I do have a slight vested interest in the matter, because the largest employer in my constituency happens to be the Office for National Statistics, and that is why I like

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to deal with the cynicism that occasionally crops up about the well-being statistics. They might have cost £2 million, but they have certainly added to my sense of well-being, because they provide work in my constituency, and we should not be cynical about them. In the past we measured happiness, success and politics on the basis of gross domestic product, but that is not a sensible thing to do, because, when the nation’s prosperity increased, unhappiness increased as well.

There was a splendid T-shirt in Hungary in 2000. On the front it said, “What has 10 years of right-wing government done that 50 years of communism could never do?” and the answer on the back was, “Made the people love socialism”. They had put up with the equality of misery, because everyone was treated badly, but when they moved to the inequality of choice they were unhappy, because young men were becoming millionaires on the stock exchange while pensions were increasing slower than inflation.

There is a crucial difference between the two, and one of the myths of politics is that choice is an example to be pursued, and that everyone will be happy if they have choice. No, they will not. I am a child of the war, when there was no choice and we wore utility clothes, but everyone was on the same level, and that was much better than what we have now, with our children wanting to wear quality, fashion clothes. All the great myths of politics are there, so it is crucial that we measure scientifically our sense of well-being.

Many points that I wished to make have been made, but it was telling of Andrew Dilnot to give us one striking example of the need for truth and honesty in statistics. He did not mention the newspaper, but most people will recognise that he was citing The Daily Telegraph, which put out a big, 36-point, front-page headline, stating, “Public pensions to cost you £4,000 a year”. It had divided £9.4 billion by 26 million and got an answer of almost £4,000. The answer is actually £400, but that particular piece of fiction was repeated on the “Today” programme and in the day’s headlines, and it became part of common knowledge which is actually common ignorance, so it is right that someone such as Andrew Dilnot should be there to take on the powerful forces that put fiction into the public domain because they are innumerate.

Mr Dilnot made a number of other points, which were entertaining, about how we should move forward. He talked about an idea called “Tell me a story”. He would suggest to schoolchildren that they go to the website of the Office for National Statistics or the Government statistical service and tell him a story about aspects of the country, but expressed in statistics.

It is a matter of great satisfaction and pleasure for my constituents that this Swansea boy should have been upgraded to Newport—a matter of some congratulations. He can work in Newport under the benign observance of a quality MP, and I am sure that he will be extremely content. The hugely successful relocation of the ONS to Newport can continue and prosper. Gales of applause will be coming up the M4 today as a result of the House’s decision, which I am sure will be to reinforce the decision of the Public Administration Committee to appoint Andrew Dilnot as the best possible candidate.

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4.50 pm

Nigel Mills (Amber Valley) (Con): It is a pleasure to follow the hon. Member for Newport West (Paul Flynn), although I am not sure how I am going to follow some of the details that he mentioned. It will be a challenge for Mr Dilnot to find a statistical measure for happiness; I am not sure that he will find reliable data for that.

I start by welcoming Mr Dilnot’s appointment. I pay tribute to the Chair of the Public Administration Committee, my hon. Friend the Member for Harwich and North Essex (Mr Jenkin). The process has shown that pre-appointment hearings should not always be simply to ratify the Government’s appointment. There should be a possibility that the proposal will be rejected and that the process will have to restart, and the occasional rejection should be seen in the context of the advantages that the process offers us.

Any politician will know how important statistics are. Soon after I was selected as a candidate, around the time of the change in the law, in early 2008, we used some crime figures in a leaflet. A couple of months later, I was phoned up by someone from the local newspaper, who said that the police authority was challenging the data that we were using. It cited some very different figures and had no idea where the figures that I had used came from. It turned out that my figures were from the most recent British crime survey and the authority was using police data. What was slightly unfortunate was that it used crime data for the year that ended two days previously—I could not possibly have used that in my leaflet, which had been printed two months before, and not even in the same year.

In retrospect, I was grateful as I got a front-page headline and a decent amount of publicity. The vast majority of correspondence said, “You’re right—we don’t believe a single figure that they tell us anyway, so we’ll happily go with the ones that you cited.” That sums up the public mood about official statistics—they just do not believe them, probably because all politicians tend to manipulate them, get them wrong or selectively use some that suit the argument and omit those that might go the other way.

It is a real job to make public the data used and make it clear when they are abused by politicians. We should all base government and policies on actual evidence, rather than on what we would like the evidence to be; we should make the policy fit the data, not the data the policy. It is ironic that, in a debate about the probity of the data we use, we have had comments about child poverty data. That is one of those footballs that we can kick back and forward. What data do we want to use? Do we compare 2005 to 2010? Some of the numbers show child poverty going up by 300,000 and some by 100,000, or we can say that it has gone up since the election. The hon. Member for Barnsley East (Michael Dugher) wandered into that argument. The right hon. Member for Blackburn (Mr Straw) gave a far more balanced view: we have to be careful that we use realistic, accurate data that present a meaningful picture, rather than the one that we want.

I agree with the Minister that the person who heads this authority needs to be credible, senior, and, most of all, independent. If we are to have a Parliament that can effectively hold Government to account, we need reliable,

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honest, accurate data to be available to all of us so that we can do that job properly. I truly hope that Mr Dilnot can take that process forward. I, too, cannot see much justification for the Government’s having 24-hour advance access. I hope that the Public Administration Committee can make some further recommendations when it looks at that, because probably one of the last great abuses is our being able to see stories appearing in the press that rely on statistics that we have not seen.

4.55 pm

Kelvin Hopkins (Luton North) (Lab): It is a great pleasure to endorse the recommendation that Andrew Dilnot be made chairman of the UK Statistics Authority. I had the pleasure—indeed, the honour and responsibility —of serving on the selection committee. I cannot say too much about what went on in the selection process, but his performance was, as the chairman said at the pre-appointment hearing, stellar—and in a very strong field. We have got exactly the right person in Andrew.

Before saying more about Andrew Dilnot, I want to say something about Sir Michael Scholar. I agree with all the compliments paid to him this afternoon. Indeed, I praised him publicly at the Public Administration Committee when he came before us in the previous Parliament. The fact that he has been criticised by—or perhaps I should say that he has slightly disturbed—politicians on both sides of the House shows that he is even-handed. However, I think that he was just being truthful when he criticised special advisers in the previous Government for misusing statistics about knife crime. I am sure that they were not pleased, and they may have privately said that he was a Tory stooge—who knows? The fact that he has now upset the Mayor of London and has been accused of being a Labour stooge suggests that perhaps he is nobody’s stooge. Perhaps he is just his own man, telling the truth as he sees it, and that is what we want in a chair. He has done a splendid job.

Sir Michael has drawn attention to the fact that official statistics are not held in high regard by our voters. In a recent public lecture at Oxford university, he said that we came bottom of the league table in our attitude to official statistics and that our electors do not trust them. That is a very serious matter. In my view, our official statistics are of very high quality, and they should be trusted, but it is their misuse by Governments and by the media that leads to their being mistrusted. I think that I was appointed to the Committee because I have some modest experience of statistics; I studied the subject and used to teach it at a modest level. I used to show my students how one can use statistics to tell fibs, in a sense, by distorting things; one can exaggerate the vertical scale to make it look steeper than it should be, and so on. People can try all sorts of tricks to make statistics tell the story that they want to tell.

The great thing about the UK Statistics Authority is that it will present the statistics raw, and truthfully. If they are misused, it is up to the authority to point that out from time to time. I entirely agree with what my right hon. Friend the Member for Blackburn (Mr Straw), the former Justice Secretary and Home Secretary, said about pre-release. Let us get rid of pre-release and we will solve some of these problems. We can then all see the statistics as they come out and make of them what we think, not get it all pre-digested by politically interested, politically motivated Governments of both sides.

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Sir Michael has pointed out that we have to raise the status and the opinion of official statistics with our electors so that they are trusted. I personally trust official statistics, and I trust the splendid people who work in Newport in the constituency of my hon. Friend the Member for Newport West (Paul Flynn). I have visited their headquarters and spoken to them many times, and they are clearly public servants who can and should be trusted. We want to ensure that the population at large regards them equally well.

I have had a long association with Andrew Dilnot, because long before I was a Member of the House I used to attend the pre-Budget presentation by the Institute for Fiscal Studies, which he led. It was always a splendid occasion, and the statistics and analysis that the IFS produced were always first class. I still receive its green budget reports—in hard copy, I am afraid, because I am old-fashioned—and always pore over them with great interest.

I am one of those people who are fascinated by numbers and statistics. I like nothing better for Christmas than a book full of statistics that I can spend Christmas day entertaining myself with. People might call me an anorak, but I believe that numbers are important. The great thing about Andrew Dilnot is that he has a passion even greater than my own for statistics. The passion that he showed in the interview was almost as though he were talking about great works of art. Statistics tell truths if they are accurate and presented truthfully, and his enthusiasm and passion for statistics as almost works of art inspired us all. I believe that we have the right person for the job.

I agree entirely with what the Chair of the Public Administration Committee, the hon. Member for Harwich and North Essex (Mr Jenkin), and a number of other Members have said about Andrew Dilnot. I could not attend the hearing, because I was a member of the selection committee, but I am sure his performance was as exciting and stimulating as it was at the interview. It was a great pleasure to be involved in the process, and I think we have got exactly the right person for the job.

5.1 pm

Priti Patel (Witham) (Con): It is a great pleasure to follow the hon. Member for Luton North (Kelvin Hopkins), a fellow member of the Public Administration Committee. I was at the hearing at which we interviewed Mr Dilnot—in fact, it was my first day on the Committee—and I was overwhelmed by his enthusiasm and passion and the degree of animation with which he spoke about statistics. On that basis, it gives me great pleasure to endorse his recommendation.

I wish to add to the points that have already been made one that has been spoken about only briefly, which is Mr Dilnot’s capacity to become a cheerleader for statistics. We have heard a great deal about the cynicism and negativity associated with statistics, but one of the strongest points that came out of our hearing with him was that he wanted to do significant work to change the perception of statistics. He wants not just to do that for the cynical oldies among us but to engage young people in statistics and increase their understanding of them.

As the hon. Member for Luton North pointed out, Mr Dilnot is passionate about statistics. Those of us who have had the privilege of studying statistics, maths

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or economics in the past will understand the significance of stats to our daily lives and well-being and what they mean to society as a whole. Mr Dilnot spoke about that with great enthusiasm and commitment, and he went as far as to state that it would be a priority for him.

Members have made points about the integrity of statistics. Mr Dilnot’s appointment provides a tremendous opportunity to redefine the relationship with statistics of all of us—the Government, the public and future generations. I wholeheartedly support the recommendation in the Committee’s report, and I hope that the appointment goes through with no flaws or problems at all.

5.3 pm

John Healey (Wentworth and Dearne) (Lab): It is good to follow the hon. Member for Witham (Priti Patel), and I welcome the fact that so many Members on both sides of the Chamber have wanted to contribute to the debate.

I pay tribute to the members of the Public Administration Committee and its Chairman, the hon. Member for Harwich and North Essex (Mr Jenkin), for the report and their work. I speak having been the Minister responsible for developing the Statistics and Registration Service Act 2007 and leading it through the House. May I say that I had no greater supporter in government or more critical friend in that work than my right hon. Friend the Member for Blackburn (Mr Straw)? I am grateful to him for that.

The fact that our debate this afternoon is in such terms causes us to reflect on and pay tribute to the work of several people in setting up the UK Statistics Authority after the House passed the legislation, especially the former national statistician, Karen Dunnell, and the current national statistician, Jil Matheson. However, I want to pay particular tribute to the outgoing chair, Sir Michael Scholar. He helped lead and set up the authority with great distinction. He helped provide important guidance and governance to the Office for National Statistics, and ensure that a good, strong code of practice for official statistics was introduced in January 2009 and is, properly, now also enforced. As hon. Members from both sides of the Chamber have observed, he has been ready, when necessary, to tackle Ministers from the previous Government and the current Government about the misuse of statistics. Indeed, he most recently tackled the Mayor of London for his misuse of official statistics.

