rose—

Resign!

rose—

Order. I will take points of order after the statement.

With permission, Mr. Speaker, I would like to make a statement on the deportation and removal of foreign national prisoners. I will update the House on our progress in considering the cases that I reported last week had been released without proper consideration, and I will set out the facts in relation to the reports on foreign national prisoners and the removal of failed asylum seekers, which my Department received over a period of time. I will also set out the action taken by my Department in response to those reports, including the robust procedures put in place to deal with the very specific issue of consideration of deportation pre-release. Finally I will set out, as promised a week ago at this Dispatch Box, the conclusions I have come to on reforms necessary to the policy framework in which deportations are considered and dealt with.

Let me begin by confirming, as I set out to the House last week, that as a result of a series of decisions taken earlier this year, including improved management structures, more resources and tightened procedures, we have for the past month had a system to ensure that further cases cannot be missed. That situation will continue to improve as we move over time as a matter of routine to consider for deportation all potential cases a year before they leave prison, or at the beginning of the sentence if that is less.

Last Friday I wrote to you, Mr. Speaker, to set out our progress in dealing with those cases released without prior consideration of deportation, and I would now like to update the House on the figures that I published then. As of yesterday evening, consideration of all the most serious 79 cases had been completed, with deportation action having been commenced in respect of 70. The remaining nine are cases where deportation action is not being pursued, in accordance with current policy criteria. Of those 70, 32 are now accounted for and either deported or within our control. The immigration service and the police are continuing priority operations to bring the remainder under control. I will not give further details at this stage, as the House will appreciate that my first priority is the efficacy of those operations.

As I made clear in last Friday's letter, Mr. Speaker, our second priority for consideration is the 103 cases in which, as we stated to the Public Accounts Committee, the type of offence was unknown. Data on these cases is now complete, and I can say that there are 11 of these cases where the original offence was within our category of "more serious offences". Consideration for deportation of all but one of these cases has now been completed and deportation action has commenced in respect of seven of them. Since their release, none of these individuals has committed any of the more serious further offences.

That deals with all the cases where individuals were originally convicted of more serious offences. Of the 1,023 cases in total, consideration has commenced in 574 cases, of which 554 have been completed, with deportation action being pursued in 446 cases. Perhaps I should add that almost all the cases that have so far been given prominence in the media in recent days are not among those upon which I have been reporting to the House, although some do indeed raise important issues of policy.

Whatever the historic failings, I want to thank all those engaged in the very intensive work that has continued throughout the bank holiday weekend. That has included a major police incident room in Portsmouth, a casework operation in the immigration and nationality directorate in Croydon, work by prison and probation staff, and joint police and IND operations to detain offenders decided for deportation. There is a very high operational commitment to this work, for which I want to express my appreciation.

From the outset I have acknowledged that there has been a systemic failure within the Home Office, which I regret and for which I have apologised. For example, it was only in 1999 that records on this subject began to be kept at all. However, there have been a number of allegations of inaction by the Home Office in a range of areas over a period of time that have portrayed what I believe to be a false position. I want now to set the record straight.

There are three distinct issues. The first is the broad issue of the rising number of foreign nationals in our prisons—rising from 5,587 in 2000 to almost 10,000 in 2005— and the policy framework for their deportation. The second is the removal of failed asylum seekers and our action to reach the so-called "tipping point". The third is the specific operational question of the backlog of cases.

The first issue—the overall approach to foreign national prisoners and their deportation—was the one raised over a period of time by respective chief inspectors of prisons. In summary, they have mainly made the argument that the Government were not paying sufficient attention to foreign national prisoners or their human rights, particularly in relation to detention after the end of their sentences. The Home Office has sought to deal with those concerns by a variety of means, which, among other things, led to the deportation of about 3,000 foreign national prisoners in the years 2004 and 2005—a figure to compare with a total foreign national prisoner population of 9,690 prisoners in 2005. Anne Owers, the chief inspector of prisons, acknowledged some progress on that broad issue in her report of 2004–05.

The second issue—the removal of failed asylum seekers—was the main focus of the National Audit Office report of July 2005, to which much reference has been made, entitled "Returning Failed Asylum Seekers". The overall conclusion of the report was that the prompt departure or removal of unsuccessful asylum applicants should be prioritised—a conclusion that squared exactly with the Home Office prioritisation of asylum in general and, in particular, action to reach the point where more asylum seekers were leaving the country than there were unfounded new applications. That was indeed achieved in February this year and was widely welcomed.

The NAO report also noted that action on criminal cases was not being initiated early enough to allow preparations for removal to be made pre-release from prison, although the report acknowledged the increase in resources already directed to dealing with such cases. The Home Office immediately responded to the NAO comment. Additional staffing of 90 caseworkers to come on stream from January 2006 was identified, as were a further £2.7 million of resources to come on line from 1 April 2006. Immigration service staff were placed in four London prisons and surgeries were held in 60 prisons, a weekly report on the foreign national prisoner population was initiated, and new arrangements were made to move foreign nationals who had completed their sentence from prison to immigration detention facilities at the rate of about 300 a month. In addition, management arrangements were strengthened.

The NAO report was the basis for the Public Accounts Committee evidence session on 26 October 2005, which also focused on the issue of the removal of failed asylum seekers. I have already acknowledged the important role played by the Public Accounts Committee in focusing attention on these matters. I also very much welcome the announcement that the Home Affairs Committee will extend its inquiry to cover this matter. The House may recall that I first raised publicly my concern over the broad policy issues raised by the rise in the number of foreign national prisoners in evidence to the Home Affairs Committee on 25 October last year.

Following the PAC hearing, the Home Office set about collecting and cleansing the data in order that we could report properly to the Committee and take appropriate action on the true size and nature of the backlog. The first report was made to the PAC in November, but closer analysis revealed that the size of the backlog was larger than previously thought and, crucially, that serious offenders were among the backlog. That was reported to me at the end of March 2006, together with plans to recheck the information before it was put into the public domain, to begin casework on the backlog and to work with prisons and probation on the serious cases. The PAC itself published its report on 14 March. It addressed the issue of foreign national prisoners in the body of its report, but it was not in a position to draw firm conclusions or make firm recommendations.

The rise in the number of foreign nationals in our prisons and the overall policy framework for dealing with issues of their deportation is a long-standing concern about which detailed work has been proceeding for some months in the Home Office. I would now like to report my preliminary conclusions to the House. These are complex and difficult issues, so I will shortly publish—before the end of May—a consultation paper with specific and detailed proposals from the beginning to the end of the process. The guiding principle will be that foreign nationals guilty of criminality should expect to be deported.

To achieve that, I will consult in the following areas. First, the data which identify an individual as a foreign national must be captured at the beginning of the criminal justice system, including at the point of arrest and as the case proceeds through the courts. At each stage, there should be sanctions against individuals who give false information on nationality, or indeed no information at all.

