular tyrant. The current situation was no part of the American strategic objective. Fourthly, on terrorism, we have within Iraq—be it for al-Qaeda or other organisations—the greatest recruiting territory for terrorism since the Soviets invaded Afghanistan. Finally, we have the drift into civil war.

I noticed that the Secretary of State for Defence said last week that civil war was not inevitable or imminent—an important choice of words. He did not say that it was unlikely. He said that it was not happening today, and it was not certain that it would happen tomorrow. But he knows as well as I do that the facts increasingly suggest otherwise. Indeed, the former Iraqi Prime Minister has said that the situation has already reached the point of civil war, and it is difficult to disprove that argument.

So where do we go from here? I have said that it looks increasingly as if there is no military solution. British troops are doing a fabulous job, but they will not sort out the insurgency in the foreseeable future, and we all know that. The problem is that our Prime Minister and the President of the United States are in denial. It is almost impossible to imagine a combination of circumstances that would now persuade either to acknowledge that it was all a terrible mistake. Whatever happens, they say that it is all part of the great plan, that everything is getting better and that we should just trust them. But the world does not trust them and nor should it.

A political solution is required with, first, a more convincing form of power-sharing in Iraq, recognising that Sunni fears and concerns cannot be met simply by a 20 per cent. formulaic share in the structure of government. We went through that process in Northern Ireland, where eventually, after many painful years, we realised that power-sharing had to mean precisely that in a substantive sense, if it was gradually to resolve the kind of problems that we all want to address. Power-sharing has to have substance, not form.

Secondly, the United States and the United Kingdom have to appreciate gradually that, although their withdrawal from Iraq will cause serious problems for the Iraqi Government, it will also remove one of the recruiting agents for those who are creating the insurgency. Arab Governments in the region must do far more than they have done until now to be part of the process of rebuilding Iraq and assisting the work of the democratic Iraqi Government.

Finally, although we all want a democratic Iraq, that will work only if a President Putin-type figure is in charge of Iraq. I am no fan of Vladimir Putin; some of the things that he has done in Russia have been very bad, but he took over at a period of great instability and fragmentation in Russia, and one of the reasons why he has become so popular with the Russian people—even if not with the rest of us—is that he created a sense of stability and authority. If Iraq could identify an individual who could be given that sort of presidential power, he would not be a dictator in the Saddam sense, although he might be more authoritarian than we or the United States would like.

That kind of political approach is the last chance for preventing the disintegration of Iraq. Without it, British troops will either be sucked in for an increasingly desperate period or they, and we, will have to conclude that it is approaching the hour when they will have to be brought home.

First, I want to talk about the reasons for the debate. As a member of the Defence Committee, I think that Parliament needs to be involved in such processes. Doubtless, the Minister will find some of our proceedings uncomfortable and may tell me in the Tea Room that we have given a platform for tenuous and sometimes gratuitous general comments about Iraq and Afghanistan, rather than the main issue. But my answer to that is that Parliament needs to be involved, so that it can ventilate the issues.

Although I share much of the assessment made by my hon. Friend the Member for Leyton and Wanstead (Harry Cohen) of how wrongly things have been done in Iraq, they are not being done wrongly by the British. I am not in control of that Iraqi money. I cannot spend it; other people are doing that. My hon. Friend raised interesting questions, but we are talking about the money that we spend and give. That is under our control, which is why we need to discuss it. We might consider how others could do things better, but we also need to be clear about our own position. That is what we should debate—not how other people spend their money. It is tempting to give a spanking to the argument about elected dictatorships, but I shall not go into that.

The money that is being spent is supporting our troops—people who are trying to do a job. I have heard no one say that they do not want to spend that money. There may be arguments on the margins that the amount should be a little more, but the Defence Committee says that we need to support our people in their job. The money is being spent, and there are important arguments about how it is spent and about accountability, but we must be clear about the fact that we are supporting people on the ground.

I have visited Iraq and Afghanistan, sometimes in uniform—with the armed forces parliamentary scheme, so the House need not panic—and sometimes not. Talking to people on the street—if we can actually get on to the street—or talking to a couple of young men on the back of a donkey cart, we hear a different story. Of course, there is ambivalence about our being in Iraq, what we are doing and so on, but when we witness the day-to-day relationship of our forces with people in both Iraq and Afghanistan, it is not as it is often described.