The UK Statistics Authority has two most important features, which have a bearing on the appointment of its chair. The first is its statutory independence from Government and the second is its answerability to Parliament—to this elected House. The report of the Public Administration Committee demonstrates and reinforces the role that Parliament must play. My hon. Friend the Member for Ashton-under-Lyne (David Heyes) called it a fine example and my hon. Friend the Member for Newport West (Paul Flynn) said that we mark a historic day in the extension of the proper role of Parliament in holding the Executive to account and in the conduct of public life. That is true, and the report reinforces the value and importance of the House’s role in the process in three ways.

First—and perhaps for the first time—the Select Committee played an important role in ending the appointment process for the Government’s previous preferred candidate for the job. Secondly—I pay tribute

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to the Parliamentary Secretary, Cabinet Office, the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd)—the Government conceded a greater role for the Committee in the selection process for the chair, allowing it to comment on the person specification, the job specification and the recruitment process. Thirdly, they crucially conceded the point that a member of the Committee had a valuable role to play on the selection panel, and I pay tribute to my hon. Friend the Member for Luton North (Kelvin Hopkins). I note that the report stated that his role was to assess independence from the Executive. He proved his ability to do that over 13 years of the previous Government and continues to do that from the Opposition Benches.

It strikes me from the Committee’s hearings that Andrew Dilnot demonstrated an extraordinary passion for and commitment to what he called the science of statistics in his evidence session. One of the special qualities that he brings to the post is that of being a long-term user, not simply a producer, of statistics—a man who can be not just a guardian, but a champion of statistics in future. The Select Committee report’s conclusion states:

“We welcome his independence of mind and his enthusiasm better to communicate statistics and their importance.”

The contributions to the debate from both sides of the Chamber, particularly from Members who served on the Committee and heard his evidence, reinforced the point about passion and enthusiasm.

The Chairman of the Committee said that in the appointment process the Committee was concerned to establish personal independence and professional competences. Any hon. Member who has ever worked with Andrew Dilnot, or who has worked in areas of his expertise and activity, has absolutely no cause to doubt his personal independence or his professional competence. Treasury Ministers—I am a former Treasury Minister—waited immediately after the Budget for the Institute for Fiscal Studies assessment and analysis, which was the most significant one. Invariably and reliably, that was delivered with great independence and competence, and it was often delivered personally by Andrew Dilnot.

In conclusion, like the hon. Member for Hereford and South Herefordshire (Jesse Norman), who is not in the Chamber, I too can think of no more fitting and suitable a person for this post in public life in our country than Andrew Dilnot. I welcome him as the Government’s preferred candidate and the work of the Committee in the process of his appointment, and I welcome and endorse the report, which concludes:

“His experience makes him eminently fitted for the role.”

5.10 pm

Sir Peter Bottomley (Worthing West) (Con): I apologise for not being here at the beginning of the debate, Mr Deputy Speaker, and declare an interest: I am not the statistician in my family.

I believe that those who follow such debates would be well advised to get hold of the Public Administration Committee’s sixteenth report of Session 2010 to 2012, HC 910-I, “Appointment of the Chair of the UK Statistics Authority”; the corrected transcript of oral evidence of 10 May 2011 of Sir Michael Scholar,

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Jil Matheson and Richard Alldritt on the appointment of the chair of the UK Statistics Authority; and the written evidence on the appointment of the chair of the UK Statistics Authority, which contains all but one of eight papers submitted to the Committee. I tried to find out what the missing paper was—it was “UKSA 04”—but “UKSA” also stands for “United Kingdom Sailing Academy”, “the United Kingdom’s Strongest Athlete” and one or two other things with which I need not delay the House today.

To illustrate that statistics need interpretation, I remind the House that if the UK Statistics Authority reduces its number of staff as it intends, by 2015, the number of staff it had in 2005 would be approximately 42% higher. That is to say that it is a 29.5% reduction from the figure of 2005. That has come about via a 16% reduction from 2005 to now, and there will be another 16% reduction from now until 2015.

That is an example of how, in three sentences, one can cast a cloud over people’s understanding, but what it basically means is that we need statisticians and those who read their work. That is why the UK Statistics Authority has a vital role in getting information from the Government out into the open in a way that the outside world can understand and interpret, and feed back to hon. Members in a way that increases our understanding.

I did not believe that it was right to combine the Statistics Commission and the Office for National Statistics, but that is done. Sir Michael Scholar has clearly explained how the UKSA arrangements are supposed to retain a separation between the regulator and the producer of statistics. I am willing to accept that, but I am still not very happy about it.

When Sir Michael Scholar gave evidence to the Committee with Jil Matheson on 10 May 2011, he made some points about the problems that he put to the Prime Minister in 2010. On page 11 of the transcript, Sir Michael said that

“before any significant changes could be made to the statistical capability of a Department, or any major changes to its statistical output, the Department would be obliged to secure the agreement of the National Statistician. That would be going back to a system that pertained in this country during the time that Claus Moser”—

Lord Moser—

“was head of the Central Statistical Office. I asked the Prime Minister if he would go back to that system, which would be something that he could do through administrative action without any need for legislation or for any additional expenditure. I also asked him if he would accept the proposals we had made on prerelease access…My third proposal to him was that he should give the Authority a place in the decision making about cuts in statistical capability across the whole Government. Recognising, in the difficult fiscal position that the Government were and are now in, that there were going to be cuts, we felt it was very important that the Statistics Authority, with a view right across the scene of the whole statistical system, should be brought into the process of decision making about where cuts should be made.”

It would be very helpful if the Government, now or shortly, responded to each of those points. We know about the pre-release access—progress has been made on that and it has not brought the roof down—but the other two points still matter and should be made.

The hon. Member for Luton North (Kelvin Hopkins) referred to himself as an “anorak”—which I think is the only word we get from Greenlandish Eskimo, but I stand

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to be corrected—and in the hearing on 10 May 2011 he referred to time series. Sir Michael Scholar, the chairman, said, in effect, “I don’t think we can give you the assurance that we aren’t losing something that is valuable.” It would be wise if the Government and the new chairman, together with the national statistician—

Kelvin Hopkins: I raised my concern about the loss of time series in the Select Committee in the last Parliament. I am also worried that the squeeze on expenditure may see valuable time series lost for the future and that would be a great mistake.

Sir Peter Bottomley: It is not just the time series: we also need to protect the extra investment going into the longitudinal studies, which are a vital statistical treasury that can be used both prospectively and retrospectively.

I pay tribute to my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) for the way in which he has chaired the Committee and to Dame Janet Finch, whose dignity helped to resolve an awkward situation. It is vital that we have a chairman who is fair, fearless and clear. That is not a comment on Dame Janet, but on Sir Michael Scholar—and I hope that it is one that we can make in retrospect when Andrew Dilnot retires. Those are the attributes we want from our statistics, and we also need them from the chair of the UKSA.

At one point, the House declined to give its support to someone for that kind of role—when Elizabeth Filkin was the Parliamentary Commissioner for Standards. We paid a price for that. It was a parliamentary price, but there will be a national price to pay if we do not give our support to the chairman and the National Statistician. I therefore commend the motion.

Question put and agreed to.


That this House endorses the nomination of Andrew Dilnot CBE for appointment as Chair of the United Kingdom Statistics Authority.

Business without Debate

Charities Bill [Lords]

Motion made, and Question put forthwith (Standing Order No. 58), That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Motion made, and Question put forthwith, That the Bill be not committed.—(Mr Dunne).

Question agreed to.

Motion made, and Question put forthwith, That the Bill be now read the Third time.

Question agreed to.

Bill accordingly read the Third time and passed, without amendment.

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Prevention of Nuclear Proliferation

5.18 pm

The Financial Secretary to the Treasury (Mr Mark Hoban): I beg to move,

That the Financial Restrictions (Iran) Order 2011 (S.I., 2011, No. 2775), dated 21 November 2011, a copy of which was laid before this House on 21 November, be approved.

Today I seek the support of the House for the financial restrictions measures against the Iranian banking sector that the Chancellor announced on 21 November. The Government have taken decisive action to respond to a significant threat against UK national interests by putting a stop to all business between UK financial institutions and those in Iran. The Treasury has laid the Financial Restrictions (Iran) Order 2011 before Parliament under the power in schedule 7 to the Counter-Terrorism Act 2008. This order contains restrictions requiring UK credit and financial institutions to cease business relationships and transactions with all banks operating in Iran, including their branches and subsidiaries, and with the Central Bank of Iran.

I turn first to the rationale behind the order. The Government have serious concerns about activity in Iran that facilitates the development or production of nuclear weapons. This concern has been repeatedly raised by the International Atomic Energy Agency, the UN body charged with monitoring Iran’s nuclear activities. Its latest report, in November, highlights its deepening concerns about

“possible military dimensions to Iran's nuclear programme”.

The restriction in the order was made in response to Iran’s nuclear activities, as highlighted by the IAEA, and the urgent calls from the Financial Action Task Force for counter-measures to be taken against Iran. Iran’s nuclear programme poses a significant risk to the UK’s national interests. This order seeks to address that.

Paul Flynn (Newport West) (Lab): Is there not a danger, if we push Iran too hard, of it expelling the IAEA inspectors from the country? If that happens, instead of acting in the knowledge with which they provide us, we would be acting in ignorance.

Mr Hoban: It is important that we continue the twin-track approach—of engagement and challenge—that the Government have set out and which the previous Government also followed.

The November IAEA report documents Iran’s failure to co-operate fully with the agency and the possible military dimensions to Iran’s nuclear programme. The IAEA reports on Iran’s programme on a quarterly basis, but the November report set out its concerns in the strongest terms to date. It states that information available to the IAEA indicates that Iran has carried out activities relevant to the development of a nuclear explosive device. The report notes that

“while some of the activities identified have civilian as well as military applications, others are specific to nuclear weapons”.

The Government view these developments with the utmost concern.

In response to the November IAEA report, its board of governors issued a resolution expressing “deep and increasing concern” about the possible military dimensions of the Iranian nuclear programme. The board urged Iran

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to abide by its international obligations and called on it to engage seriously on the nuclear issue. These concerns are of the most serious nature and have far-reaching consequences for the UK’s interests and those of the region. Some 32 of the 35 countries on the board of governors supported the resolution.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC) The Minister might be about to answer my question, but what are other nation states doing in response to events in Iran? In particular, I am thinking about UN Security Council members Russia and China.

Mr Hoban: I will outline some of the action taken by several countries to exert pressure on the Iranian regime and to ensure that targeted action is taken to prevent the development of nuclear technology. I shall address some of those issues later.

The case for UK action is also underlined by the recent calls from the Financial Action Task Force for countries to apply effective counter-measures to protect their financial sectors from money laundering and financing-of-terrorism risks emanating from Iran. Those calls were renewed with urgency on 28 October 2011 and noted the taskforce’s particular and exceptional concern about Iran’s failure to address the risk of terrorist financing. It also flagged up its concerns about the serious threat that this posed to the integrity of the international financial system. The taskforce has not expressed such serious and ongoing concerns about any other country.

The UK is leading action against Iran because Iran’s proliferation-sensitive activities pose an ongoing concern for the UK and the international community as a whole. The measure that we have imposed is strong but necessary, and we encourage other countries to take similar tough action. The UK is an important global financial centre, so UK restrictions will have a significant impact on the options available to Iranian banks. That will make it more difficult for Iranian banks to use the international financial system in support of proliferation-sensitive activities and protect the integrity of the UK financial sector. Other countries share our and the taskforce’s concern about Iran’s nuclear activities.

Mr Jack Straw (Blackburn) (Lab) rose—

Mr Hoban: I will finish this paragraph and then give way.

That includes the US and Canada, which implemented further restrictive measures against Iran on 21 November, alongside the action that the UK took.

Mr Straw: I sought to intervene on the Minister when he started talking about other countries. One of the things that slightly surprise me about this measure, whatever its merits, is that only two other countries supported it, which left us rather isolated and an easy target for the thugs in Tehran. Why did the Government not discuss and then take steps to agree with as many European Union partners as possible a similar measure in advance of this measure being promulgated?