Secondly, it is important to ensure that the issue of deportation is raised throughout the sentencing process. Following recommendations from the sentencing advisory panel, the Sentencing Guidelines Council will shortly be publishing draft guidelines to set clear criteria according to which judges should make deportation recommendations when sentencing.

Thirdly, we need to deport prisoners at an earlier stage in their sentence. Ideally, prisoners should serve their sentence in full in their home country. The UK currently has prisoner transfer agreements with more than 90 countries, and we have recently ratified an agreement with India and other such agreements are awaiting ratification. Within the European Union, we are strongly supporting the efforts of the Austrian presidency to secure a directive which will enable the repatriation of prisoners within the EU without requiring the consent of the prisoner. In addition, the Criminal Justice Act 2003 introduced arrangements to consider whether prisoners should be deported before the end of the sentence, and we will consult upon proposals to enable this to happen earlier in a prisoner's sentence.

Fourthly, I want to make it clear that the Government not only intend to ensure that the current system operates effectively, but seek after consultation to extend the categories of offenders who are considered for deportation. We will therefore publish proposals to consider for deportation a wider range of offenders.

I want to state clearly that where deportation can properly be considered, the clear presumption should be that deportation will follow unless there are special circumstances why it cannot. We will consult on whether that presumption should be made statutory through primary legislation. Such a presumption would include all criminals sentenced to imprisonment, all those convicted for an offence listed in an order under section 72 of the Nationality, Immigration and Asylum Act 2002, all those on the sex offenders register, repeat offenders and, of course, all those recommended for deportation by the sentencing judge. We believe that there is a strong case for extending those proposals to any individual who is convicted of an imprisonable offence, whether or not a sentence of imprisonment was actually given, and we will consult on that too.

Those proposals would replace the current practice of considering for deportation only non-European economic area nationals with a sentence of 12 months or more; EEA nationals with a sentence of 24 months or more; cases in which the individual has three lesser convictions in a five-year period; and all cases in which the sentencing judge has recommended deportation.

Finally, in relation to our policy framework, I have already said that we are now ensuring that all deportation decisions are being taken before an individual is released. That will continue, but I will also consult on the following steps to ensure effective implementation of deportation and removal decisions: the full use of the less burdensome process of administrative removal rather than deportation in eligible cases where individuals have no or limited leave to remain; more effective procedures in relation to psychiatric hospitals; a new power in primary legislation to enable us to detain an individual pending consideration whether they should be deported or removed as a result of their criminal conviction; amending primary legislation so that deportation appeals, save for those raising asylum or human rights issues that are not clearly unfounded, are heard after the individual has been deported from the UK; and the introduction of an automatic bar on return for all those who are subject to administrative removal due to criminality, which is already the case with those who are deported.

I should add that I will also consult on proposals to achieve a more coherent approach to taking criminality into account in decisions on who is allowed into the country, who is allowed to stay, who is granted settlement and who can acquire British citizenship. These are significant proposals which, as I said earlier, we have been preparing for some months—[Hon. Members: "Oh!"] We have. They will, I am sure, also be controversial, but I hope that, unlike with some previous legislation in this area, we can rely on the full-hearted support of both the main Opposition parties in ensuring that foreign nationals who commit crimes are deported rapidly to the countries from which they come.

This has been an unedifying episode for all of us in the Home Office who are charged with the protection of the public—[Interruption.] Yes, it has. But I said that I would stay and put the situation right. I have set out the results of the intensive work that is being done by the agencies to deal with the outstanding cases. I have set out the steps taken to improve our systems on foreign national prisoners, including robust procedures that now mean that the appropriate processes are in place, and I have set out my proposals to deport more offenders, more quickly. I commend the statement to the House.

The first duty of Government is to protect the public, and the Government have failed in that duty in a most appalling fashion. They have done so, not by failing to identify suspected criminals—although they have done that—and not by failing to catch criminals, but by releasing over 1,000 criminals from their own prisons without consideration. Ministers have lost control of their Departments and they have introduced a new doctrine of ministerial responsibility—the bigger one's mistake, the more one deserves to stay in one's job. The Home Secretary has tried to make a virtue of the fact that he has told us the facts—[Interruption.]

Order. Mr. Ronnie Campbell, I know it is difficult for you, but perhaps you could be quiet for a while.

Thank you, Mr. Speaker. The Home Secretary tried to make a virtue of the fact that he has told us the facts. In truth, however, he was forced by the Public Accounts Committee to admit to his failure and he was dragged to the House to answer for it, both last week and today. We now know that he did not even tell the Prime Minister—who, I see, is giving his usual support. Last week I asked the Home Secretary four questions; he answered none of them.

My right hon. Friend answered them all.

The Home Secretary answered none. He said that he would answer them by the end of the week, but he still had not answered any of them by then. This week I shall ask him eight questions, and the House, and the public, will expect eight answers. Before I do so, however, let me say that of course I applaud any action that will address the problem, although much of it amounts to bolting the prison door after the prisoners have fled.

I understand that the Home Secretary intends to introduce new powers to create a presumption of deportation for foreign criminals. I applaud that intention, but—[Interruption.] In answer to the Government Chief Whip's sub-vocal heckle, may I remind her of the powers that the Home Secretary already has? The Immigration Act 1971 gives him explicit powers to deport any non-British citizen under section 3(5) if he

"deems . . . deportation to be conducive to the public good".

Laws are fine, but the public require competent action.

Let me turn to my questions. First, there is the length of time that it took the Home Secretary to alert the police to the problem. He and his predecessors were warned several times, as he has now admitted, by Her Majesty's chief inspector of prisons and by some police forces, of the growing magnitude of the problem of foreign criminals being released rather than deported. The Home Secretary was warned again by the National Audit Office on 14 July last year. Can he tell the House precisely why he did not take action 10 months ago? Why did he not do 10 months ago what he did last week? At least 400 criminals identified in the Home Office's first submission to the Public Accounts Committee could have been arrested and deported. If, for some inexplicable reason, he was unable to act 10 months ago, why did he not act one month ago, when he had a full list available? Why did he tell the press about the problem before he told the police, giving more than 1,000 criminals the chance to disappear before the police could catch them?

We are told that from last July, procedures were implemented to increase the number of staff and the resourcing of the unit concerned, and that there is now a "proper case management system"—I think that I quote exactly. So can the Home Secretary explain why we hear persistent reports that that department is understaffed, undertrained, and largely manned by temporaries? Is not the truth that whatever he did it was ineffective, as the rate of release of foreign prisoners into the community went up after July? Is that acceleration in the release of potentially dangerous criminals into the community not a clear demonstration of his own failure?