Our forces want support at their elbow to do their job properly. Their motivation is clear. They are frustrated about obvious things such as being able to phone home, boots and all the usual stuff, but what they really want are the tools to do the job. Part of their frustration is about being able to engage in the civil-military interface, to provide appropriate support for civilians and the proper agencies of an emerging Government and other agencies. The people I spoke to have their own concerns, which include airlift capacity, armoured vehicles and their own protection and equipment, and they are right to raise those matters. They want a manoeuvre capability: they want to be able to get to where they need to go quickly, to be able to do the job, to be protected and to protect others, and to get away, and they need the equipment to do that.

I shall concentrate my comments on how we spend our money. A lot of concern has, rightly, been expressed about equipment. The report's comments on accelerated capital investment and spending are interesting, because that relates to the capacity to repair, supply, provide, maintain and deliver the equipment that people require to do the job. I am worried that, although we have known for some time that there are problems in some of those areas and although we have continuing conflicts in two places, we have not been able to predict requirements. The Minister has had the opportunity to do this, so he knows that ordinary people doing the job on the ground will say that that is the problem: they need more certainty and better planning. The fact that there are not enough Warrior armoured vehicles—that is what is claimed—and that there are problems maintaining and supplying them should now be able to be predicted because the problems were identified some time ago.

The hon. Gentleman is making a powerful argument that what matters is not how much money is spent, but when it is spent. Page 7 of the Defence Committee report explains away the large capital investment for urgent operational requirements by referring to the purchase of, for example, force protection equipment. Given that the technology used in improvised explosive devices—shaped charges—has been around since the second world war and was used in Bosnia and Kosovo, why was the money to protect against that threat not spent at the start, when probably half the amount that is having to be spent now would have been required?

As I am not responsible for that matter, I cannot answer the hon. Gentleman's question, but I know that he has an interest in Kinetic activities of various sorts. He is right to identify the problem. Work is going on. I am saying merely that, although the right thing is being done, because of the way it is presented to us, it appears to be a bit rushed and being done a little too late. I do not think that that is true in some respects, but that is how it appears to us because of the way in which the finances are presented to us. I want to be confident that that is not happening; that is part of the reason why the Committee has asked for a more regular mechanism whereby what is actually being done is made visible.

Does my hon. Friend, like me, believe that the MOD sends a blank cheque to the Treasury and asks for it to be signed, or does he believe that there is a list of operational requirements with moneys attached? Does he agree that it would be to the benefit of accountability if the Committee received that list after it was approved by the Treasury, so that we could then scrutinise it?

Yes, there are mechanical processes that we could put in place that would facilitate better understanding, not only on the part of the Committee, but on the part of everyone who signs up to the estimates—the whole House on behalf of the whole population. That suggestion might be worth considering but no doubt there are others. I am not a management accountant or a policy wonk—I do not understand how some of those processes work and, to be frank, I do not want to, but I am sure that the pointy heads in the Treasury could come up with processes that would do that for us. The political aspect is what is important—if we have visibility and transparency, we might get better-quality decision making because we have a better understanding of the issues. To be frank, some people do not understand the issues of timely supply and what is actually happening as clearly as they should.

Let me return to my arguments about capital and, more importantly, repair and provision of equipment. I was pleased by last Thursday's decision about the Army Base Repair Organisation, although there has been an understanding about that for some time. However, I want to see figures on spending on urgent requirements and on capital depreciation of assets. I want to be confident about how existing assets will be maintained and their life perhaps extended. I want those things to be made clear. It is clear from that decision that we know that we need more armoured vehicles and that we need a better supply. The methods that are currently used are not wrong, but different methods are available. There is a relationship between all those things, and the Select Committee is working on a report on defence industrial strategy. We have a clear defence industrial policy, including a force generation process that assesses the number of people required against a set of defence assumptions. Perhaps we should have better individual debates about each of those matters but, more importantly, they relate to the industrial strategy for delivery which, in turn, is related to the way in which the money flows.

Those interrelationships are not clearly understood or debated properly in the House, so it is important to ventilate them. Partnering arrangements under a defence industrial strategy are probably a good idea for some things, but not for others. There are certain things that one needs to supply at certain times and that, frankly, one does not wish to subject to competition. ABRO has the capability to maintain armoured vehicles—whether that will be true for the new fleet is a different matter. Some estimates and decisions about when money can be spent and acquired are related to those decisions.