Mr Hoban: Given the UK’s importance as a financial centre and its interconnectedness, there was an opportunity to act to close down opportunities for banks in Iran to

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use our facilities. The other point is that on the day that we announced our measures, President Sarkozy wrote to us supporting our financial sanctions and also proposing sanctions on oil. There will be a further debate in the European Union about that next month at the Foreign Affairs Council, where we will push this issue further. We are working in concert, not just with our European allies but with the US and Canada, as I have said. Indeed, the EU already has strong financial sanctions in place against Iran, and introduced asset-freezing measures and travel bans against 180 Iranian individuals and entities at the beginning of this month. The EU is considering taking further measures to implement that, and we will be pushing our partners to take strong measures too.

Mr Straw: I am grateful to the Minister for giving way, but with great respect, I am still rather perplexed. We are members of the EU, and although I am aware of the individual-specific action that the EU is taking, that is different from the measures in this order. What I simply do not understand, just to repeat the point, is this. Whatever the merits of this measure, the manner of its introduction must leave us very isolated and exposed. Why was there such a hurry? Was it because of an American timetable, or was there some other, more commendable reason for doing it in advance of getting what I would have thought the Minister might judge to be a significant number of other nations alongside us and then making a co-ordinated announcement?

Mr Hoban: The Government bore in mind when making their decision the strong concerns raised by the IAEA in its November report. Indeed, the way in which it expressed them marked a step change in its level of concern compared with previous quarterly reports. The increase in concern on the part of the Financial Action Task Force about how financial systems could be used to finance terrorist acts or in other areas led to the Government’s decision to move, which was an important thing to do. It is a proportionate response to the risk posed by Iran to require the UK financial sector to cease all business relationships and transactions with the Iranian banks and their branches and subsidiaries, including the Central Bank of Iran.

Mr Ben Wallace (Wyre and Preston North) (Con): Can my hon. Friend perhaps answer a technical question relating to the Treasury’s responsibilities? Is the United Kingdom in the correct legal position unilaterally to stop banks being used in trade with Iran, or could we find UK companies that abide by the European Union ruling or law, which still allows that, taking the UK Government to court to allow them to continue using those banks?

Mr Hoban: We are acting under powers that were put on the statute book by the previous Government. My hon. Friend will be aware that there is a licensing regime in place, and some licences have already been issued on a general basis—there are applications that I shall perhaps turn to a little later when dealing with specific examples. Permission has been given on a general basis to enable transactions to be completed, for example, so there is a regime in place. However, if my hon. Friend has particular concerns, I would encourage him to engage with Treasury officials to take them forward. I know that my hon.

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Friend, as chairman of the British-Iranian all-party group, has a clear interest in this subject. If there are particular concerns of which businesses are aware, I encourage them to talk to us about them.

Jeremy Corbyn (Islington North) (Lab): The Minister has been speaking for about 10 minutes, during which he has come from expressing concerns about Iran’s nuclear activities to discussing financial regulations. He would, however, recognise that Iran remains a signatory to the nuclear non-proliferation treaty. Does the Minister not think that a serious diplomatic initiative by all members subscribed to the nuclear non-proliferation treaty would be a more fruitful way of dealing with the issue, rather than descending to what some of us fear will be a much more serious situation, including possible military conflict with Iran?

Mr Hoban: The purpose of the order is not to enable debate of the broader issues of engagement with Iran, but to put in place financial restrictions against Iran. As I said earlier, there is a twin-track approach of both engagement and sanctions, where appropriate. That is what we are doing. I think we would all want Iran to come back and engage in this process; we need to find a mechanism for that to happen.

Let me return to explaining why we have imposed the restrictions in the order. Iranian banks play a crucial role in providing financial services to individuals and entities within Iran’s nuclear and ballistic missile programmes. Many Iranian banks have already been sanctioned by the UN and the EU for their role in Iran’s proliferation-sensitive activities. However, experience under existing financial sanctions against Iran demonstrates that targeting individual Iranian banks is no longer sufficient. Once one bank is targeted, a new one can step into its place.

Taking this action will also protect the UK financial sector from the risk of being used unwittingly to facilitate activities that support Iran’s nuclear and ballistic missile programmes. As I said to the hon. Member for Islington North (Jeremy Corbyn), the action is in line with the Government’s dual-track strategy of pressure and engagement with Iran. The aim of the pressure track is to encourage Iran to begin serious and meaningful negotiations.

Let me explain the specifics of the order. It was made under schedule 7 to the Counter-Terrorism Act 2008, which provides the Treasury with the power to give a range of restrictions to UK credit and financial institutions in response to certain risks to the UK national interest. The power enables the Treasury to respond to proliferation risks, money laundering and terrorist-financing risks, or where the Financial Action Task Force calls for counter-measures. The restrictions in the order sit alongside sanctions already imposed on Iran by the UN and the EU, but go further, as they prohibit additional activities.

The restrictions came into force at 3 pm on 21 November 2011; shortly after that, the Treasury published a series of documents on its public website to alert the financial sector to the restrictions and to provide detailed guidance on their implementation. Those documents were also e-mailed to more than 13,000 subscribers to our e-mail alert system. In previous debates on these measures, one concern raised by the Opposition was about how we ensure that people are made aware of the restrictions.

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Paul Flynn: Will the Minister give way?

Mr Hoban: I want to make some progress. This is a time-limited debate, and in looking at the number of Members present on both sides of the House, I am conscious that others wish to participate.

The Treasury asked various supervisors, including the Financial Services Authority, Her Majesty’s Revenue and Customs and other Government organisations, to publicise the restrictions and to provide information to firms on the requirements associated with them. Alongside the order, we published six general licences exempting specific activities from the restrictions. Those general licences enable credit and financial institutions with existing business relationships or transactions with the entities concerned to manage the cessation of business in an orderly and controlled way. The licences permit the provision of financial services for humanitarian purposes and of personal remittances between individuals here and in Iran. Further licences, whether general or individual, may be granted by the Treasury to manage the impact of the requirements on third parties. This approach is similar to that used in asset-freezing measures.

The restrictions apply requirements to persons operating in the UK financial sector, including FSA-authorised firms, money service businesses and insurers. Firms are required to establish whether any current or future business relationships or transactions are affected and comply with the requirements of the restrictions. Although the restrictions are given only to the financial sector, they will make it more difficult for other companies to trade with Iran. The UK Government actively discourage trade with Iran, and UK trade with the country has declined by 46% during the first eight months of this year in comparison with the same period in 2010.

As I said to my hon. Friend the Member for Wyre and Preston North (Mr Wallace), companies affected by the restrictions can apply for a licence of exemption, and we are willing to grant licences where UK companies are owed money under existing contracts that can only be paid via an Iranian bank to the company’s UK account. We will examine applications on a case-by-case basis.

The use of existing procedures means that firms will already have in place systems to meet obligations relating to financial sanctions and anti-money laundering, which should assist in minimising the burden of compliance with the restrictions. All institutions operating in the UK financial sector will need to ensure that they do not undertake new transactions or enter into new business relationships with any bank incorporated in Iran, including the central bank, and branches or subsidiaries. It is expected that compliance costs for the sector as a whole will be moderate, although any institution with significant business relationships with an Iranian bank will face higher costs.

Supervision of compliance with the restrictions will form part of the existing supervisory regime of entities such as the FSA, Her Majesty’s Revenue and Customs, the Office of Fair Trading, and the Department for Enterprise, Trade and Innovation in Northern Ireland. It is an offence to fail to comply with the requirements of the direction or intentionally to circumvent the requirements. Breaches may be subject to civil penalties imposed by supervisors, or to criminal prosecution. The maximum criminal penalties are: a fine not exceeding

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the statutory maximum, £5,000, in the magistrates court; or two years’ imprisonment or an unlimited fine in the Crown court. Those penalties are equivalent to those for breach of other financial sanctions regimes such as the EU asset-freezing regime in relation to Iran. The financial services sector takes very seriously the implementation of restrictions and sanctions, and takes steps to ensure its compliance with any restrictions.

To conclude, the order was issued by the Government to respond to the severe risk that Iran’s nuclear activities pose to the UK national interest. The measure is strong but necessary. Iran’s proliferation-sensitive activities are a serious and ongoing concern for the UK and the international community as a whole. It is vital that we continue to take steps to increase pressure on the Iranian regime and encourage Iran back to the negotiating table to find a diplomatic solution. For those reasons, I commend the order to the House.

Mr Deputy Speaker (Mr Nigel Evans): I remind the House that the debate can continue until no later than 6.48. After the shadow Minister has finished speaking, Members will wish to do the maths in their heads to divvy up the time. If they do not do so, in the spirit of Christmas, a time limit will be introduced.

5.37 pm

Chris Leslie (Nottingham East) (Lab/Co-op): As the Minister has outlined, events in Iran in recent months and weeks have been deeply concerning. It is right that we have a debate today on the nature of the British response to those troubling developments. Elements within the Iranian regime have been fomenting public discontent outwards towards other countries, partly in an attempt to stop the Iranian people looking inwards at the regime itself. The increased fuelling of hostility to the outside world is a worrying move, to which neither we nor the international community can afford to turn a blind eye.

Last month, the comprehensive and unequivocal report from the International Atomic Energy Agency made clear the fact that there is an accumulating body of evidence regarding the possible military dimensions of the nuclear programme in Iran. As the Minister has said, in the light of that, it was right that the UK, along with the US and Canada, took the decision to increase diplomatic pressure on the regime in Iran.

We welcome the Chancellor’s announcement that the UK would sever all ties with Iranian banks, including the Central Bank of Iran. As the Minister said, a position came into force on 21 November and is now formally before the House. Since then, important developments have taken place. Following the announcement of the further sanctions, the Iranian Parliament approved a Bill that called for the downgrading of diplomatic ties between Iran and the UK, and several MPs in the Iranian Parliament chanted “Death to Britain” as the measure was adopted. Within a few days, hundreds of demonstrators overran the city centre compound of the British embassy in Tehran. They looted and vandalised the homes of embassy staff and set fire to the main buildings, while Britain’s second embassy compound in the north of Tehran was simultaneously attacked and looted.

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I echo the Minister’s comments. I also fully support the remarks made on 30 November by the shadow Foreign Secretary, my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander), about the “unyielding professionalism and… bravery” of our UK diplomatic staff in Iran.

The notion that such an assault against our embassy could take place without permission, and indeed instruction, from elements in the Iranian regime is too far-fetched to be entertained, and the belated and limited response from the Iranian diplomatic police serves further to discredit such delusions. Let us be clear: this was a co-ordinated attack on two British embassy compounds by a student militia controlled by elements within the regime.

All diplomatic avenues available to the UK and the international community must surely be pursued to increase the peaceful pressure on the regime in Iran to ensure that it fulfils its responsibilities and obligations under international law, and the financial restrictions that we are discussing today should be seen in that light. The attacks on and looting of the British embassy compounds in Tehran following the measures that we are debating serve to highlight the desperation of the regime in the face of increasing pressure and isolation from the international community. It is therefore right for us to cease dealings with Iranian banks and their subsidiaries, and with the Central Bank of Iran, to avert the risk of the financing of terrorism or money-laundering activities emanating from Iran.

Mr Straw: May I say now what I should have said in my first intervention? I declare my interest as a co-chairman of the all-party parliamentary group on Iran, although I have absolutely no financial interest.

I am listening carefully to what my hon. Friend is saying. Does he share my significant concern about the fact that we were joined by only two other countries in advancing this proposal? If the case was as strong as is suggested, we could surely have had many others alongside us, and our diplomats would not have been exposed in Tehran as they were.

Chris Leslie: I understand my right hon. Friend’s point, which brings me neatly to the five questions that I wish to ask the Minister.

The Government say in the impact assessment that they want to press for further international action. They also say that

“there is a risk that the measure will be weakened by financial institutions in other countries providing financial services to Iranian banks, including in support of Iran's proliferation-sensitive activities”.

My question to the Minister echoes some of the concerns expressed by my right hon. Friend. Will he assure us that he and his Foreign Office colleagues will be active in using all available diplomatic channels to put pressure on other countries to impose sanctions similar to those bilaterally imposed by the United Kingdom, the United States and Canada? It is clear that a concerted international effort is greatly needed to put further pressure on Iran to change course.