The Home Secretary cannot even give us what he promised last week—the full number of crimes committed by the 1,000-plus criminals since their release. Civitas, the respected Home Affairs think-tank, whose director is a member of the Home Secretary's own Statistics Commission, estimates the likely number of convictions—not crimes—for the 1,000 criminals at about 700. That is 700 crimes as a result of this failure. And the Home Secretary did not tell us how many crimes were committed by the 288 criminals released after he was explicitly told about the problem—the criminals who are absolutely and inescapably his own responsibility. Civitas estimates that they would have been convicted for 100 crimes committed within six months of release.

On Friday, the Home Secretary told us that of the 79 foreign criminals he considered to have committed serious offences, deportation action had been started on 70. But only 32 of those 70 have been located. That means that 38 are not in his control, presumably because he warned them through the press three days before. So, even on his own figures he is failing in more than half the cases.

The Home Secretary should not forget that 1,023 foreign criminals are at issue here. He has just told us that deportation is being pursued in 446 cases. Will he tell us how many of those are within police control? When the Home Office completes the deportation exercise, how many of these 1,000 foreign criminals will remain at large in the United Kingdom?

I am concerned that those 1,000 are just the beginning of the problem. With almost every day that passes, we hear of a new failure. This morning's papers are full of the story of the suspect in the tragic murder of WPC Sharon Beshenivsky. I do not expect the Home Secretary to comment on that case, and I will be very careful. As I understand it, the suspect was given indefinite leave to remain in 2000. In the subsequent five years he was convicted of three offences and sentenced to three separate prison terms. Yet in March 2005 the Home Office decided not to deport him to Somalia, even though, a year earlier, the Home Office's operational guidance note on Somalia said:

"there is no longer any policy that precludes the return to any region of Somalia".

In the past two years, the Home Secretary's office has made more than 2,000 decisions against deportation. I have to ask him, in the light of this and many other examples: is he comfortable that those decisions were made with sufficient regard for the safety of the British public?

Last week, a whole new category of cases was raised by Lord Ramsbotham, the previous chief inspector of prisons—that of 1,500 prisoners who have no nationality record, or a false record. How many people in that category have been released into the community without consideration for deportation in the past seven years? Again, is the Home Secretary persuaded that this oversight has not unnecessarily jeopardised the safety of the British public?

Finally—[Hon. Members: "Hooray!"] Labour Members will not be happy about this either, because it is not amusing. Last week one of the murderers of Mary-Ann Leneghan was sentenced to more than 20 years in prison. He had been recommended for deportation on his 18th birthday, but was not deported and was involved in this hideous crime just a few months later. This raises a whole new category of people who are recommended for deportation but who are not, for one reason or another, imprisoned. Can the Home Secretary give us an indication of the size of that category and whether he has considered policy with regard to such people, as clearly some represent an unnecessary risk to the public.

Together, those groups represent several thousand people who are a potential risk to the public and should be considered for deportation. It may therefore be that the 1,000 whom the Home Secretary says he has already considered are just the tip of the iceberg. Has he considered these categories in detail and what he might do to minimise the risk to the public? Whatever his answer, I would like to know why he has not done anything to deal with these potentially serious risks to public safety. There are two possibilities: either the Home Secretary did not know about these problems, and was therefore negligent, or he did know but did nothing effective about them, and was therefore incompetent. The answer is not simply more laws, and it is certainly not just more headlines. The answer is a more competent Home Secretary—and that is the very least the British public deserves.

The right hon. Gentleman raised several points—

Twenty-nine.

I do not think that it was 29, but I am interested to hear that that is the number that my hon. Friend was able to identify.

First, I paid tribute last Wednesday, and I will again, to the role of the Public Accounts Committee in this process. It has been a positive process, and that is what the PAC should do. Secondly, in answer to the right hon. Gentleman's question about what I did about the National Audit Office report last July, I have already clearly set out the whole series of measures that I took to deal with its recommendations and to improve our performance in that area. Moving on to his third point, I am the first to concede that there remain issues about implementing that in the most effective way. I do not accept his stricture that the IND, or the Home Office in general, is understaffed, undertrained and so on, but I do think that there is a serious point about way in which we organise ourselves in those areas. We are changing that as a result of the NAO report and other things, precisely in order to address those issues.

On what the right hon. Gentleman calls the accelerating procedure of failure, the reason for those figures, as my right hon. Friend the Prime Minister said a moment ago at Prime Minister's questions, is that as a result of the NAO proposals we sent immigration officers into prisons, tightened the procedure, identified more problems to take up, and solved more problems. The problem is—I have to be straight about this—that if one tries to sort out these problems, one turns up more problems. That is the situation that must be candidly addressed.

As for the right hon. Gentleman's friend from Civitas, perhaps I could remind him that, as he knows very well, in an attempt to get all-party agreement about the way in which crime statistics are dealt with, I invited him to nominate individuals to a panel to review that matter. The gentleman concerned was duly nominated by the right hon. Gentleman, and I appointed him because I wanted some consensus, so of course I am interested in his views on all these matters.

On the question of the people whom the police and the immigration service are still pursuing, I am not, as I said in my statement, going to give a moment-by-moment update on that, but I believe that they are making extremely good progress as a result of the situation that I set out.

Finally, I come to the list of cases that the right hon. Gentleman raised, including the person allegedly involved in the murder of Sharon Beshenivsky, the cases raised by Lord Ramsbotham, and the case involving the killers of Mary-Ann Leneghan. Those are very serious cases. As the right hon. Gentleman acknowledges, they are not among the 1,000 that we are talking about, but as he also acknowledges, they raise precisely the questions that it is right for us to address in deciding how we deport more effectively people who are guilty of criminality. It is no good the right hon. Gentleman saying that we do not need more laws or more procedures, that it is all hunky-dory and the problems are simply down to poor administration. We need more laws so that we carry matters through properly and I hope that, this time, he will support the proposals.

The Home Secretary predictably showered the House with a volley of new figures and statistics. We will scrutinise those new figures with the attention that they deserve. We already know from the figures released at the end of last Friday that they pose as many questions as they provide answers.

For example, why has the Home Secretary not explained to us how he compiled the figures and what definition he used to conclude that only 79 cases related to serious offences? He claims today that, of those 79, deportation action has commenced for 70, but he went on to say that 38 of the 70 have not been accounted for. How can one proceed with deportation action for the 70 most grave offenders if one does not know—or appear to know—where 38 of them are? We need answers to those questions for the statistics that he provided today to have any credibility.

