This statement updates the House on the successful sale by the Ministry of Defence (MOD) of its entire holding of ordinary shares in QinetiQ Group plc (QinetiQ). QinetiQ was created in 2001 from the majority of the MOD’s in-house science and technology laboratories. Given the market sensitive nature of the transaction, it was not possible to inform the House in advance of the decision to sell.

The MOD announced on 9 September 2008 that it would sell its remaining 18.9 per cent. stake (comprising approximately 125 million ordinary shares) in the company. The sale process was completed on the same day through an accelerated bookbuild process, achieving a price of 206p per share and raising around £254 million (net of estimated costs) for the taxpayer. The price achieved by the MOD represented a discount of 7.8 per cent. to the closing price of QinetiQ shares on the day before the transaction. A discount is normal for a transaction of this scale. Between flotation and this sale, the average price of QinetiQ shares in the market was 194p.

The Government retain a special share in the company. This provides the Government with the right to block certain activities or ownership that could be contrary to UK defence and security interests, or which could threaten QinetiQ’s ability to provide its MOD customers with impartial advice.

The sale brings the total raised for the taxpayer from the privatisation of QinetiQ to approximately £830 million (net of costs).

I am pleased to announce that on 20 August we signed a 15-year partnering agreement with BAE Systems Land Systems Munitions (BAES LSM) for the future supply of general munitions to the armed forces. This is the first opportunity since contract signature to inform the House.

The new contractual arrangements have been developed under the umbrella of Project MASS (Munitions Acquisition—The Supply Solution), which is a key strand for delivering the defence industrial strategy (DIS) within the general munitions field. The contractual partnering agreement is underpinned by a broader non-contractual strategic partnering arrangement between BAES LSM and the MOD for the longer-term delivery of joint objectives in the munitions sector.

At present, 80 per cent., by value, of the general munitions used by the armed forces for frontline operations and training are procured from BAES LSM under a contract due to end in 2010. The new, innovative partnering agreement will continue to cover about 80 per cent. of the general munitions requirement, including small arms and medium calibre ammunition, mortar shells and artillery shells and will ensure continuing security of supply for a minimum of 15 years. The new agreement, which is worth at least £2 billion and, depending on the level of demand, potentially in excess of £3 billion, also incentivises BAES LSM to deliver a modern, world class industrial base.

This is excellent news for defence. Not only will the new arrangements deliver a long-term, secure supply of battle-winning munitions for our armed forces, it will also ensure that the UK retains an important sovereign capability, directly sustaining some 1,700 UK jobs.

It is also excellent news for BAES LSM, and for their highly skilled workforce in the north of England and south Wales, who are to be commended for their continued commitment and contribution to our efforts in Afghanistan and Iraq, under the current arrangements. During this period of high demand, the company has stepped up production to meet the challenge, providing up to 1 million rounds of small arms ammunition a day from their manufacturing facility at Radway Green, near Crewe.

Our new partnering agreement with BAES LSM is an important milestone in the implementation of the defence industrial strategy, which is providing a framework for real change within the defence industry and its relationships with the MOD.

Following my statement on 12 June 2008 about the incident that took place on board HMS Tireless in March 2007, I would like to inform the House today that the investigation undertaken on behalf of the Chief of Defence Matériel to consider issues relating to the procurement, supply and management of oxygen generators has concluded.

This investigation has shown that when the Ministry of Defence introduced the self-contained oxygen generator (SCOG) into service on submarines, it assessed that the new unit delivered a substantial improvement to the safe generation of emergency oxygen over the previously used Mark V candle. The cap and seal present in the new design was believed to be proof against contamination. The investigation has, however, made it clear that this belief, and therefore the resultant understanding of any risk of explosion, was flawed and that we were complacent about the improvement in safety the new SCOGs delivered.

The investigation has also identified a number of shortcomings in the way we handled and managed SCOGs. In particular, it has demonstrated that logistics management processes were in some places ambiguous, and as a result were neither consistently applied nor comprehensively followed. The investigation found that these shortcomings existed across the logistics management system.