We think it important to support the order, but some of my questions are important as well, including one concerning enforcement and penalties. We know that there have been instances of financial institutions breaking

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rules laid down to prevent Iran’s progress towards nuclear capability. Two years ago, in December 2009, Credit Suisse was fined $536 million in the United States for the removal of information in relation to the origination of US-bound transactions from the “Atomic Energy Organization of Iran” and the Iranian “Aerospace Industries Organization”. In January 2009 Lloyds bank was fined a substantial $350 million in the United States for similar breaches involving Iran and other international restrictions, while in August 2010 Barclays was fined $300 million.

Criminal offence and civil penalties will apply in relation to non-compliance with—or knowledge of, and intentional circumvention of—the new requirements that we are discussing. The penalties are the same as those that the enforcement authorities and courts have in respect of non-compliance under the money laundering regulations 2007—fines, imprisonment for a maximum of two years and so on. The Americans clearly take breaches very seriously, as is shown by the scale of the fines they have imposed, so my question to the Minister is: can he reassure the House that the UK will take a similarly robust approach, with penalties on a scale that reflects the seriousness of the offence, both to prevent breaches of the rules and to punish appropriately those who breach them?

My third question for the Minister relates to the explanatory memorandum, which makes it clear that a licence for exemptions from this order can be granted by the Minister on a case-by-case basis. The impact assessment states that

“it is unlikely we will license significant further exemptions for businesses as this would risk undermining the purpose of the measure”.

That is self-explanatory. We recognise that exemptions are not likely to take place on a significant scale, but will the Minister set out in what circumstances exemptions might be made to those restrictions?

My fourth question relates to the fact that the order has a time limit of a year and, under paragraph 38 of schedule 7 to the Counter-Terrorism Act 2008, the Treasury will be obliged to report every year on the exercise of its functions under that schedule. The Minister has said, as does the explanatory memorandum, that the order will be kept under review, but given the fast-moving developments and narrow time scales involved in the situation with Iran, will he commit to reporting to this House before the annual deadline if circumstances change—for instance, if negotiations on the nuclear programme were to improve or worsen? We hope that the latter would not be the case.

Lastly, will the Minister make it clear to the House, and leave no doubt about the message we are sending today to the people of Iran and to the international community more widely, that despite attacks on our channels of diplomacy with assaults on our embassy, we will not be deterred from actively and creatively pursuing all diplomatic options at our disposal to ensure that Iran upholds its responsibilities and obligations under international law? There is a widespread hope that diplomacy must prevail. We, and other nations around the globe, cannot afford to be complacent. The Opposition welcome this measure from the Treasury and hope that, with the Foreign Office, it will, as my right hon. Friend the Member for Blackburn (Mr Straw)

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said, be proactive in building a broader diplomatic effort across the globe to stop Iran flouting international law.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): As earlier, I ask hon. Members to look to see how many others are standing. I think that there are about nine, we have to finish in an hour’s time, and I am sure that the Minister will want three minutes or so to wind up.

5.47 pm

Mr Ben Wallace (Wyre and Preston North) (Con): May I declare an interest, as co-chair of the all-party group on Iran? I apologise to you, Mr Deputy Speaker, for the fact that I shall have to leave before the conclusion of the debate as I have to chair the group’s meeting on The Daily Telegraph versus The Guardian on the future of Iran, which we hope will be an entertaining event.

I would like to put on the record why I support the Government’s attempt to impose sanctions on financial transactions coming out of Iran. My support is not unqualified, but I support the aims and ambitions. It is absolutely clear that in the past decade or so Iran has used a plethora of its banking network to fund Hezbollah and other organisations, and to try to acquire conventional and perhaps potential nuclear parts for its programmes at home. So I understand what our Government are trying to achieve.

I would have been less supportive before June to July 2009. Before then—indeed, when I last visited Iran—whatever we may have thought of the Iranian Government, they ruled by consent, and attempts were made by a number of senior members of the Iranian Government to reform Iran. Unfortunately, after President Ahmadinejad’s last election, we have seen a clear move away from the rule of law towards a much more totalitarian state. Anyone who has contacts with the Baha’is or with mere critics of the Iranian Government will notice that these people’s human rights are constantly being exempted from the Iranian constitution under the guise of “national security”, “spying” and so on. All those traits lead me to worry about the shifting nature of the regime.

I know enough about Iranian history to put aside the rhetoric. Death to America day is still an annual event in the Iranian calendar and has been since 1981, but let us not forget that before that there were plenty of other annual events, under both shahs and even before that, which related to us, too. I put aside the rhetoric because it is a regular occurrence that the British embassy is abused. Every Tuesday rent-a-mob turn up on a bus and stones are thrown over the wall. When I was there they were pelting stones into the garden. Under the previous Government it was invaded twice, although certainly not as seriously, and without any threat. We should be in no doubt that that is certainly co-ordinated.

The antagonism towards the British embassy goes back hundreds of years to the time of the “great game”. More recently, in the ’80s, the street running parallel to it was renamed Bobby Sands avenue, just to annoy us. It is a game the Iranians play, I am afraid, and one could say that part of the Iranians’ problem is that they have too much history, not too little, to draw on.

I shall push aside the rhetoric, however, and focus on what is more worrying: the nature of the regime. I can understand that it is certainly time to send a strong

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message that the rule of law is the best protection for the Iranian people and the Iranian street. I mean the rule of law according to their constitution not ours, not a rule of law that we seek to impose on them. Their constitution is actually one of the few in the middle east to give automatic rights to Jews, Christians and a range of other peoples. By making those exemptions, they show the danger of the nature of regime that the west and the rest of the United Nations should seek to put right.

Mr Brian Binley (Northampton South) (Con): I thank my hon. Friend for giving way, and I shall be very brief. Does not my hon. Friend agree that although the Iranians may have the constitution in place, they certainly do not act as though a constitution were in place? Therein lies the problem with human rights.

Mr Wallace: Absolutely. They do so less and less each day, and that is one of the major regrets for someone such as me who believes that Iran has a great future and that the west often looks to the wrong allies in the middle east in the long term. I disagree, however, with the position on the Mujahedin-e Khalq. I believe that if one of the few things the Iranians and the Americans both agree on is that the MEK should be a proscribed terrorist organisation, we should perhaps maintain that.

I have some specific questions for the Minister about the sanctions. Why did he choose to include the Central Bank of Iran? A number of cases have been brought to my attention, including one from a company in Cambridge that has gone through five regimes of British export licences, and has European as well as Treasury approval to sell engineering goods to Iran. It is owed £12 million for goods already delivered and the sanctions—either those effectively extraterritorially imposed by the United States or our own—have prevented it from getting its money. I suspect—in fact, I know—that that threatens its very viability. When I went to visit Treasury officials, the answer to the problem was that they did not really get engaged in commercial-to-commercial decisions. I am afraid that the Treasury’s decisions have caused the problem, and in the past, companies—including American companies—have used a corridor from central bank to central bank to clear certain moneys. Not so long ago, JP Morgan in New York received money from Iranians that was owed to an American/UK contractor. If they can do it, so can we.

Bob Stewart (Beckenham) (Con): The only question I would ask is: would not the Iranians consider it to be part of the irritation factor not to use such a channel, if there was one? They could stop that payment, which is owed to one of our companies, just to irritate us further, even if there was such an avenue.

Mr Wallace: My hon. Friend would have a point if it was not for the fact that at the moment, the Iranians need our goods more than we need theirs. I meet plenty of day-to-day Iranians in business and everything else—not in my business, as I do not have any such interests—who try to do the right thing and live by the rule of law.

Secondly, I ask the Minister what our European colleagues are doing. Historically, Germany and Italy are some of the biggest traders with Iran, and my worry is that the strength of the E3 plus 3 was unity. That was

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its strength: we brought together the three European powers of Britain, Germany and France along with China, Russia and America. For every round of sanctions that has come before this House or the international community, there have been fewer and fewer signatories to it. As the right hon. Member for Blackburn (Mr Straw) pointed out, as we get fewer and fewer signatories we are at risk of undermining the message that says that we all agree that Iran should not be progressing along such a path.

My worry is that the Iranians are super-sensitive to such differences. They are one of the greatest trading nations in history, of course, and my word, are they canny! When I was there, there was no shortage of some of the things that were subject to sanctions. They used to use the Bahrainis as one of the greatest routes for money, goods, new cars and so on. Without Germany and without Italy, there is a real danger that we could be left high and dry.

Mr Straw: May I, as one of the three Foreign Ministers who got the arrangement going in the middle of 2003, underline the hon. Gentleman’s point about the E3? There were two huge advantages. One was that we were not the United States, although we consulted them, and the second was that because France, Germany and the UK were working together, each of us could reach out to a series of other allies. We did not just get three rather large countries on board but many others, too.

Mr Wallace: It is absolutely true that Russia and China often need to know that the west is united before they move from an agnostic position to a proactive one. One worry I have about the full closure of the embassy in Tehran is the fact that I have seen the Chinese and Russian embassies in Tehran, and the Chinese and the Russians will not waste any time in becoming the prominent voice of the E3 plus 3. I know that we have not shut down diplomatic relations, and I reiterate the importance of that.

Another thing to which the Iranians will be hypersensitive is the charge of hypocrisy in the middle east. We must always be aware of it. Pakistan is one of their neighbours, and it not only started a nuclear programme but distributed it. In fact, Mr Khan is probably the one responsible for giving the Iranian programme a bit of a boost. The response to that is that the west has done everything other than punish the Pakistanis for not being a signatory of the nuclear non-proliferation pact: therein lies part of the problem. I noticed last week that Australia has agreed to sell uranium to India. India is not a signatory of the nuclear non-proliferation pact and is not going by that rule, and although the nature of the Indian Government is entirely different, the Iranians are obsessed with treaties and they can see what is happening. We must be consistent.

The other issue is Israel, of course. This is not about the conflict or whether it is right or wrong, but Israel is another country in the middle east with a nuclear weapon that does not sign up to the UN nuclear non-proliferation regime at all. That will be used against us. As long as we are consistent and say to Iran that it must comply, but we would also like Israel to comply, that strengthens our hand.

Thirdly—and finally, because I am aware that many people wish to speak—where will we go from here on sanctions? It is important to recognise that sanctions

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are part of the process of trying to bring Iran back to the rule of law, and back to attempts to solve the issue by allowing inspectors in. That would allow Iran to play a full role in the world, which it should do, and would allow the Iranian leaders to understand that we are not trying to make war with Iran but to make peace and allow it to live to its full potential. The worst thing for the Treasury and this Government would not be if the sanctions failed, but a war or military intervention that would see oil prices go through the roof. I do not think that this frail economy could survive oil at $250 a barrel.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. There will now be a five-minute limit on speeches, with the usual injury time for interventions.

5.59 pm

Paul Flynn (Newport West) (Lab): The threat of war is far more serious than an increase in oil prices. The effect of a war, particularly if nuclear weapons were involved, would be almost unimaginable, particularly given the situation regarding Iran and its clients in Hezbollah and other groups. We should not treat this issue lightly or suggest that it is not important that we are seeing a new nuclear state because it would lead, I am certain, to others such as Turkey and Saudi Arabia also wishing to acquire nuclear weapons. The great fear is that a wall of sanctions can rapidly become a war of weapons. I have watched two terrible decisions being made in this House, and I believe we are on the brink of stumbling into another dreadful conflict.

When we went to join Bush’s war in Iraq, that decision was taken on the basis of a deception in the House. Eighty Labour MPs opposed the war and had signified their opposition to it, but during the debate they were bribed, bullied and bamboozled into abstaining or voting for the war. The majority on which that measure was passed was 179—coincidentally exactly the number of our brave troops who died in that war. If we had known the truth then, that war would not have taken place because 80 Labour MPs would have opposed it.