The Home Secretary has announced new primary legislation. Let us be clear: the current fiasco did not arise because of an absence of legislation or a lack of rules. Yesterday, we found an 86-page document from the Prison Service that provides forensic guidance on how to consider the deportation of non-British offenders. The fiasco did not arise because of a lack of powers enjoyed by the Home Secretary; he already enjoys wide discretion to remove anyone who is deemed not be conducive to the public good. Since 1997, the Government have introduced up to 36 new laws and hundreds and hundreds of new offences. Surely he acknowledges that placing yet more pressure on an overburdened criminal justice system through new rules and laws devised in the panic of the current fiasco might prove little more than a cosmetic solution.

We will consider positively any measures necessary to deport those who should and can be deported more quickly than at present, and especially the measures that the Home Secretary outlined to encourage offenders to serve their sentences in their home countries once convicted here. However, we will not welcome the measures if they prove, on further reflection and analysis, to be a knee-jerk reaction, designed to grab headlines rather than offenders and to help the Government out of a self-inflicted fiasco.

Our prisons are grotesquely overcrowded. The probation service is demoralised and under-resourced. The Government are at permanent loggerheads with the judiciary and reoffending rates, which have a direct bearing on what we are considering, are among the highest in the western world, with up to 70 per cent. of young offenders offending again within two years of release from prison. The Government have presided over lamentably low conviction rates for some of the most serious crimes imaginable, such as rape.

Surely the Home Secretary should start getting a grip on the Government's woeful mismanagement of the criminal justice system rather than indulging in rushed, new legislation in response to recent events. Our focus will remain on the serial incompetence of a system in which the basic rules to examine every case for deportation simply did not operate. The Home Secretary should take political responsibility for that incompetence. He has said nothing today to suggest that Ministers were anything other than neglectful in failing to tackle such grave issues until they were shamed into doing so in recent days. He should do the decent thing—we know that he has done it before—and ask the Prime Minister to release him from his predicament and allow him to resign today.

First, when I stated that 70 people had been approved for deportation and procedures were going ahead in those cases, that is true and the police are working on it, as I reported to the House. Secondly, I have not sought in any way to hide the fact that the Home Office made serious mistakes. I said that last week, I say it this week and I continue to assert it. As I said in the statement, I believe that several positive things have happened side by side with that mistake and it not right for the hon. Gentleman to say that I did not set them out. We have made significant progress on several matters.

The hon. Gentleman needs to grasp a key point when he speaks about considering the legislative position. In every deportation case, a battle goes on between the individual to be deported and the state that seeks to deport. The battle takes place in the courts, with a series of judgments appealed through a long procedure. That is the law of the land, as it is entitled to be. However—I stress this in the strongest terms—the battle about case after case, occasionally with important judgments, such as the Chindamo judgment, going against the Government, is a key factor in any Government's ability to act decisively. That is why I say that our response must be to go back to the basics, and make a presumption that non-British criminals should be deported. That is what we will set out. The challenge for the hon. Gentleman and his colleagues in the House and the other place is whether they are prepared to sign up to that principle.

Following my right hon. Friend's comments, does he agree that one of the most unsatisfactory parts of the current law that has been revealed in the past few days is the way in which it requires Home Office officials to judge not only what is in the public interest, but the chance of defending a particular case against a subsequent court challenge? Does not that produce a deeply unsatisfactory and inexplicable position for our constituents, whereby it appears that Home Office officials have simply decided not to deport somebody who then commits a serious offence? Is not the great advantage of a presumption in favour of deportation not simply that we will not have future backlogs but that the House can say what it wants to happen on behalf of our constituents, and it will be clear when the courts decide in an individual case that such action should not follow?

My right hon. Friend is correct. I pay tribute to him and the Select Committee that he chairs because it decided a good while back—partly, I am sure, in response to the NAO report, but also for other reasons—to go through the detailed workings of the immigration and asylum system. It did not simply take evidence in the House but considered the current procedures, and so it should because our approach should be scrutinised, precisely for the reason that my right hon. Friend gave. That is why I welcome the Select Committee's decision to widen its terms of reference to include the management of foreign national prisoners. That is important. My right hon. Friend is correct and I hope that the Select Committee will make recommendations to that effect and that the House will listen to them.

Listening to the Home Secretary, I am sure that I am not alone in smelling a rat. Again, when a problem arises, a member of the Government comes to the House, denies responsibility and says, "Here's another tonne of legislation, which we will lay on the problem to resolve it." The courts have made it clear that the Home Secretary retains the absolute right to make the decision to deport somebody and they will not gainsay him on that. The idea that the proposed presumption will suddenly change that practice is nonsense.

The Home Secretary misses another point, too. What will he do about those whom he cannot deport? Will they simply wander the country because he could not deport them simply because they could not get a flight?

I have done the opposite of denying responsibility for the matter. From the beginning, I acknowledged my responsibility for the mistakes that have been made. It is fair to say that I have also sought credit for the positive changes that we have made side by side with the mistakes, but I accept responsibility completely and categorically, and I do not believe that the right hon. Gentleman has the right to say that I have not done so.

On the right hon. Gentleman's fundamental point about how we deal with deportations, he knows from his extensive experience how difficult such issues are. It is not simply a matter of being unable to find a plane. There are access and logistical problems but, as he well knows, there is also a range of other different issues to consider.

I dealt with that specific question in the statement. I said that, in cases in which we cannot deport, we should consider primary legislation to extend our powers. That possibility will be tackled in the consultation paper.

Like control orders.

No, not like control orders. The hon. Gentleman should face a fact: we have the power to keep in prison those who have committed offences until the end of their sentence; we have the power to keep under immigration detention those whom we have a realistic prospect of deporting, but we do not have the power, on my say-so or anybody else's, to keep people in prison because we feel like it because of the risk that they might pose. That is the dilemma and the problem. It is why we need to consider new legislation and ascertain how to deal with the matter.

My right hon. Friend referred in his statement to the removal of failed asylum seekers. The hon. Member for Sheffield, Hallam (Mr. Clegg) referred in his question to the fact that there was already legislation on the statute book to deal with such cases. Why did my right hon. Friend, in responding to the hon. Gentleman, fail to refer to the case of the failed asylum seeker in Manchester who stood in the council elections as a Liberal Democrat candidate and was elected? He returned to the country from which he claimed he had been seeking asylum to attend a wedding, and remains in this country now only because he benefited from an amnesty granted by my right hon. Friend's predecessor.

The short answer is that that is a result of my natural generosity of spirit, which I try to show at all times to the Liberal Democrats as I cannot give them any other support.

My right hon. Friend was the first Member of Parliament to visit me on the day I was appointed Home Secretary. He took me to his constituency office—just off the Lobby—to show me the filing cabinets full of constituents' cases that had not been properly dealt with by the system that was in place at the time, and about which he had made representations. He said to me, "You've got to get this sorted out", or words to that effect. He was right. The point that he made was that the problem went back over a long period, well into the term of the previous Conservative Administration. That is what we are trying to put right, and I am determined to achieve that.