The investigation also looked at the issue of individual culpability. It concluded that although individuals had made mistakes, the errors made did not amount to negligence, and as a result disciplinary action is not justified. Although no individual was found to be personally culpable, it is clear that we were complacent and, as I said in my statement on 12 June, the Ministry of Defence must bear responsibility for this tragic incident. As part of that responsibility it is our duty to ensure that the necessary changes are made to prevent a reoccurrence.

The DE&S investigation has made 14 recommendations for improvements across the logistics management process, including for the handling, storage and tracking of SCOGs. These recommendations have been accepted in full and are being implemented, along with those made by the board of inquiry, which consulted with a range of organisations, including NASA, while it looked into this incident.

The Ministry of Defence has already put in place a number of improved processes, guidance and equipment-related measures since the explosion on HMS Tireless. An interim replacement for the generation of emergency oxygen that is better protected than the SCOG has been introduced. This is being supplied to the submarine fleet as quickly as practicable. We have already fitted replacement oxygen generators to two of the fleet and expect to have rolled them out to the rest by the end of the year. These, along with any pre-existing SCOGs which remain in use over the next few months, will only be used in an emergency situation and are being handled appropriately. Work is also underway to develop and introduce a replacement oxygen generating capability for routine and emergency use in the future.

The outcome of this further investigation, its recommendations, and the improvements that are already being put in place do not change the fact that as a result of this tragic incident two submariners died and another was seriously injured. I would again like to offer my sincere sympathies to their families, friends and colleagues and assure them that the action we have taken significantly reduces the risk of such a tragedy happening again. My Department is continuing to provide the coroner with every assistance possible and is keeping the Heath and Safety Executive fully informed.

I am today placing a copy of the investigation report in the Library of the House.

It has been brought to my attention that replies I gave on 14 May 2008, Official Report, column 1578W to the hon. Member for North Devon (Mr. Harvey) and on 6 June 2008, Official Report, column 1182W to the hon. Member for Woodspring (Dr. Fox) over-reported the percentage and number of rejected claims made under the Armed Forces Compensation Scheme.

The original data and subsequent revisions are shown in the tables below.

Table 1: Previously released and revised AFCS rejection percentages (Excluding medical discharges).

Table2: Previously released and revised AFCS rejection figures.

On 11 August 2008 I published a consultation document, which is the latest stage in the development of the new system we are introducing for the regulation of health and adult social care.

“Changes to arrangements for regulating NHS bodies in relation to healthcare associated infections for 2009-10—A consultation for the NHS” takes forward our commitment to allow the Care Quality Commission to regulate NHS bodies with respect to healthcare associated infections from April 2009. A copy has been placed in the Library and copies are available for hon. Members from the Vote Office.

The NHS has been working hard to tackle healthcare associated infections. We are on course to halve the number of MRSA infections from 2003-04 levels and reduce “C difficile” infections. Patients keep telling us that contracting a healthcare associated infection is one of their biggest concerns. It is crucial that we focus on bringing infection rates down even further and protecting patients, staff and visitors from the risk of infection.

Patients are looking for assurances that no matter who provides their care, they will receive a safe and quality service. They also look to the regulators of health and social care to support and encourage improvements in the services they use.

The NHS next stage review final report, “High Quality Care for All”, emphasises the important role regulation plays in improving quality.

The Health and Social Care Act establishes the Care Quality Commission on 1 October this year and it will take over responsibility for regulating health and adult social care from April 2009. It will operate under a new legislative framework, with a wider range of enforcement powers. These include powers to inspect and investigate, to issue statutory warning notices and financial penalties, and, in the most serious cases, to prosecute, suspend or cancel registration.

This document sets out how we plan to carry forward the existing code of practice for the prevention and control of healthcare associated infections into this new environment, and further details the full range of enforcement powers that will be introduced under the Health and Social Care Act 2008.

This publication encourages all NHS organisations to engage with this process and provides an opportunity for them to comment. However, it will also be of interest to anyone working in health and adult social care and to patients and service users who are interested in how the reforms are going to improve the services they use. The consultation will close on 20 October 2008.