I have also seen the second-worst decision in my time here—the decision to go into Helmand province in 2006. At that time, only two British soldiers had died in the conflict. The figure is now 192. Again, the basis on which that decision was taken was the hope that not a shot would be fired and that we would be there for, at the most, three years for supervision purposes. We are now in grave danger of deepening the chasm of suspicion between ourselves and Iran.

There are reasons for saying that although the Arab awakening has not affected Iran in the same way as it has many other countries in the region, there is discontent in that country. There is division on almost all issues except one—the nuclear issue. If there is any way of guaranteeing that almost all sides of opinion in Iran join together it is the threat from outside—from us—which wants to deny it the possibility of having a nuclear power programme or the nuclear weapons that Israel, Pakistan and India already have. The great danger is that this escalation seems to be going on now. We should be seeking means of reducing the tension, building confidence and bridging the gap. We know the provocations that have taken place, but there is this grave danger. Unless we recognise the truth of the threat, we might

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find ourselves in another terrible situation of going along a slippery slope that could lead to warfare—in this case, possibly nuclear warfare.

6.3 pm

Mr Brian Binley (Northampton South) (Con): Let me say at the outset, in order to set my hon. Friend the Minister’s mind at rest, that I fully support the measures that the Government have taken on sanctions. I welcome the sanctions as they have been levied, but I would have wished us to have applied a whole series of sanctions in a more programmed and measured way for a longer period. However, we are where we are. The information I am getting from people inside Iran is that the sanctions are already proving quite successful, but I think the Minister mentioned that.

The action of shutting the Iranian embassy in London and downgrading our staff in Tehran desperately needs to be followed up by our European Union partners and others in the wider western world. It has been a tragedy over many years that we have consistently given messages suggesting that we were attempting to appease the mullahs as though they were friendly English vicars eating cucumber sandwiches and drinking their tea on their lawned gardens. We all know that not to be the truth, but that impression seems to have been ingrained in the Foreign Office for a long time. Every time I talk to the Foreign Office about Iran, it seems to want to bring the mullahs on board, as though any kind of appeasement would achieve a friendly outcome in which we could all eat cucumber sandwiches together. There is no hope of that, so we need to go further and apply sanctions, perhaps in the oil and gas arena, but we need the help of other nations to do that. The Germans and French seem particularly concerned about our interests at the moment, but doing that would be in their interests. We are talking about a mediaeval theocracy that is building a nuclear weapon, and that is very surprising.

Let me remind the Minister that the Iranian people had the courage and the bravery to start the first demonstration that could be described as the beginning of the middle east spring—I shall not call it the Arab spring, for obvious reasons. They were the people who recognised that their elections were corrupt and who rose up in their hundreds of thousands to make a point to a regime that they have found difficult to influence. We have talked about the constitution, but that constitution is not regarded very highly by the people who have a duty and a responsibility to operate it.

Let us look at Iran’s human rights record. Minors have been executed: Amnesty International said only a short time ago that a 16 and 17-year-old were hanged this year. Young women are being stoned, and trade unionists, students, bloggers and members of the Baha’i faith have been imprisoned and, in some cases, hanged. Three fathers who went to visit their children in Camp Ashraf in Iraq were charged on their return with moharebeh—being an enemy of God. Those three people were killed too. So much for a constitution.

This is a country that needs to see strong measures from the west and to hear strong messages that we support what is a sizeable wish for democracy and freedom. The sanctions are a measure in the right direction, but more needs to be done. I ask Ministers to make every effort to implore their fellow Ministers in the EU and beyond to

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send a strong message that will give hope to the people of Iran and to those Iranians who are working externally for a free and democratic Iran.

6.8 pm

Jeremy Corbyn (Islington North) (Lab): In this brief debate, we should think very carefully about the long-term implications of the path on which we are apparently setting out today. I recognise much of what was said by the hon. Members for Northampton South (Mr Binley) and for Wyre and Preston North (Mr Wallace) about human rights abuses in Iran. I draw attention to early-day motion 2526 concerning trade unionists in Iran, and there are human rights abuses against people of the Baha’i faith, Kurdish people and others. I am extremely well aware of the abuse of human rights that takes place in Iran and of the determination of many people, including working-class people, trade unionists and intellectuals, to do something about their society and to take part in that political debate. We should recognise that a lively, if robust and sometimes very dangerous, political debate is going on in Iran.

We should also think carefully about the rhetoric we use when we talk about Iran. Iran is an inheritor of the Persian tradition, a place of enormous civilisation and culture, and a place of enormous unity when faced with an external threat, as my Friend the Member for Newport West (Paul Flynn) pointed out. We should not denigrate the whole history of the Persian people and the contribution that they have made to history while ignoring our own scandalous role in their history, from the attempts at exploiting oil, which eventually led to the formation of the Anglo-Iranian Oil Company, which became BP, through to the coup in 1952 inspired by the British and the CIA. We do not have clean hands in the history of Iran, and we should have some humility when dealing with the situation there.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): To add to that point, does the hon. Gentleman agree that the last thing we should try to do now is demonise Iran?

Jeremy Corbyn: Absolutely. I sat in the Chamber in the run-up to the wars in Afghanistan and Iraq, when the House indulged in an orgy of demonisation of a particular country. That created a sufficient head of steam in public opinion that was deemed by the Governments of the day to endorse an invasion of those countries. I remind the House that 10 years later we are still in Afghanistan, we have spent £9 billion or £10 billion on wars in Iraq and Afghanistan, and there is no end in sight.

The reason the Minister gave for proposing the Financial Restrictions (Iran) Order 2011 to the House was that this is a banking order—a finance order—but he relied heavily on the IAEA reports and the issue of Iran’s nuclear capacity and nuclear capability. I stand here as somebody who is passionately opposed to nuclear power and nuclear weapons in equal measure. I believe nuclear power to be intrinsically environmentally unsustainable and dangerous, and I think nuclear weapons are absolutely immoral. However, I recognise that in law there is a distinction in that any country is allowed to develop nuclear power; it is not allowed to develop nuclear weapons.

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Iran remains a signatory to the nuclear non-proliferation treaty. Last year’s NPT review conference came to the conclusion that the best way of bringing about a nuclear-free world—a big step—would be the creation of a nuclear-free middle east. That would, of course, mean a mechanism for negotiation involving Israel and Iran. Israel, I remind the House, has 200 nuclear warheads and the rhetoric of the Israeli leaders is strongly critical of Iran. We need to bring about a mechanism, impossible within the NPT while Israel remains outside it, and possible only within the terms of a nuclear weapons convention. I hope the Government will put considerable efforts into promoting a nuclear weapons convention, and retaining a diplomatic link and debate, negotiation and discussion within Iran.

There are those who say that the war has not started yet and there is nothing to worry about. I remind them of a number of facts. One is that the US fleet in the Gulf is enhanced and enormous. There is a US base in Bahrain. Iran shot down and captured a drone missile that had apparently strayed over the border or been deliberately sent over it, depending which narrative we care to follow. A serious and significant number of assassinations and explosions have occurred in Iran over the past few weeks, with greater and greater intensity. I do not know who is causing those explosions. It could be foreign forces; it could be internal opposition; it could be all kinds of people, but there are clearly enormous tensions. Isolating Iran in the current circumstances is more dangerous than anything else I can think of.

Martin Horwood (Cheltenham) (LD): The hon. Gentleman is making some interesting points, but I am not clear whether he opposes a tougher sanctions regime. Surely a tougher regime is the peaceful means by which we will persuade Iran not to develop nuclear weapons, and therefore avoid the higher risk of another state intervening in a more aggressive and violent way.

Jeremy Corbyn: What I want is engagement and recognition, first, of the human rights abuses in Iran, which are clearly immoral and wrong; a great deal of attention has been drawn to those. Secondly, serious engagement is needed that does not lead us to a descent into war with all the incalculable consequences of that, not to mention very high oil prices for the rest of the world. Today’s debate is, to me, one staging post in the process. Whether the sanctions will have any effect I have no idea. I suspect they will have very limited effect, particularly as my right hon. Friend the Member for Blackburn (Mr Straw) pointed out that they are being imposed by Britain with the United States, virtually in isolation from the rest of the world.

I hope we have learned lessons about the folly and stupidity of getting involved in wars that allegedly are for our own protection, but in reality are often seen to be part of western expansionism and the assertion of US power within the whole region. We are here to make a decision on one fairly small aspect. I hope we can be a little more careful and sensible about this and recognise that there are very many people in Iran who will be united, as my Friend the Member for Newport West pointed out, in opposition to any foreign intervention and any invasion of Iran. Perhaps it is those people whom we should be thinking about now, rather than preparing for yet another war.

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6.15 pm

Robert Halfon (Harlow) (Con): I welcome this debate because, contrary to what has just been said, I believe that Iran is in essence the new Soviet Union of the middle east. It supports terrorism. We know well its strong backing of Hezbollah in Lebanon. It supplies Hezbollah with the missiles and the finance that it needs to destabilise the region and to fire attack missiles on Israel. Iran also supports Hamas, and we know what Hamas has done in Gaza, overthrowing the more moderate Palestinian Authority, running a totalitarian mini-state known as Hamastan in Gaza, stopping moves towards peace and regularly firing missiles on Israel.

Iran has also undermined democratic states. Not long ago it fired missiles on to the Kurdish regional Government. It is supporting the Syrian Government of President Assad and his crackdown on the recent anti-Government protests. It has provided the Syrian authorities with equipment, advice and technical know-how to help curtail and monitor internal communications. It has provided material assistance in the form of riot and crowd dispersal material, as well as military training for Syrian troops. Hamas, Hezbollah and Syria are in essence proxies for Iran. We well know that Iran has sent suicide bombers into Iraq and attacked our troops.

All this would be bad enough were it not for Iran’s nuclear programme. As has been said, the development of the nuclear bomb in Iran is incredibly concerning. The IAEA report has been highlighted and clearly shows that Iran has been covertly developing the technology needed to weaponise nuclear material. If we think the current Iranian regime is extreme, its so-called more moderate predecessor said that it would be okay to use a nuclear bomb in the middle east against Israel, because if a few million are killed in the process, it does not matter for the wider good.

Jeremy Corbyn: The hon. Gentleman mentioned nuclear weapons. Does he not have concerns that Israel has 200 nuclear warheads and is not a signatory to the nuclear non-proliferation treaty? Does he not think a nuclear weapons convention including Israel would be a helpful step forward in the region?

Robert Halfon: I am happy for any nuclear convention to reduce nuclear weapons in the middle east, but the crucial point that the hon. Gentleman misses is that Israel is a democracy and Iran is a dictatorship.

Mike Freer (Finchley and Golders Green) (Con): I agree with my hon. Friend. May I point out that it is not Israel that has threatened to wipe its neighbour off the face of the earth? Is that not the key point?

Robert Halfon: My hon. Friend, who is a strong supporter of Israel, is exactly right.

The one difference between Iran and the Soviet Union is that, when the Soviet Union and the west had nuclear weapons, we lived under the doctrine known as MAD, mutually assured destruction, and for MAD to work one had to be sane, but the sad fact is that Iran does not have that level of sanity, given that, as my hon. Friend says, the President often says that he wants to wipe Israel off the map. We know how the regime behaves from its recent treatment and trashing of the UK embassy, from its taking of American hostages and from its many other human rights abuses.

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The hon. Member for Islington North (Jeremy Corbyn) mentioned the abuse of trade unionists and the imprisonment of women, an issue that The Times has highlighted so well, so I strongly welcome the fact that the Government have brought in the tough measures before us. This is the first time the UK has used such powers to cut off an entire country’s banking sector from our financial sector, and that is hugely important not just because of the hoped-for effect of stopping the Iranian nuclear regime, but because of the message that it sends to other tyrannical regimes throughout the world—that Britain will not be weak, but be strong and do everything it can to stop the actions of such dictators.

Although I strongly welcome these tough sanctions and praise the Treasury for having the courage to introduce them, I note that we may be too late. Iran is not far off acquiring a nuclear bomb, and we—perhaps not this country itself, but NATO—may need to take further military action to rid the world of that bomb, to put pressure on the country’s evil regime and to bring about a true democracy, with the rule of law, freedom and everything that the Iranian people deserve.