Last week, I asked the Home Secretary whether the people who had committed serious sexual offences were put on the sex offenders register before they were released, as that was vital for maintaining confidence that the register could help our local police forces. His reply was:

"I assure the hon. Lady that precisely the same procedures on the sex offenders register applied to the foreign nationals whom she has described as apply to anybody who commits a sex offence."— [Official Report, 26 April 2006; Vol. 445, c. 588.]

If that is the case, how come senior police officers have said recently in the national press that there are serious offenders, including sex offenders, of whom they have no details whatever? Will the Secretary of State fill me in on whether he feels his statement last week reflected the true situation?

I am not sure to which statement the hon. Lady is referring, but I do not believe that those views are right. The police have been intimately involved in this approach through their national command centre in Portsmouth, and they have dealt with a large number of issues through the police national computer. I do not think that the specific remarks that the hon. Lady reports are correct, but perhaps she could drop me a note with their particulars, and I will answer them in detail.

Sharon Beshenivsky lived at Hainworth, in my constituency, until her murder. My colleagues from Bradford and I attended her funeral at Bradford cathedral. Does my right hon. Friend agree that the most precious of human rights is the right to life itself? I welcome his comments, and I am impressed that we seem to be moving in the right direction. The Prime Minister also commented just now on overhauling the system and changing the rules. If we are, as my right hon. Friend the Member for Southampton, Itchen (Mr. Denham) mentioned, to have a presumption in favour of deportation, would Mustaf Jama—the prime suspect in Sharon's murder—be capable of being deported if he were to come before the people who discuss deportations? Given the changes that are to be introduced, would he now be capable of being deported? Will my right hon. Friend also comment on the letter that the Leader of the Opposition waved at us earlier when he was talking about prisoners switching to become asylum seekers before they were deported? I had understood that we had put an absolute stop to that switching.

I pay tribute to my hon. Friend for taking up the case of her former constituent. She and I discussed the matter yesterday after the press reporting of the situation. I cannot confirm that any legislation will have a particular impact on any individual case—I am not going to comment on specific circumstances—but I can say that the whole intent of the legislation is to change the balance of assumption in favour of the rights of people who want to avoid having crimes committed against them, rather than the rights of individual criminals. That is what we are proposing, and that is what I think should happen.

On my hon. Friend's final point, I will examine the case that she mentioned, and I am sure that the Leader of the Opposition will let me have a copy of the letter that he was brandishing in the House today. I will respond in detail to my hon. Friend on that point, but I believe that steps have already been taken to deal with those matters.

Do the Home Secretary, the Home Office and the police know where all the dangerous foreign national criminals are? If they do not know where they are, how will they remove or deport them?

As I have said, the police are pursuing all of them on the basis of the extensive intelligence and data that we have about all of those individuals.

Can my right hon. Friend understand the anger of my constituents in Bradford, and of people in general, when they discovered that one of the people wanted in connection with the murder of Sharon Beshenivsky was a convicted criminal and a foreign national who had not been recommended, even in principle, for deportation? Why was he not recommended even in principle? Who are these people who cannot see right from wrong? Why was this man not tracked? I welcome much of my right hon. Friend's statement today, but he himself has talked about the systemic failures in the Home Office. How can we have any faith that the new measures will not end up in the same shambles as the previous ones?

I certainly can understand the anger that my hon. Friend describes. He and I also discussed this matter yesterday. I hope that he will acknowledge that the case to which he refers was not one of the specific cases that we have been talking about. As I said yesterday, however, and I say to the House today, it does raise precisely the kind of general questions that my hon. Friend has raised. That is why we need the type of legislative change that I have described. However, my hon. Friend is right to suggest that, after the failures in the Home Office's handling of these matters, we have to win back people's confidence in our capacity to deal with them. I hope that, when he considers those failures, he will set them side by side with our successes, and acknowledge that both have to keep moving forward in a strongly positive direction.

The Home Secretary will be aware that the language that he has used about the removal of these prisoners was very different from the language used by the Prime Minister just a few minutes earlier from the same Dispatch Box. The Prime Minister said that these criminals would "automatically" be deported. The Home Secretary says that they can expect to be deported unless there are circumstances that would make it inappropriate to do so. Will the Home Secretary now acknowledge that what the Prime Minister said was wrong, and that the Prime Minister was, as usual, using language that he thought would make an effective soundbite, but which was a considerable distance away from the truth?

No, I will not. I do not believe that there was the distinction in language that the right hon. and learned Gentleman has made. If we are being candid about these matters, we should look back to the time during the previous Conservative Government, before he was Home Secretary, when the noble Lord Ferrers said in answer to a question that, of a total sentenced population of 34,000 in December 1991, about 2,600 were known to be foreign nationals, and that the nationality of a further 5,900—a fifth of the prison population—was not recorded. That was the state of affairs that we had to deal with, and it is what we are now putting right.

On the subject of soundbites, will my right hon. Friend guard against the soundbites—the murmurings about meltdown—that I have heard from Opposition Members? Will he also guard against calls for action from a party that, while it was in power, took no action whatever, collected no figures and cut 2,000 Home Office jobs? I congratulate my right hon. Friend on his announcement today. When he is considering what the House should do next about this problem, will he balance the need to protect our constituents from those who wish them harm against ensuring that the people who come here to make a proper contribution to our economy and our culture still feel welcome to do so?

My hon. Friend is absolutely right. I am particularly glad that she made reference in the final part of her question to the need to strengthen the cohesion of communities in this country. That is an important and genuine requirement to consider as we balance the issues that are being debated today. I can assure her that the cohesion of communities up and down the country, including her constituency, will be a central consideration for me as we take forward the legislation.

Following last week's statement, the Home Secretary was kind enough to write to tell me that one of the 79 most dangerous foreign nationals was resident in Scotland. Can he tell me how many of the 1,023 are currently in Scotland? What possible excuse can he give for not notifying the Scottish Executive, the Scottish Prison Service and Scottish police forces when he knew about the difficulties in his Department? Why did he not tell them in time so that something could have been done to ensure that Scottish communities were safer and more secure?

As I said in my statement, I am not in a position to give full information about the 1,000 at this stage. I will do so when I can. On the hon. Gentleman's other question, I dealt with that in the answer that I sent to him, and I will continue to work closely with the Scottish Executive and others to ensure that we bring those matters under control.

My right hon. Friend has referred to WPC Sharon Beshenivsky. What checks are made by the Prison Service and the immigration and nationality directorate on prisoners' claimed nationality? Where removal is not possible, is administrative detention ever considered? What conditions, such as tagging, are applied on release to people who cannot be deported?