Section 14(1) of the Prevention of Terrorism Act 2005 (the 2005 Act) requires the Secretary of State to report to Parliament as soon as reasonably practicable after the end of every relevant three-month period on the exercise of the control order powers during that period.

The level of information provided will always be subject to slight variations based on operational advice.

Control orders continue to be an essential tool to protect the public from terrorism, particularly where it is not possible to prosecute individuals for terrorism-related activity and, in the case of foreign nationals, where they cannot be removed from the UK.

As stated in previous quarterly statements on control orders, control order obligations are tailored to the individual concerned and are based on the terrorism-related risk that individual poses. Each control order is kept under regular review to ensure that obligations remain necessary and proportionate. The Home Office continues to hold Control Order Review Groups (CORGs) every quarter, with representation from law enforcement and intelligence agencies, to keep the obligations in every control order under regular and formal review and to facilitate a review of appropriate exit strategies. During this reporting period, three CORGs were held in relation to the orders currently in force. In addition, further meetings were held on an ad-hoc basis as specific issues arose.

During the period 11 June 2008 to 10 September 2008, one new non-derogating control order was made. Six non-derogating control orders were renewed in accordance with section 2(6) of the 2005 Act. In total, 16 control orders are currently in force, four of which are in respect of British citizens. Three individuals subject to a control order live in the Metropolitan Police Service area; the remaining individuals live in other police force areas. All of these control orders are non-derogating.

During this reporting period, 120 modifications of control order obligations were made. Sixty-one requests to modify a control order obligation were refused. A right of appeal exists in sections 10(1) and 10(3) of the 2005 Act respectively against decisions by the Secretary of State to renew a non-derogating control order or modify an obligation imposed by a non-derogating control order without consent, and against decisions by the Secretary of State to refuse a request by a controlled person to modify any such obligation. Ten appeals have been lodged with the High Court by controlled persons relating to modifications to orders or the renewal of orders in this reporting period. One of these appeals was subsequently withdrawn.

Seven judgments have been handed down by the High Court in control order cases during this reporting period. Three of these judgments have been handed down in the case of Secretary of State for the Home Department v. Abu Rideh. An interim judgment in a modification appeal was handed down on 23 June 2008 in which the court ordered that a modification be made to Abu Rideh’s reporting requirements. Final judgment was reserved until the conclusion of the substantive review of the control order under section 3(10) of the 2005 Act. Following the hearing under section 3(10) in July a judgment was handed down on 8 August 2008 in relation to the issue of compliance with article 6 of ECHR (a closed version of the judgment was handed down on 31 July 2008). The court ordered that further disclosure of the closed case against Abu Rideh should be made available to him or withdrawn from the case. No appeals against this judgment have been submitted by either side as yet. A further interim judgment in relation to modification appeals submitted by Abu Rideh was handed down on 15 August 2008. The court ordered some further modifications to Abu Rideh’s reporting and visitor obligations but upheld the Secretary of State’s decision to refuse to allow Abu Rideh to have access to the internet.

Two of the judgments handed down in this reporting period relate to the case of Secretary of State for the Home Department v. AP. A closed judgment in relation to article 6 compliance was handed down on 14 July 2008. A judgment was handed down in the substantive 3(10) review of AP’s control order on 15 August 2008. The court found that there was reasonable suspicion that AP is, or has been, involved in terrorism-related activity and that a control order is necessary to protect the public from a risk of terrorism. The court also found that no further disclosure was necessary in order to ensure compliance with article 6. The judgment dealt with two modification appeals lodged by the controlled person. On the first appeal, the court found that a modification made to AP’s control order by the Secretary of State had created a package of obligations which was in breach of article 5. AP was subsequently served with a modified control order. The second appeal in relation to restrictions on meetings and mosque attendance was dismissed. Both AP and the Secretary of State have sought permission to appeal to the Court of Appeal; decisions with regard to permission are pending.