6.21 pm

John McDonnell (Hayes and Harlington) (Lab): I, too, preface my remarks by stating that I have been a consistent opponent of the regime in Iran. I founded the Hands Off the People of Iran organisation in this country to campaign for the restoration of democracy in Iran and, with my hon. Friend the Member for Islington North (Jeremy Corbyn) and the hon. Member for Northampton South (Mr Binley), have signed a number of early-day motions in support of human rights in Iran. I have focused on the persecution of trade unionists, particularly those in the Tehran bus workers union, but I also led the campaign in this country to free Jafar Panahi, the film director.

Having said all that, I am extremely fearful of the statutory instrument under consideration, because I fear that it will take us into the cul-de-sac of war, which is an all too familiar path for us in this country: we seem to find an opponent, which is usually associated with minerals or oil; we then find that it is a threat to world safety; and we then find or concoct evidence of that threat. The International Atomic Energy Agency’s recent report failed to find any conclusive evidence of nuclear weapons production and, in fact, found no evidence of Iran’s

“diversion of declared nuclear material”

to weapons production.

The report relies on past evidence, which we have debated in the House before: a laptop computer, originating we believe from the Israeli or US intelligence services and referring to the development of a nuclear weapons programme by a certain scientist, Vyacheslav Danilenko. We were told at one point that this Ukrainian was a nuclear science expert, but we now discover that he was an expert in nanotechnology and had no real expertise in nuclear weapons. We were told also that there was a technique, supposedly being developed by the Iranians, involving a test explosion chamber, but we now know from the evidence of Robert Kelly, the chief of the IAEA for eight years in Iraq, that the chamber could never be used in a test.

Mr Binley: Will the hon. Gentleman give way?

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John McDonnell: I would, but we are short of time, so if the hon. Gentleman does not mind, I will not. I am sure that he understands.

All that evidence led to the conclusion by Mr Mohamed el-Baradei, the former head of the IAEA, that he had “no confidence” in the allegations based upon it, but it has convinced the new head of the IAEA, Mr Yukiya Amano. WikiLeaks has, unfortunately, exposed comments from the US on Mr Amano, however, whom it describes as

“solidly in the US court”

and “ready for prime time”.

So I begin to doubt the independence of his judgment on the matter.

It seems that we are being drawn into an atmosphere of war, and sanctions lead to war. Recent research by Professor Robert Pape of the university of Chicago demonstrates that 95.7% of cases of sanctions since world war one have led to military conflict, but who suffers? I agree with my hon. Friend the Member for Islington North that it is not the elite, but the poorest. The reaction is usually for the ruling elite to blame the ills of the country on foreign forces, and sometimes it even unites the country against a foreign foe, but the tragedy is that sanctions often motivate a regime to seek to protect itself by acquiring the very weapons that we seek to rid ourselves of.

There has been military action on the ground already. We have evidence of that from various reports—not just the drone, but intelligence assets on the ground relating to assassinations. The chair of our own parliamentary Intelligence and Security Committee could not rule out such assassinations having been undertaken by Israelis, and he confirmed that on occasions the US and Israeli Governments have given authority for assassinations.

I just want to get on the record my fear that we have trodden this path before, and that after sanctions come the bombs, then invasion, then loss of life, destabilisation and a growth in terrorism, then usually the installation of a puppet regime and the privatisation and exploitation by western countries of the mineral and oil resources. I hope against hope that we are not embarking on that tonight with this statutory instrument, but I have this dreadful fear of “Here we go again”.

6.26 pm

Rory Stewart (Penrith and The Border) (Con): In the debate about Iran, we tend to be presented with two pictures of the country: either it represents an extreme existential threat to national security, in which case any response, however aggressive, is justified; or it is not a threat at all, and therefore we do not need to do anything.

The truth is of course more complicated and tragic. Iran poses a significant threat to the United Kingdom, Europe and the United States, but our options are limited. There is not time in a five-minute speech to talk about the issues that the hon. Member for Islington North (Jeremy Corbyn) raised, but it is true that Iran is a highly complex and fragmented society. There is an elite, particularly in Tehran, Isfahan and Shiraz, who are liberal, western-friendly and progressive, but there is also an extremely conservative and isolated rural population, who provide the support base for Ahmadinejad. There is no doubt at all, however, that Iran is a priority.

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Many things in which the House has become involved have not been priorities. In recent debates, we have become involved in everything from Somalia to Mauritania, and we have exaggerated the importance of Afghanistan, but Iran clearly matters—in terms of its connection to terrorism, its nuclear bomb, rights and regional stability. There is no greater potential force for regional stability or instability than Iran, but we must face the fact that our current policy of sanctions, though rational and wise, is designed to delay the development of a bomb; and we must face the fact that there is a very high probability of Iran eventually developing a bomb. It may well develop a bomb even if an Islamist Government are not in place, because an atomic bomb has become a source of national pride for many people going well beyond the Islamist supporters.

What is our appropriate response to that threat? We should continue to do the things that we are doing at the moment. First, we should ensure that we have a clear, consistent policy towards Iran. That means that we do not wish to appease the Iranian Government, or to give any impression at all that our sympathies lie with that Government. We need to be robust in our defence of Iran’s regional neighbours, because the primary threat that will be posed by an Iran in possession of a nuclear bomb, however erratic and eccentric its Government are, is unlikely to be the bomb’s deployment; it is more likely to be a considerable increase in Iran’s prestige and in its threat towards its neighbours through terrorism or border disputes.

We must also, however, do things that we are not doing enough at the moment. One is to recognise that because the problem is primarily political, the Foreign Office and our armed forces must invest more and more in area expertise and linguistic expertise in relation to Iran because that will become more and more important—either in deterring some of our allies from unwise precipitate action or in helping us support our regional neighbours.

Secondly, it would make enormous sense to diversify our energy supply. Some 30% of the oil on which western Europe and the United States depend comes through the strait of Hormuz. That is far too much. Iran has a stranglehold on us, but we can overcome it through the smart deployments of new routes of delivering oil and gas to Europe and the United Kingdom.

Finally—a new idea in the last 30 seconds—we need to change our relationship with Shi’a communities around the Arab region and in Pakistan. Too often, we have acted as though Shi’a communities are natural allies of Iran, but there is no reason for them to be so. There is no reason why Britain cannot use its history and knowledge to develop a more constructive and productive relationship with those communities. If we can get that right, continue to invest in the financial sanctions and measures that we are already taking and develop the three areas that I have identified, we can move away from a policy of lurching from extreme aggression to inaction and find a principled, moderate and passionate response.

6.31 pm

Andrew Percy (Brigg and Goole) (Con): I rise to support the motion and the words of the Minister. Some of the shadow Minister’s comments about wanting to see an international extension were perfectly reasonable,

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but I do not think that that alone should have prevented us from acting on our own, and acting with the United States and Canada was entirely correct.

A great deal has been said that I do not wish to repeat, although I endorse what my hon. Friend the Member for Harlow (Robert Halfon) said about comparisons between Israel’s having nuclear weapons and the acquisition of those weapons by the despotic regime in Iran. We are talking about two completely different Governments and to try to mix them up is unhelpful, to be polite about it.

I do not think that anybody who has spoken today has in the slightest attempted to denigrate or insult the history of Iran or the Iranian people. The issue that we all have is with the Iranian regime; the debate has been consensual in that we have all expressed our outrage at what that does to its own people. I do not think that those who urge us to go further are in any way seeking to denigrate the Iranian people or their history.

Jeremy Corbyn: I appreciate that the hon. Gentleman is not trying to denigrate anybody, but unfortunately the history of interventions is that, however supportive people are or odious the regime is, we end up with an awful lot of wholly innocent civilians being killed, as happened in Afghanistan and Iraq. None of us wants to see that in Iran.

Andrew Percy: I do not think that anybody wants to see conflict in Iran; more importantly, none of us wants Iran to acquire a nuclear weapon at all. We are on the same page on that one.

Jeremy Corbyn: We have nuclear weapons here.

Andrew Percy: That is a different debate for a different day, but I would rather that nuclear weapons were in the hands of the United States or this country than in the Iranian regime’s, as it is currently constituted.

The hon. Member for Hayes and Harlington (John McDonnell) commented on the International Atomic Energy Agency report—[Interruption.] I apologise for my croaky throat, Madam Deputy Speaker; it is difficult to get my words out. The hon. Gentleman’s conclusions were slightly different from those drawn by others. I want to remind him of a couple of things in that report. Crucially, the report found evidence that Iran has procured

“nuclear related and dual use equipment and materials by military related individuals and entities”;

has developed

“undeclared pathways for the production of nuclear material”;

has acquired

“nuclear weapons development information and documentation from a clandestine nuclear supply network”;

and has worked

“on the development of an indigenous design of a nuclear weapon including the testing of components”.

Further evidence is provided by the reports that we have seen about the high explosive test sites, the neutron initiator and the uranium enrichment, which all prove that Iran is closer than ever to a nuclear weapons programme.

There has also been the non-co-operation with the IAEA, of course—we know that inspectors are consistently barred from entering Iran. In some cases they have been

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expelled; in 2007, 38 inspectors were expelled. We can read a great deal into the response of the Iranian regime to the IAEA findings; it simply dismisses them as having been written by people acting on behalf of the United States or its western allies.

I do not think that the report’s conclusions were quite as the hon. Member for Hayes and Harlington suggested. We should be extremely concerned. It is absolutely right that we act as we have been acting and show leadership on the issue. Yes, we would like other European countries to come on board, but acting as we have, along with the United States and Canada, is right for this country and what we are all trying to achieve—Iran never getting hold of a nuclear weapon. I associate myself with many of the comments made in this debate and I endorse the position of the Government.

6.36 pm

Mr John Baron (Basildon and Billericay) (Con): I rise to suggest to the Minister not only that it is questionable whether sanctions are working but that they may be counter-productive. I also suggest that the west underestimates its ability to influence Iran. It is a complex society with multiple centres of authority and constant power struggles. I hope that our Government will recognise that better in our diplomatic efforts.

Iran is a very wealthy country when it comes to minerals; other major powers are queuing up to gain access to its oil. That lessens the impact of sanctions from the west. Anyway, if Iran has set herself on nuclear weapons, she will not be scared away; if she has not, sanctions will, in my view, serve only to encourage her to get them.

In our discussions on Iran, we tend to forget too easily that it is a complex society justifiably proud of its history. As we have heard, the Parliament has protected rights for minorities; Iran’s 25,000 Jews are represented by a Jewish MP. We forget that there is no desecration of synagogues, which is more of a problem in Europe. We also forget that there is a well developed middle class in Iran that often disagrees with Ahmadinejad, as recent protests have illustrated.

My concern is that sanctions are counter-productive. Support for the current hardliners in Iran probably increases as a result of sanctions—Iranians responded to Bush’s talk of an axis of evil in 2002 by removing the reformist President Khatami. I suggest that the only sensible course of action is calm yet vigorous diplomacy.

Robert Halfon: I am incredibly grateful for my hon. Friend’s thoughtful remarks, although I come from a completely different perspective. He said that sanctions have made the regime more extreme, but some years ago there were no sanctions yet the regime became more and more extreme. Can he explain that?

Mr Baron: I am afraid that my hon. Friend was not listening. I did not say that sanctions made the regime more extreme, but that they reinforced the position of the hardliners within Iran, itself being a complex society. There is a difference. The only sensible option is calm yet vigorous diplomacy. We need to offer implicit recognition of Iran’s status as a major power in the region—a status that we created ourselves by castrating Iraq. There is a precedent for recognising a new status. In the 1960s,

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when the US presence in Asia was waning and China was beginning to flex her muscles, Nixon did not respond by denying the reality of Chinese power.

As I said, the west underestimates the opportunity to influence Iran. She is a state in transition with multiple centres of authority and constant power struggles. The challenge for the west is to influence those struggles. Crude sanctions or appeals for regime change undermine local proponents of reform by making them look like imperialist lackeys. Offering Iran a new relationship with the west could strengthen the pragmatists at the expense of the hard-liners. We can, and should, go the extra mile for peace. Much greater emphasis needs to be placed on quiet diplomacy between Iran and the west.