On the hon. Gentleman's second point, yes, we deal with administrative detention. On his third point about tagging, we are looking to extend the ability to use that. As I said to the former Leader of the Opposition, the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), there are serious issues about our legal powers in those circumstances, which is why I called for further consideration. On his first point, he puts his finger on a critical difficulty in this procedure. Many people come into this country having destroyed all their documents and make fraudulent and untrue claims about their nationality. In those cases, it is often extremely difficult to identify the genuine nationality of those concerned. If we do not know which country individuals come from, it is extremely difficult to know where to deport them to. That is a major issue in immigration, and we have done tremendous work in developing the e-borders regime, which tries to identify people more effectively before they enter this country. I will be candid with my hon. Friend, however, that that also raises serious questions, because there are people whose nationality cannot be identified at the outset, which is one of the serious problems that we have had in providing the data that the Public Accounts Committee and the House would wish for.

When the Home Secretary wrote to you last Friday, Mr. Speaker, he said that 79 of the prisoners were originally in prison for more serious offences and 13 had committed the most serious offences, by which he meant murder, manslaughter, rape and child sexual offences. If we look at his letter to the PAC last Tuesday, however, we see that three had been in prison for murder, two for manslaughter, nine for rape and five for sexual offences involving minors, making a total of 19, not 13. Can the Home Secretary clear that up? Was he being inaccurate on Tuesday or on Friday, or is there some other explanation? Can he explain—

Order. One supplementary is fine.

I will write to the hon. Gentleman and the PAC about his specific question about the relationship between the issues. As he says, however, it is true that the definitions in each of the cases have not always been entirely straightforward. That is why the situation has arisen with the numbers. The best way to deal with that is to write to him and the PAC.

Will my right hon. Friend confirm that because Somalia has entirely disintegrated it has not been possible for many years, including when the Conservatives were in office, to deport anyone to that country, short of taking them up in an aeroplane over Mogadishu and dropping them out with a parachute? Does he therefore agree that it is entirely fanciful—indeed, hypocritical—for Conservative Members and their friends in the media to pretend otherwise?

My hon. Friend is correct. That has been more of a difficulty with that country than with just about any other country in the world. It is possible to imagine voluntary return in certain circumstances, which has been achieved in a small number of cases. More generally, however, it has not been possible to proceed for precisely the reasons that he gives.

Following the points raised by the hon. Members for Keighley (Mrs. Cryer), for Bradford, West (Mr. Singh) and for Bradford, North (Mr. Rooney), will the Home Secretary take the opportunity to apologise to the family of WPC Beshenivsky and the people of Bradford for the fact that the main suspect in her murder was allowed to wander the streets when he should have been deported? Will he answer the question that many people in Bradford are asking at the moment: why do he and this Government give more credence to the human rights of foreign criminals than to those of police officers and the general public in this country?

I do not have anything to add to what I have said previously to MPs from that locality.

I also welcome the announcement from my right hon. Friend. Many constituents have asked me in recent weeks why foreign nationals who have committed offences and effectively outstayed their welcome by their actions have not been automatically deported. On the serious matter of the countries to which, for whatever reason, people cannot be deported, will he consider issuing a list making public the countries to which it is difficult to deport people? When people finish their sentences, what are we doing to make sure that they are detained? Finally—

Order. I tell the hon. Gentleman and other Members that one supplementary is fine. I think that he managed two, but one is fine.

I certainly will consider my hon. Friend's proposals. Let me highlight one problem: in the case of Zimbabwe, which has many difficulties, the Government are subject to consistent calls, including from the Opposition, not to deport anyone to that country in any circumstances. We are also under a duty to examine the circumstances of the individuals concerned and the threat that they face. My hon. Friend illustrates the serious issue at the core of how we deal with those questions. All that I ask for is consistency from Opposition parties in addressing those questions, rather than one day saying, "What about the rights of asylum seekers?" and the next day saying that they cannot be allowed into the country.

Is it not the case that a foreign prisoner due to be deported still retains a right to make a claim to stay under the Human Rights Act 1998? If that is the case, what will happen to that foreign prisoner making a claim under that Act during the course of proceedings? Will he or she be on bail or in custody, and under which provision?

Actually, that is the position with regard to such a prisoner's human rights under the European convention on human rights rather than specifically under the Human Rights Act. Any individual might or might not have a claim under the European convention on human rights, which I think, from memory, this country signed up to in 1951. That claim has to be duly considered by the courts, whether the person concerned is on bail or in prison, in whatever circumstances apply. The issue that I raise—I do not know whether the hon. Gentleman, with his great legal experience, will agree—is that we must be more ruthless about examining the actual circumstances of such people. That is why I say that we should have a presumption that someone who has committed a criminal act should be deported to the country from which they come.

I welcome my right hon. Friend's proposals to deal with the systemic failures that he has honestly put before the House today. Will he assure me, however, that he will take no strictures from the former Home Secretary, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), whose woeful personal misjudgment allowed two of the biggest drug dealers in the United Kingdom out of prison?

I certainly will not take strictures from the former Home Secretary, whom I regard as the one person in the House who is not equipped to make comment on these issues. I will not comment on the allegations made by my hon. Friend, although I am aware of them and understand the force with which he makes them.

Can the Home Secretary say how many of the 1,023 cases would have resulted in deportations had the new legislation that he proposes been in place?

No, I cannot.

I thank my right hon. Friend for his statement and welcome his proposals. Given that this whole sorry outcome is the result of systemic failures in the Home Office going back to the 1990s, can he tell me how many foreign nationals who either have been deported or are being considered for deportation are repeat offenders whose original offences were carried out prior to this Government's introduction of measures to identify and record the number of foreign nationals in prison?

I cannot give my hon. Friend the number to which he refers, but I can say that he is right: there are individuals who go back over a long period in precisely the way that he describes.

To his credit, the Home Secretary tried to deport several very dangerous suspected al-Qaeda organisers, only to run up against the human rights legislation that had been signed up to or enacted by his Government. It is clear from his statement today that the same would happen in relation to people claiming asylum from countries with repressive regimes. Did the Home Secretary discuss that issue with the Prime Minister before the Prime Minister came to the House today? If he did, how was it possible for the Prime Minister to say that these people would automatically be deported under the new rules, when he—the Home Secretary—has made it perfectly clear that they could not be?

I have already dealt with the substance of the question, but let me make a specific point. Yes, I have frequently discussed with the Prime Minister the question of the operation of the European convention on human rights, and the fact that it impacts in a number of different ways. As far as I know, the Opposition still believe that we should be signed up to the convention, but if I am wrong about that, I should be interested to hear it.

Get on with it!

I am getting on with it, and I am trying to do so in such a way that even the hon. Gentleman may be able to understand.

Patronising!

Yes, I am patronising.

The fact is that that issue remains a central one, at the core of the whole discussion. I appeal to the right hon. Member for Haltemprice and Howden (David Davis) and the spokespeople for the other Opposition parties to address the matter honestly in that discussion, on the basis of the presumption that criminals should be deported.