On the surface, I am asking a simple question about the regular supply of information but, in fact, the Committee and I are asking a very difficult question. Realistically, the answer is to provide a more joined-up process, because planning assumptions and so on depend on how the money is spent. It is not easy for the Ministry of Defence to do so, but it is vital to make those processes visible so that we achieve a better quality of understanding and, consequently, a better quality of debate. Doubtless, my right hon. Friend the Minister will be upset with me, and will have a bit of a row with me later but, although it may not feel like it, I am ally of his in this debate. At the end of the day, it is important that we show and demonstrate our own democracy at work. It is all very well for me to go on to the streets in Afghanistan and talk to ordinary Afghans about building capacity to provide a democratic process, but we must demonstrate such things in our own democratic process. In Iraq and Afghanistan, people said to me, "You come from the mother of Parliaments, so you know it all. Just tell us what to do." I said, "If I did know it all, I would be a dangerous man, and if I tried to tell you I would be even more dangerous. You have to develop it for yourself." One of the best ways in which we can help them to do so is to demonstrate that our processes are open and are seen to be open.

The debate is not just for our benefit. We need to send a message of support to our people in each theatre, whether they belong to the military, other Government Departments, the police service or other bodies that are helping to develop capacity. Money has, in fact, been provided. Our discussion is about the methodology that we should use to hold that debate properly and give those people confidence that we will maintain that funding for them. We should give similar confidence to the people of both those countries whom we claim that we are trying to help. That should be our motivation. I am not interested in what is said about the whys and wherefores of entering one conflict or another, or whether Mr. Bremer should have worn boots with his suit. We should make certain that we send the right message. May I tell my right hon. Friend that, although it may not feel like it, I am on his side?

The report by the Select Committee on Defence states:

"Telling Parliament that the costs of the deployment to Afghanistan is 'around a billion' is just not good enough. This is a very large amount of . . . money, and the public deserve better information on how it is going to be spent."

Costs are imprecise, because we do not know precisely what they will be. We are told that the aims are, first, to deal with instability, to extend the writ of the Afghan Government, not to allow Afghanistan to fail, to support the Afghan national army and police and to gain the good will of the Afghan people. Those are great aims, given the consequences of actions in Afghanistan that led to the events of September 2001. Secondly, as part of that we are there to assist the Afghan authorities in reducing the supply of drugs. About 90 per cent. of the heroin on the streets of my constituency—Gravesham—comes from Afghanistan and about a quarter of those drugs come from Helmand province, where our troops will be deployed.

To my mind, however, those twin aims—stabilisation and the reduction in the supply of the opium poppy—are in conflict with each other. How do we gain the good will of people in Helmand province when a very large number of them are dependent on growing poppies, not as a great money-making adventure, but as a substance crop that they grow to feed their families? I have spoken to Afghan farmers who say that if we seek to interfere with their livelihoods and do not provide sufficient alternative means of income, they will take up arms against us.

We are told that military operations will be against the greedy, not the needy, and that the involvement of the British military will be confined to

"cordons, airlift of Afghan National Army and Police units, and help with planning".

To my mind, the consequences will generate anything but the good will of the local people. Last week, at a meeting at Permanent Joint Headquarters in Northwood, jokes were being made about whether, as a consequence of that conflict in aims, British troops would become the duty targets.

I and every person who is associated with planning for the deployment to whom I have spoken at the MOD and the Foreign and Commonwealth Office believe that the reason why the estimates of cost are so vague is precisely that we have no clear idea of the consequences of what we are proposing to do.

I am grateful to the House for allowing me to participate in this important debate. As my right hon. and learned Friend the Member for Kensington and Chelsea (Sir Malcolm Rifkind) has said, this is one of our first opportunities to assess some of the spending commitments that have taken place not only this year, but in the past few years. I take issue with some of the concerns that have been raised by Government Members that, somehow, we are involved in a process of simply ticking off the accounts. We must go further than simply looking at the financial aspects—the numbers—to the decisions that lie behind them. Were those decisions correct? Could the objectives have been achieved quicker or cheaper if other decisions had been made instead?

Today, as I am sure all hon. Members are aware, is the third anniversary of the invasion of Iraq. This is an appropriate time to take stock of what has happened in that country—a moment to consider what has been achieved or not achieved—and to measure the social and political progress that has been made. There are more than 200 UK dead. More than 2,300 American soldiers have been killed. More than 4,000 British soldiers have been injured.