Mr Binley: Does my hon. Friend recognise that we have approached the Iranians bearing gifts in that we proscribed the MEK as a way of mollifying them and encouraging them to be our friend? None of our overtures over the past 12 years has worked. Does my hon. Friend recognise that a consistent but strong voice is now the only way to proceed, and that the last thing we want is military intervention?

Mr Baron: I am afraid that the Iranians have a slightly longer memory than just 12 years. They remember our support for Saddam Hussein when he invaded Iran, and many other interventions in Iran by the west are still fresh in their memories.

We need to go the extra mile for peace. Much greater emphasis needs to be placed on quiet yet vigorous diplomacy between Iran and the west. The UK is well placed to help in this effort. Despite recent measures announced by the Foreign Secretary, of the three stated enemies of Iran—the UK, the US and Israel—only one still has diplomatic relations with Iran.

Mr Denis MacShane (Rotherham) (Lab): Will the hon. Gentleman give way?

Mr Baron: No, because we are very short of time—I apologise.

I suggest that we give diplomacy a greater chance for one final push before it is too late.

6.42 pm

Mr Hoban: This has been an interesting and wide-ranging debate. As anyone listening to it will have recognised, there is a range of views about Iran and how the UK should engage with it, but there is also the common strand that everyone expressed—our concern about the proliferation of nuclear weapons and how we seek to tackle that.

In response to my hon. Friend the Member for Basildon and Billericay (Mr Baron), I say that we all want to see a diplomatic solution, but we need a process whereby there is not only engagement but pressure on the Iranian Government. At the moment, unfortunately, there are no signs to suggest that the Iranians are interested in meaningful and serious negotiations on the key issue of their nuclear programme, and it does take two parties to engage. The E3 plus 3 has been trying to negotiate with

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Iran, and it is not that group’s fault that the negotiations have not yet succeeded. It is Iran that needs to engage in serious negotiations.

Let me reflect on some of the comments that have been made. The right hon. Member for Blackburn (Mr Straw) and my hon. Friend the Member for Wyre and Preston North (Mr Wallace), who are co-chairmen of the all-party group on Iran and are currently at one of its meetings, asked about support for the action that the Government have taken and why we did not act in concert with EU member states. It is worth highlighting two points in that regard. We have undertaken a significant programme of lobbying internationally and continue to do so. As I said earlier, the US and Canada acted alongside us in imposing the sanctions on 21 November. However, there is a balance to be struck. Clearly, we want to encourage as many people as possible to join with us to impose these sanctions, yet at the same time there is a real sense of urgency on this issue. The risk of Iran acquiring a nuclear weapon becomes more serious as time passes, as was highlighted in stark terms by the IAEA report. We consider it imperative to act now and to encourage others to follow.

Mr Baron: Will my hon. Friend give way?

Mr Hoban: I want to make progress and conclude fairly promptly because there is a time limit on this debate.

We will engage with our European counterparts at the Council meeting next month. As I said, President Sarkozy wrote to us supporting moves for financial sanctions but also suggesting broadening them to the import of oil.

Let me turn to the points raised by the hon. Member for Nottingham East (Chris Leslie). I have dealt with his first point about putting pressure on other countries to act. His second point was about whether the UK will use significant fines to promote enforcement. As I said earlier, the civil and criminal penalties for breaching these restrictions enable the authorities to levy unrestricted fines. In the context of the civil sanction, for example, the fine should be proportionate, effective and dissuasive. I believe that the authorities take this matter seriously and will act proportionately to that.

The hon. Gentleman asked about exemptions, which relate to the licensing process that we have talked about in other situations. Some general licences are in place to deal with transactions that are already in progress. People can also apply for specific licences. Fifteen specific licences have been applied for; one has been granted and 14 are in the process of being considered. This is an ongoing process. I hope that that also addresses the point raised by my hon. Friend the Member for Wyre and Preston North.

We are committed to reporting regularly to Parliament. The Counter-Terrorism Act 2008 says that we should report as soon as possible after the calendar year in which the actions have been taken. We will endeavour to do so, and we will keep the House informed about the progress that is made.

Everyone across the House recognises the dangers that attach to nuclear proliferation. This is a process of negotiation and diplomatic engagement. We need the other party to engage in that diplomacy, too, but we

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should not be afraid of applying pressure to the Iranian regime where we think that that is appropriate and proportionate and will help to further our objective of keeping the world a safer place. I commend the motion to the House.

Question put and agreed to.


That the Financial Restrictions (Iran) Order 2011 (S.I., 2011, No. 2775), dated 21 November 2011, a copy of which was laid before this House on 21 November, be approved.

13 Dec 2011 : Column 710

Opposition Day

[Un-allotted Half Day]

European Union

6.48 pm

Mr Nigel Dodds (Belfast North) (DUP): I beg to move,

That this House commends the Prime Minister on his refusal at the European Council to sign up to a Treaty without safeguards for the UK; regards the use of the veto in appropriate circumstances to be a vital means of defending the national interests of the UK; and recognises the desire of the British people for a rebalancing of the relationship with our European neighbours based on co-operation and mutually beneficial economic arrangements.

Yesterday in the House the Prime Minister referred to a period of great change in Europe. There is a sense arising out of the European Council at the weekend that something very significant has happened in the United Kingdom’s relationship with the European Union. A taboo has been broken. For the first time in living memory, a Prime Minister of the United Kingdom went to an EU summit not only prepared to say no but, in the event, actually used the veto when it became necessary in our national interest. I commend the Prime Minister for sticking to his word and wielding the veto in the circumstances that he outlined in this House last week. I have to say with regret that that is not something that we have come to expect from British Governments. We have been more used to Ministers going to crucial EU meetings in recent years and coming back having to explain why the latest EU regulation or measure is being implemented despite the implications for our national interests.

It is clear that what the Prime Minister has done has gained support from people from right across the political spectrum. That may not be reflected in some of the speeches, interventions and posturing in the House, of course, but it is clear that a large number of people from all backgrounds, whether they are Tory, Labour, Liberal Democrat or support parties in Northern Ireland, agree with what the Prime Minister has done.

Andrew Percy (Brigg and Goole) (Con): May I provide my right hon. Friend with an example of that? Two of my constituents living on the Isle of Axholme wrote to me last night by e-mail to inform me that they had voted Liberal Democrat in the general election but would now vote Conservative because of our Prime Minister’s actions.

Mr Dodds: I am sure there will be many such messages flooding in to right hon. and hon. Members over the coming days. There is no doubt that, not for the first time, many Members are out of step with what the people think.

Mr Denis MacShane (Rotherham) (Lab): Very simply, what action did the Prime Minister veto? A veto is imposed to prevent something from happening.

Mr Dodds: I will come on to that in detail, but he prevented a treaty from coming into place that did not have sufficient safeguards for the United Kingdom. It is

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a pity that when the Labour party was in government, it did not take such action to prevent some of the things that happened to this country.

Mr John Redwood (Wokingham) (Con): Of course, the Prime Minister stopped a treaty for the 27. Did the right hon. Gentleman see that the statement that was issued was made only by the 17 euroland Heads of Government? The other nine have not signed up to it. That is very clear in the statement, so it is misleading to say that Britain is isolated when the other nine think it is a lousy treaty as well.

Mr Dodds: The right hon. Gentleman is absolutely right, and I will come to that. Even today, we are hearing of issues in Denmark and that Sweden is unlikely to sign up. In Poland, it has been pointed out that two thirds of each House will have to support what has been agreed if the country is to sign up, and it is unlikely to get that. We are hearing similar things in Finland, the Czech Republic and other countries, never mind what is going on in Germany and even France. This is potentially a watershed moment in British politics.

Mr William Cash (Stone) (Con): This is a good moment to place on record the fact that the Democratic Unionist party has played a stalwart role in this whole business from the beginning. That needs to be put on the record, as part of the historic tribute that needs to be paid to that party in this matter.

Mr Dodds: I am very grateful to the hon. Gentleman for his kind remarks. Given that he was commended even by the leader of the Labour party in the House yesterday, those words are very welcome coming from someone with such vast experience in fighting these battles over the years.

What happened at the weekend is important not so much for the substance of the matter in itself but for the rebalancing of our relationship with the European Union that it might herald. I refer to that in our motion.

Many people say that because of the action that the Prime Minister has taken, we are now marginalised and isolated. Many of those who say that are, of course, the very same people who at one time not so long ago were urging us to join the euro. They were the people who castigated the euro-realists who dared to point out the in-built defects of the euro project. They made the same dire, doom-laden predictions then. They were wrong then, and they are wrong now.

Being outside arrangements that exist for most of the other EU members is, in any case, nothing new. For instance, the UK is not in the Schengen agreement. We were told by some that that was contrary to the spirit of being good Europeans as part of the EU, but it is absolutely right in the interests of the UK and the protection of our borders.

We heard much yesterday and over the weekend about the damage that the latest developments might do to our country’s standing in the world. For instance, we heard about how the Americans might view us. However, yesterday Hillary Clinton made very clear what she thought, saying that

“our concern has not been over the position that the UK has taken, it’s whether the decisions made by other members of the eurozone countries within the EU will work.”

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With respect, that is the nub of the matter. What matters is what will happen to the eurozone.

We have talked about the role of other countries. The right hon. Member for Wokingham (Mr Redwood) referred to other countries that have not signed up, and I mentioned Sweden. It will also be interesting to see what the position is in the Irish Republic when the matter has been considered in detail. It is not so much the text of the proposal as its substance that matters in the decision whether the agreement must go to a referendum. It will be interesting to see the reaction there. It is clear, is it not, that the French Government and others have a clear policy when it comes to corporation tax? Over the years, the Irish Republic has prided itself on attracting foreign direct investment through low rates of corporation tax, and it has built its economic policy around that to a large degree. It will be watching the matter very carefully.

Mrs Anne Main (St Albans) (Con): Does the right hon. Gentleman share my concern about the fact that a French MEP is suggesting this evening that Britain ought to be punished for taking a view that supports the best interests of Britain? Should countries be punished for not behaving themselves?

Mr Dodds: The hon. Lady is right to point to some of the vindictive language that is coming out of Europe. Indeed, President Sarkozy was talking today about consequences for the United Kingdom because of the actions that we have taken. We have to recognise that there are dangers—I think the Prime Minister talked about “risks”—in the intergovernmental approach, and I will deal shortly with what that might mean. It is one reason why we cannot let matters sit where they are. We are in an unsatisfactory position, and we need to decide how we will deal with the situation.

In France, the Opposition Socialist contender in the presidential election, François Hollande, has made it clear that if he were elected, he would seek to renegotiate any agreement that was reached, because he opposes the loss of French budgetary sovereignty. The concerns felt in the House are not some isolated, strange, esoteric or unusual position, but are shared across large parts of Europe by many parties, many of which would not be described as naturally Eurosceptic, right wing or anything of the sort. Members would do well to bear that in mind when they talk about the Government being in thrall to a small minority of MPs and others. They should recognise the reality. The idea that there is a united Europe of 26 against the UK is not correct.

Of course, many countries have to put the new euro-plus arrangements to parliamentary approval, at least, if not to a referendum. We will see what happens when they actually consider the implications of having their national budgets supervised by the European Commission, and the fact that strict rules will be imposed on their national Governments’ ability to borrow, with all the implications for sovereignty that that entails.

For all the adverse reaction from some on the Opposition and Liberal Democrat Benches yesterday, the fact is that the Prime Minister’s stance has the overwhelming backing of the people of the United Kingdom.

Mr John Baron (Basildon and Billericay) (Con): The right hon. Gentleman’s points are absolutely right. May I suggest to him that many Conservative Members

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believe that the veto should be the start of a process to reset our relationship with the EU, based on free trade, growth and prosperity? We want to move away from political union and dead-weight regulation. That is not some utopian dream—such a relationship already exists. I ask him to reflect on the fact that countries such as Switzerland already enjoy such a relationship with Europe, so there is no reason why we should not.