On a point of order, Mr. Speaker. As a new Member, may I ask for your guidance on whether the usual courtesies should have applied when the hon. Member for Chesham and Amersham (Mrs. Gillan) visited my constituency recently? I saw plenty of press coverage of her visit to Wales's premier seaside resort, but found no notification to my office, either here or in my constituency, that the visit was about to take place. Do such conventions still apply, and should they have applied in my case?

rose—

Order. Let me answer.

I do not want to become involved in any arguments between Members on these matters, but the convention does apply. What an hon. Member must do is notify the constituency Member. I stress the word "notify": the person concerned does not need permission to enter the constituency.

Further to that point of order, Mr. Speaker. It may please you to know that there are standing orders in my office to inform hon. Members when I visit their constituencies. In this instance I made an inquiry, and found that both a letter and an e-mail had been sent to the hon. Member for Bridgend (Mrs. Moon). I apologise if neither reached her. I shall make inquiries of our locator system in the House, which is run by whereonearth.com—because I want to know where on earth my message went. I do apologise.

There is an apology, then.

On a point of order, Mr. Speaker. I was surprised to read in column 835 of Hansard for 2 May that an hon. Lady—and she is a lady of honour: the hon. Member for Bromsgrove (Miss Kirkbride)—had named me personally, and stated in the House that I was demanding the resignation of a senior Cabinet Minister. What corrective avenues, Mr. Speaker, are open to a Member who is able categorically and unequivocally to deny having made any such statement and would not make any such statement, before further damage to fraternal relations with senior colleagues and to my personal career prospects—which, admittedly, were fairly slim to start with?

The hon. Gentleman has put the record straight, and perhaps next time he appears on Sky television he will be able to do so again.

On a point of order, Mr. Speaker. I fear that Members may have been inadvertently misled about the Home Secretary's offer to resign. Speaking of an exchange with the Prime Minister, the Home Secretary said:

"I told him I was prepared to resign if he thought it was right. He said he didn't think it was right."

Subsequently, we have been told that the Home Secretary did not offer to resign. I wonder what avenue I can explore as a Member of Parliament to ensure that hon. Members are fully informed on this matter in what I think you will agree, Mr. Speaker, is a national crisis over prisoner releases.

The best thing to do is not to draw the Speaker into such arguments.

I beg to move,

That leave be given to bring in a Bill to require police services to include proposals to introduce and sustain neighbourhood policing as a provision of their policing plans; and for connected purposes.

Let me say immediately that if police services in England and Wales continue to respond positively to the Government's agenda on neighbourhood policing, my Bill will only gather dust. Most if not all forces have responded with professionalism and enthusiasm to the aims set out in a string of White Papers and Government Bills since 1997.

I shall largely confine my remarks to the Metropolitan area, which I believe has led the way in neighbourhood policing. Both the current commissioner and the Mayor deserve praise for not only supporting but implementing the provision of safer neighbourhood teams across London, which Sir Ian Blair has called

"the greatest development in community policing in the last 40 years".

While both Sir Ian and Mr. Livingstone are uncontroversial characters who will no doubt stay in their respective posts for many years to come, should they for any reason move on, I would like to think that their legacy in community policing will be preserved. I also hope that the many local initiatives—not just in London—that are improving community safety can be introduced nationwide to continue the Government's exemplary record in cutting crime and antisocial behaviour. Those are the objects of my Bill.

The purpose of this speech is not to rehearse the details of the statutory framework that already exists or to recite a welter of statistics, but to show how neighbourhood policing is already working on the ground. That said, I feel it is worth reminding the House that without the consistent commitment shown by the Government since 1997, neither the powers nor the funding for neighbourhood policing would exist. The Crime and Disorder Act 1998 introduced crime and disorder reduction partnerships and formal co-operation between the police and local authorities to reduce crime. The Police Reform Act 2002 provided for community support officers, who are now an essential ingredient of safer neighbourhood teams and who will number 24,000 by 2008. The White Paper "Building Communities, Beating Crime", published in November 2004, promised to spread neighbourhood policing to every community, and to involve those communities in how they were policed. In January this year, the respect action plan further promoted the use of antisocial behaviour orders, dispersal orders and closure orders to attack antisocial behaviour. Many of those measures are being brought together and extended in the Police and Justice Bill, which is currently before the House.

Recorded crime, as measured by the British crime survey, has fallen consistently since 1997. Both London boroughs crossed by my constituency have experienced significant falls in crime, and Hammersmith and Fulham has experienced the sharpest fall in London. The Government's aim is to see a further reduction in recorded crime of 15 per cent. between 2004 and 2008—a higher percentage in London—and to reduce the fear of crime through the national reassurance policing programme. Neighbourhood policing is key to both those targets.

The decision of the Mayor of London and the Metropolitan Police Authority, chaired by Len Duvall, to accelerate by two years the introduction of safer neighbourhood teams in all 624 wards in London presents a major logistical task. The police service in London has risen to that challenge and ensured that every ward has at least a four-person team: a sergeant, a police constable and two police community support officers. A further police constable and community support officer will be added by the end of the year.

Safer neighbourhood teams are dedicated to the wards to which they are assigned. They provide residents with a continuous and familiar uniformed presence, and they get to know their patch intimately, not only deterring crime but accumulating intelligence about both the area and its inhabitants. That is hardly revolutionary—indeed, it is what my constituents have been requesting for many years—but it is something that previous Governments and police authorities have declined to provide.

I pay particular tribute to Ealing and Hammersmith and Fulham, where both the police commanders and the council leaderships have gone beyond what is required in introducing neighbourhood policing. In Hammersmith, the Labour council voted funds of £1 million a year to fast-track safer neighbourhood teams, introducing full-strength teams in most wards three years ahead of plans. In Ealing the borough commander, Colette Paul, was able to launch safer neighbourhood teams in all 23 wards on 3 April this year, having planned for their introduction in advance of any London roll-out.

But community policing in those boroughs goes far beyond the additional police resources. As leader of Hammersmith and Fulham council, I had the privilege of working with three outstanding police commanders: Dick Cullen, who went on to run Hendon, Anthony Wills, who has become a national champion in the fight against domestic violence, and the present incumbent, Heather Valentine. They have worked hand in glove with both the statutory sector and the community to build trust and reduce crime. For those who remember the atmosphere of mutual suspicion and hostility that afflicted many police and local authority relationships in the 1980s, that is a sea change. Nowhere was that more apparent than in the aftermath of the London bombings last July. The work done by both the Hammersmith and the Ealing police forces to reassure and enlist the support of the whole community, especially in the wake of the attempted bombing at Shepherds Bush, was exemplary.