Two judgments have been handed down in other cases in relation to modification appeals lodged by controlled persons. A judgment was handed down in the case of Secretary of State for the Home Department v. AE on 21 July 2008 in which the court upheld the Secretary of State’s decision to refuse AE permission to study AS level human biology and chemistry. On 31 July 2008 a judgment was handed down in the case of Secretary of State for the Home Department v. AU and AV in which the court dismissed appeals by the controlled persons against the Secretary of State’s refusal to make various modifications to the control order obligations.

Full judgments are available at: http://www.bailii.org/

I would like to inform the House that section 2 of the Further Education and Training Act 2007, which inserts section 18A of the Learning and Skills Act 2000, placing a duty on the council to establish regional councils, has been enacted. The Learning and Skills Council has been successful in appointing members to each of its nine regional councils. The regional councils became operational on 10 September 2008. The chairs of the regional councils are:

North East: James Ramsbotham

North West: Roger Hoyle

Yorkshire and Humberside: Rachel Mann

East Midlands: Roger Begy

West Midlands: Ben Reid

East of England: Chris Paveley

South East: Norman Boyland

South West: John Savage

London: Claire Ighodaro¹

¹Claire is a member of the LSC’s national council undertaking the role on an interim basis.

The Government have announced plans for replacing the LSC with a new structure for 16 to 19 and post-19 funding. Those plans would require parliamentary approval of new legislation. These appointments are being made pending the introduction of that legislation. Full details of all regional council members can be found on the LSC website at: www.lsc.gov.uk

On 15 September 2008 the board of Her Majesty’s Courts Service, with my approval, has published a new framework for the provision of front office services in civil courts.

The new framework consists of national minimum standards for front office service provision and operational guidance to local court managers. The framework does not affect court hearings or the future of particular court buildings.

The minimum standards ensure a coherent but flexible system for providing front office services across the county court network. They guarantee appropriate access to the full range of services currently only delivered through the medium of a full-time public court counter. It will allow local HMCS managers some flexibility, working with the judiciary, to provide services through other and more innovative channels that are tailored to the needs and expectations of the local community, as well as improving overall efficiency and service standards.

The national minimum standards set a level below which the provision of front office services must not fall and introduce safeguards to ensure that any alteration to current arrangements do not deny access to services nor create an additional burden for the public. An appropriate level of local consultation, including Members of Parliament, will be required for all significant alterations.

Copies have been placed in the Libraries of both Houses, the Vote Office and the Printed Paper Office. The framework document is also available on the Ministry of Justice website at: www.justice.gov.uk

As hon. Members are aware, the provisions of the Child Maintenance and Other Payments Act 2008 will enable the Child Maintenance and Enforcement Commission to introduce a range of new collection and enforcement tools in order to improve compliance.

These new powers include the ability to use a deduction from earnings order (DEO) as a basic method of collecting child maintenance. Up to now the Child Support Agency has used a DEO in circumstances where other suitable payment arrangements cannot be agreed or have broken down.

Compliance rates for DEOs are second only to those for direct debits and, as we made clear during the passage of the new legislation, the intention is for the Commission to pilot the use of DEOs as the primary method of collection for employed non-resident parents.

The design and timing of the pilot will need to be carefully planned so it cannot begin immediately. But the Commission is determined to improve compliance as soon as possible in order to get more money flowing to children. It is therefore intending to make use of the new power through regulations which will enable the Commission to implement an interim approach to the collection of child maintenance in order to increase compliance.

This will mean that non-resident parents who have not already agreed a method of paying their child maintenance will be offered the choice of either a direct debit or a deduction from earnings order—the payment methods with the best compliance rates. An alternative method of payment will only be used where the non-resident parent can not pay by direct debit and there is good reason for a deduction from earnings order not to be used. There will be a right of appeal to a Magistrates Court (or sheriff in Scotland) against a decision by the Commission that there is no good reason for a DEO not to be used.

The change, which the Commission plans to introduce by the end of this year, will not affect those non-resident parents who pay their maintenance direct to the parent with care or who have their child maintenance payments deducted from their benefit. And non-resident parents who have already agreed a payment method with the Commission before the change is introduced will be able to continue to pay by their chosen method.