We now know that there were no weapons of mass destruction, no missiles with 45-minute readiness and certainly no links between Saddam Hussein and al-Qaeda. In my view, it was a mistake to ignore the calls for a broader coalition to deal with Saddam Hussein. It was a mistake to disband the Iraqi military. Certainly, it was a mistake to try to link 9/11 with what was going on in Iraq. In my view, the invasion of Iraq, with the objective of helping to defeat terrorism, has only encouraged more terrorism and made the world a more unsafe place. Today's debate is about the sums involved, but those poor decisions have driven up the cost of our operations.

I do not argue about whether Saddam Hussein had to be dealt with, but as someone who has spent many years in the military—serving not only in Kuwait, but in Bosnia and other places—I have questions about the manner in which we went about getting rid of him. The inadequate assessment of the initial threat, the poor justification for an attack and the appalling management of peacekeeping have all led to the rising costs that we are debating today.

We heard only last week that 800 troops will be removed from the British forces in Iraq. The suggestion is that we are doing well and achieving our objective, but Iraq is in a very poor condition. Three months after the elections, there is still no proper Government. On average, electricity is available in Baghdad for only four hours every day, and there is no adequate water supply or sewage system—after the Americans have spent about $20 billion on the infrastructure.

I know that the hon. Gentleman was not in the House when the decision was taken to invade Iraq, but as someone who has been to Iraq four times, including a week ago, may I ask him not to take as gospel everything that he reads in the newspapers? Clearly, the situation in the south and the north is very different from that in and around Baghdad. I do not recognise his description as applying to southern Iraq. In the south, effective regional and local government have been working for two or three years.

The hon. Gentleman makes a valid point, but Basra is working in isolation from Baghdad. There is no link or co-ordination with national Government. I shall suggest a possible solution, if the hon. Gentleman will bear with me.

Is it not also the case that the democratically elected authorities are working in isolation from the British forces?

The hon. Gentleman contradicts the point made by his hon. Friend the Member for North Durham (Mr. Jones).

The term "civil war" is being mentioned more and more. We have been encouraged by Ministers not to talk about it, yet that is what we are heading towards. We should debate it in the House. What would be the financial consequences for our involvement in Iraq? The elections there were a positive step forward, but they galvanised the parties and the electorate along religious lines and into their ethnic groups. Consequently, the new National Assembly is unable to agree on a Prime Minister and fill the political vacuum. Granted, in certain areas, initiatives have been taken, but in Basra and other places political power rests not just with the local councils, but with the militias. They have taken advantage of the political vacuum. People seek refuge with the militias in Basra and in many major towns because they are scared and do not feel they are being looked after by the official authorities. The British Government say there is no civil war, yet 1,300 civilians were killed last month alone. There are 60 attacks a day, on average, and about 30 bodies are found on the streets every day in Baghdad. How high must the daily death toll rise before the Minister acknowledges that Iraq is in a state of civil war?

The Minister spoke about contingency planning. I should like to know what will happen if the current plan is not adhered to. A comparison can be made with Bosnia and what happened in that country—three distinct ethnic groups, opinions and differences suppressed by a dictator whose authority was strengthened by outside threats, and when the dictator was removed, the lid came off, opinions could be expressed and the result was civil war.

I have said previously in the Chamber that there is another possible solution to the situation in Iraq that we have not considered or put to the people of Iraq—that is, the managed partition of Iraq. It already exists. The hon. Member for North Durham says he has visited Iraq. If he has visited the Kurds in the north, he will know that they have their own Prime Minister. They even have their own airline. They are entirely segregated from the rest of Iraq and they have no intention of developing any stronger ties. They are quite happy to run their own affairs.

The Yugoslav model that we are trying to promote should be abandoned in favour of the Czechoslovakian model. Some form of velvet revolution should be promoted to allow segregation and the development of regional areas, including Basra.

I understand the hon. Gentleman's argument and I do not doubt that his motives are good, but do not the things that he proposes—a velvet revolution and managed partition—pre-suppose a level of control and security that do not exist? How can those be brought about without first providing a secure environment in which such a political debate can properly take place?

It is not for me to decide anything. That is for the Iraqi people to decide. When I put the argument to the Minister before, he found it amusing and suggested that I was some kind of imperialist who wanted to go in and sort out Iraq's problems. He might remember the debate, and he knew perfectly well that that is not what I was pushing for. It is something that the Iraqis need to decide, but the option that I have mentioned has not been debated to the full. If we speak to the Kurds, Shi'ites and Sunnis, we find that it is an option that has not been pursued. It provides the blueprint for another solution, other than the civil war towards which we are now heading.

rose—