Both boroughs have taken enthusiastically to partnership working. That often involves teams of police, community support officers and council staff descending on an area to deal with everything from crack houses and street robbery to graffiti, dog fouling and fly-tipping. They also plant trees, give advice to the homeless and, quite possibly, tell people the time. How different that is from the days of the special patrol group.

Both boroughs have introduced the community payback scheme, using offenders to make reparation and environmental improvements in their community. Earlier this year, I attended the launch of the Safer Neighbourhood Annual Challenge at Hurlingham and Chelsea school. Next Monday is the awards ceremony, when children from Hammersmith and Fulham schools will explain their schemes for improving safety in their neighbourhoods.

However, what my constituents most want to know is whether community policing actually cuts crime and the fear of crime. The first indications suggest that the answer is an emphatic yes. All crime, but specifically opportunist crime such as criminal damage, fell significantly more in wards where safer neighbourhood teams were operating last year. There, public confidence in the police rose by 12 per cent. more than was the case in non-SNT wards, complaints of antisocial behaviour fell by 7 per cent. more, sightings of police officers rose by 11 per cent. more, and the belief that the police were taking public concerns seriously by 8 per cent. more.

Those are significant achievements in a very short time. We are only at the start of a policing revolution, in which public trust and the engagement of the whole community are the keys to a safer society.

I appear to be talking myself out of my own Bill. The commitment of many councils and police services is such that I see neighbourhood policing going from strength to strength without the need for legislation, but there is always a cloud on the horizon. In this case, it is in the shape of the Tory and Liberal parties, whose assembly members in London turned their faces against the improvements in neighbourhood policing proposed by the Mayor and Labour group. Overwhelmingly, it is the Labour Government and Labour councils who have provided the resources and commitment to neighbourhood policing.

I commend my Bill as an insurance policy to protect neighbourhood policing for the future. Of course, if residents in Hammersmith and Fulham and in Ealing, as well as in the rest of London and beyond, wish to take out their own insurance that policing will continue to thrive and improve in the years to come, the remedy is in their hands—they have but to vote for their Labour candidates tomorrow.

Question put and agreed to.

Bill ordered to be brought in by Mr. Andrew Slaughter, Lyn Brown, Jon Cruddas, Ms Karen Buck, Stephen Pound, Mr. Andrew Love, Mike Gapes, Meg Hillier, Mr. Andrew Dismore, Dr. Rudi Vis, Harry Cohen and Ann Keen.

Neighbourhood Policing

Mr. Andrew Slaughter accordingly presented a Bill to require police services to include proposals to introduce and sustain neighbourhood policing as a provision of their policing plans; and for connected purposes.: And the same was read the First time; and ordered to be read a Second time on Friday 16 June, and to be printed [Bill 177].

I beg to move amendment No. 6, in page 74 [Vol II], leave out lines 5 to 26.

With this, it will be convenient to discuss the following amendments: No. 7, in page 74 [Vol II], leave out from beginning of line 27 to end of line 4 on page 75.

No. 8, in page 75 [Vol II], leave out lines 5 to 18.

No. 9, in page 75, line 18 [Vol II], at end insert—

PART 1A definition of gross assets

3A In section 293 of The Taxes Act 1988 insert new subsection—

"(6CA) For the purposes of subsection (6B) above assets of any member of the company's group that consist of capitalised internal costs of the company relating to research and development expenditure shall be disregarded.".

3B In paragraph 8 of Schedule 28B to The Taxes Act 1988 insert new sub-paragraph—

"(3A) For the purposes of this paragraph assets of any member of the company's group that consist of capitalised internal costs of the company relating to research and development expenditure shall be disregarded.".

3C In paragraph 22(3) of Schedule 15 to FA 2000, at end add "and disregarding assets that consist of capitalised internal costs of the company relating to research and development expenditure".'. No. 13, in schedule 14, page 77, line 3 [Vol II], at end add— '(3) Sub-paragraph (1) shall not apply to protected money as defined in paragraph 2(4) of this Schedule.'.

The first four amendments in this group deal with issues to do with the gross assets of investee companies. Those matters come into sharp focus as a consequence of the proposed reduction in the gross assets limit for venture capital trust investments. The final amendment in the group deals with changes announced in the Budget to the treatment of the VCT's own assets.

One of the most significant changes to the rules applicable to VCTs and enterprise investment schemes is the Bill's proposed reduction in gross asset limits, (and amendments Nos. 6, 7 and 8 would reinstate the limits that apply under the current legislation. The current rules state that gross assets should be equal to, or less than, £15 million prior to fundraising and £16 million after fundraising. That allows the very largest qualifying companies to raise £1 million.

The proposed changes will reduce the gross assets limit so that a company will have no more than £7 million in gross assets prior to fundraising and no more than £8 million afterwards. The effect will be to reduce the amount that certain companies are able to raise. At present, a company with gross assets of £6 million is able to raise an additional £10 million through fundraising, but in future it will be able to raise only about £2 million. I am concerned about the effect on the operation of VCTs, and about the nature of the companies in which they can invest.

If a VCT invests now in a company whose gross assets before investment comply with the new rules proposed in the Bill, its ability to make a follow-on investment will be restricted. Under the current rules, however, the VCT can make further investment in the company until the £15 million asset limit is reached.

My experience before I came to the House was that early investors can find that their holdings and interest are diluted by people who come in later. It is often in their interest to make follow-on investments to maintain the size of their interest in the company. Reducing the gross assets limit from £15 million will restrict VCTs' ability to do that if the company hits the proposed new £7 million limit.

Secondly, the proposed reduction in the gross assets limit is that it could change the asset base that VCTs and the Enterprise Investment Scheme can invest in. The focus will be on smaller, and therefore arguably more risky, companies.

The lower gross asset limit proposed by the Government will focus more finance on the companies in the funding gap identified in the Treasury publication entitled "Bridging the Gap", but there is a feeling that some slightly larger companies will still find it difficult to attract investment. The proposed reduction in the gross assets limit will exclude them from this source of investment, with the possible unintended consequence that the funding gap is moved further up—that is, that the needs of smaller companies will be met, but that slightly larger companies will lose out.

The reduction in the gross assets limit could also change the type of businesses that VCTs invest in. Simon Rogerson of Octopus Asset Management has said:

"Managers will steer clear of asset rich UK manufacturing companies, focusing on asset poor service companies."

When manufacturing is suffering from overseas competition and business investment is at a record low in real terms, is it right to exclude those businesses from the opportunities that VCTs present?

It is not just manufacturing businesses that are asset rich. Last week, I visited a firm in my constituency that acts as a data centre for businesses, housing the servers that they need to power and maintain their websites. It is a relatively small business with about 30 employees but the cost of its data centre, including plant, cooling and some security measures, is extremely high relative to its turnover and its employee numbers.