Mr Dodds: The hon. Gentleman is absolutely right, and I will come shortly to how we should rebalance our relationship with Europe. He is right to point to the type of relationship that we should have—one based on free trade and co-operation with our European friends and neighbours, but on a sovereign nation to sovereign nation basis.

There are those who tell us that the Prime Minister has gone against the whole thrust and approach of UK foreign policy for the past 40 to 50 years. I have no doubt that there is much wailing and gnashing of teeth in the bowels of the Foreign Office and elsewhere among the professional mandarins who have seen the EU as almost a sacred cause, to be advanced whatever the wishes of the British people or the views of the temporary occupants—as they would see it—of political office. For the mandarins, the people and those who occupy political office are to be managed and dealt with—although I am sure that that does not apply to the occupants of office in this Government.

Martin Horwood (Cheltenham) (LD): The gnashing of teeth is not just among mandarins, is it? Has the right hon. Gentleman heard from the business analysts at IHS Global Insight? They said that

“the European council statement made clear that a new ‘fiscal stability union’ would seek to deepen the internal market, creating stronger fiscal and economic rules.

‘Outside this union the UK is likely to become increasingly irrelevant and marginalised’”.

Does not such concern on the part of business worry the right hon. Gentleman?

Mr Dodds: I have heard all that before. We heard it at the time of the UK’s withdrawal from the exchange rate mechanism and when Britain decided not to join the euro. We have heard time and again the dire warnings of doom and gloom. However, if we reach the position that the hon. Member for Basildon and Billericay (Mr Baron) outlined, of a relationship based on free trade and co-operation, it will free our economy from much of the regulation, red tape, bureaucracy and dead-weight of EU laws that currently hold us back from the true competitiveness and real growth that we need.

We have not just heard from the hon. Member for Cheltenham (Martin Horwood); we have also heard the hysterical reactions of blasts from the past such as Paddy Ashdown, Michael Heseltine and the other usual suspects. It is time the House realised that focusing our foreign policy on the narrow ground of greater Europeanism and ever closer political union in Europe is contrary to the UK’s vital interests.

We make it clear that we must and should work with our European neighbours and friends on a host of economic, political and policy issues. However, let us also recognise the enormous opportunities on the wider scene: our unique position in terms of the Commonwealth,

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our special relationship with the United States, and our standing in the United Nations. For too long our vision as a country has been dominated by the little Europeanists, who want to take us in only one direction. It is high time that blinkered approach was discarded.

There are those who say that what the Prime Minister did was wrong because we must do all we can to save the euro. However, as was said earlier, in considering the events of last weekend, it has been overlooked that, for all the talk about arrangements to prevent future crises, not a lot was done to instil confidence that the immediate crisis will end any time soon.

Mr Redwood: The right hon. Gentleman is making a good point. Did he see that if, for example, Ireland or the United Kingdom joined the so-called stability pact, they would have to make massive cuts in public spending and massive increases in taxes? It is a sort of mutually assured austerity pact.

Mr Dodds: Yes. For precisely that reason, I believe that when the peoples of each country—and even some of the politicians, who are currently going around saying that the UK has done a terrible thing—begin to study the detail and realise the restrictions that will now be imposed on their freedom to set their budgets and taxes, to borrow and so on, they will seriously reconsider the proposal. Having caused the greatest economic catastrophe for many decades, by creating the euro and the one-size-fits-all approach, EU leaders have come up with a bizarre answer: no comprehensive solution to deal with the immediate and pressing crisis, and no overarching deal that will properly address the problems that Greece, Italy and Spain face, but a plan to deepen and extend European integration—a plan for more treaty change and more institutional tinkering.

After all the arguments about the Lisbon treaty, we were told that Europe had learnt its lesson and that there would no more institutional debates and treaty changes. Instead, Europe was to get on with the business of trying to create jobs, growth and economic prosperity, yet here they are, at it again. There is a one-track mind among many European federalists about deepening European integration, and political and fiscal union.

Bob Stewart (Beckenham) (Con): When the euro was set up, were there not strict rules on compliance for those joining, which even some of the biggest countries largely ignored? Now there is again talk about strict rules on compliance. Perhaps the boy is crying wolf; I do not believe that those rules can be enforced on countries that have shown in the past that they will not comply. They will not comply in future, either.

Mr Dodds: The hon. Gentleman makes a good point. He is right: in the rush to set up the euro, which was a political project from the beginning—it was believed that it would ultimately lead to political and fiscal union—those behind it permitted countries that they knew were not capable of meeting the requirements to join. What they are trying to do now will not succeed in patching the whole thing together.

Dr Julian Lewis (New Forest East) (Con): The right hon. Gentleman is being extraordinarily generous in giving way. To support what he has just said, does he

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remember Romano Prodi, then President of the European Commission, on that fateful new year’s eve when the euro was brought into effect, being asked, “This is a political project, isn’t it?” and his replying, “It is an entirely political project”? Is that not why those people are so desperate to continue with it, even though it is leading to economic disaster?

Mr Dodds: Absolutely. The hon. Gentleman is right to remind the House of Prodi’s words at that time, of the fact that the nature of the project is explicit, and of what lies behind it.

Some people say that the Prime Minister acted to protect the City and the big banks. If it was all about that, I would not be standing here supporting the motion. We need more regulation of the banks and of those who contributed greatly to the mess in which we find ourselves. One of the questions that arises from the Vickers report is how to regulate banks more strictly, and we need to be able to go further, unfettered by the EU. I also believe in the so-called Robin Hood tax—provided that it is applied universally and not targeted mainly at London and the UK to prop up the failing euro, of which we are not part.

David Morris (Morecambe and Lunesdale) (Con): On the Tobin tax, £40 billion would have been taken out of the City. Does the right hon. Gentleman agree that that would equate to £642 in taxation for every man, woman and child in this country?

Mr Dodds: The hon. Gentleman is right to point to the effects if the EU had targeted the financial services sector, unfairly penalising the UK. The tax revenues of which he speaks are enormous and the contribution to employment—not just directly—is significant for the UK. There are arguments for measures such as the Tobin tax, but they have to be applied universally. The UK alone should not be picked out.

Some say that the Prime Minister’s action will cost jobs and damage British business, but the EU’s share of world trade is decreasing. Who believes that the EU would want to stop exporting to a market of some 60 million people, or inhibit trade that would cost the jobs of millions of people in the EU? That simply will not happen. All the scaremongering about that, as in the past, is not based on economic reality.

We must guard against the inevitable pressure that will come—and is already coming—behind the scenes from diplomats, mandarins and others who will try to drag the Prime Minister away from his current stance and use the back door to achieve the UK’s acquiescence. The Prime Minister has already hinted at some sort of compromise on the desire of the euro-plus countries to use the EU institutions. He needs to be careful about that. If they want to do that, we need to ask what they are prepared to do for the UK in return. I hope the Prime Minister will not accede to the pressure being exerted to allow that to happen by the back door.

Of course, it is important to recognise the limits of what has happened. As a result of what happened at the Council, 26 countries—or however many it will be in the end—cannot themselves implement agreements on financial services or other things that have an impact on

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the single market. That must be done through the single market Council. However, therein lies a problem. Yesterday in his statement the Prime Minister alluded a couple of times to the risks involved in the intergovernmental arrangement. As I said in my contribution yesterday, the very real risk is that other EU member states will gang up on the United Kingdom and outvote us through qualified majority voting.

Mike Gapes (Ilford South) (Lab/Co-op): Is not the reality that nothing has changed with regard to financial services? Twenty-six cannot impose qualified majority voting; nor can 27. At the end of the day, therefore, the so-called veto was not a real veto, because 26 have gone ahead. The reality is that we still have the right to block changes in that respect under the Single European Act.

Mr Dodds: I do not agree with the hon. Gentleman. The Prime Minister is right to say that it would have been entirely wrong, without sufficient protections, to have a treaty that, as he put it, would have hard-wired the situation into the European Union treaties. The hon. Member for Ilford South (Mike Gapes) alluded to protections, but QMV does not provide the UK with much of a protection. As has been said already in the debate, given some of the vindictive language being used in European capitals at the moment, we must be very careful indeed. It is clear, in my view, that the status quo cannot stand in the medium to long term.

Mr Cash: Does the right hon. Gentleman accept that what he is saying is incredibly important in terms of the future path, because the real problems are contained in the existing treaties themselves, which need to be fundamentally changed, along with our relationship with the European Union? That is the real problem. We should not just nibble at the edges.

Mr Dodds: The hon. Gentleman is right in that regard. We cannot have a bloc of eurozone countries acting collectively by using its voting power at EU level to force through measures to the detriment of the UK’s national interest.

Even the Deputy Prime Minister has warned against the dangers of a club within a club. The new club will have a common interest and act collectively. The Secretary of State for Northern Ireland pointed that out in a recent article in The Spectator. He said:

“a fiscally united eurozone will spend as a bloc, tax as a bloc…and…vote as a bloc”,

and he is absolutely right.

For that reason and a host of others it is clear, as the hon. Member for Stone (Mr Cash) said, that a fundamental reassessment of our relationship with the EU is required. The Prime Minister’s use of the veto is very welcome. Saying no to Europe has been and remains almost unthinkable for some in the political elite, no matter what the cost in terms of our national interests, but the question now is: where do we go from here?

As things stand we are left with all the old familiar problems with the EU that we had before the European Council. We are left with the huge issues of loss of sovereignty and EU control of vast swathes of UK laws and policies. We are still committed as a country, because of the EU treaties, to “ever closer political union”. We remain subject, for instance, to the common fisheries

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policy, to the plethora of regulations and directives that stifle competitiveness and growth, and to interference in criminal justice and home affairs. Not least, we are still required to contribute almost £10 billion per year net to the EU at a time when domestic budgets are being slashed, and QMV provisions under the Lisbon treaty have reduced the areas where we can say no to EU intrusion.

Ian Paisley (North Antrim) (DUP): On that £10 billion net that we contribute each year to the European Community, does my right hon. Friend agree that we would be far better exercised in determining how those resources are spent on our own fishermen, our own farmers, our own industrialists and our own banks, rather than letting bureaucrats and eurocrats determine how it is spent?

Mr Dodds: My hon. Friend is absolutely right.

I sometimes hear others, particularly elements of the media, and particularly the BBC—this will not be first time that hon. Members have referred to the BBC in that regard—argue the case for Europe by saying, “But look at the vast amounts of money we get.” That has sometimes been stated about Northern Ireland; my hon. Friends will deal more particularly with the situation there later. We are told, “But you’ve benefited from all these initiatives,” and so on and so forth, but the money involved is a small percentage of what we pay into Europe in the first place. In many cases it comes with so many strings and conditions attached that it would be far better if it were disbursed by our own Government or at a regional level.

The Prime Minister said yesterday in the House that

“the balance of powers between Britain and Europe is not right”—[Official Report, 12 December 2011; Vol. 537, c. 530.]

I prefer the use of the term “United Kingdom”, because Northern Ireland is an important part of this, but the Prime Minister is absolutely right. We must therefore build on what has happened.

Many talk about the need to have powers repatriated. I sympathise with their aims and objectives, but repatriation can be limited. We may gain here, but we will lose there. I think we need a more fundamental and simpler approach. We know what the British people want, we know what makes sense for the UK in the long run, and, as we say in our motion before the House, we must rebalance our relationship with our European neighbours.

The relationship must be based on free and mutually beneficial co-operation. It must be about free trade and commerce, to the mutual benefit of businesses and consumers throughout Europe—that is the best way to create growth and prosperity—and it must be about laws being made in this country by democratically elected and accountable representatives of the British people. That is the sort of relationship that people in this country want with Europe. I believe that for too long there has been a determination on the part of the political and diplomatic elites in this country to deny the people of this country any say on Europe. Ultimately, people must be given the opportunity—finally—to have their say through a referendum. I believe that the events of the weekend have brought that day closer, and I commend the motion to the House.

Several hon. Members rose

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Madam Deputy Speaker (Dawn Primarolo): Order. Before I call the Minister, I inform the House that the amendment in the name of the Leader of the official Opposition has not been selected, and that after the Front-Bench opening speeches there will be an eight-minute time limit on Back-Bench speakers. That might need to be reviewed.