We commend the Secretary of State for Defence for volunteering to expose the Ministry of Defence to parliamentary scrutiny on this matter. (Paragraph 2)

1. The Government welcomes the House of Commons Select Committee's (HCDC) report on "The Iran Hostages Incident: The Lessons Learned." It should be noted that, in addition to the following response, the Defence Secretary provided a classified response to the HCDC report in a letter dated 9^th January 2008.

To be asked to conduct an inquiry in secret, and to report on matters which we cannot make public, is highly unusual. (Paragraph 5)

2. The Government is grateful to the HCDC for agreeing to conduct the inquiry on a non-public basis. This was necessary both to preserve the continued operational security of UK Armed Forces deployed on operations and to allow the MOD to engage fully and openly with the HCDC to enable the type of scrutiny for which it is established.

We found the MoD's initial response to our inquiry inadequate, and sensed that the Department had not anticipated that we would pursue an inquiry in depth. But, following our strong response, the MoD responded positively to our inquiry and has been helpful both in providing full answers to our questions in writing and in offering high level briefing. We believe our inquiry has sharpened the MoD's response to the Iran hostage incident. (Paragraph 9)

3. It was always the Government's intent to co-operate fully with the HCDC inquiry and we believe that the totality of our engagement with the Committee on this inquiry reflects this. We accept that the private evidence session on 17^th July did not prove satisfactory to the Committee, but this was due to a misunderstanding as to the aim of the session rather than any lack of willingness to co-operate. The witnesses were expecting (and prepared) to answer questions on the nature of the MOD response to the Fulton report, not to answer detailed tactical questions about how the incident happened. As the Committee's report states, after this session "the MOD responded positively to our inquiry and has been helpful in providing full answers to our questions in writing and in offering high-level briefing."

The decision not to publish the Fulton report has led some people to conclude that the whole thing is a whitewash. We can assure the House that this is not the case. The Fulton report was robust in identifying serious weaknesses, and recommended a range of remedial actions. The Government immediately drew up an action plan for implementing these recommendations, and has made good progress towards discharging the actions. (Paragraph 13)

4. The Government has taken the response to the Iran hostages incident extremely seriously and we welcome the Committee's conclusions about both the robustness of the Fulton report and the progress made by the MOD in implementing its recommendations. As the Committee's report states "we have reviewed the MoD's action plan in response to the Fulton report. We are satisfied that, provided all of the many recommendations are implemented, the MoD will have significantly reduced the likelihood of a recurrence and addressed the weaknesses identified by Fulton. Many of the actions have already been completed, but we intend to monitor progress and shall expect the MoD to report to us when all of the actions have been discharged." The Government supports this conclusion and has agreed to provide a further briefing to the Committee in mid 2008 to update the Committee on progress with the further implementation of the operational and media handling lessons from the two Reports.

The perception that everyone has been let off scot-free for the Iran hostage incident is ill-founded. Whilst it was decided that there were insufficient grounds for courts martial, formal administration action has been taken against a number of Service personnel across a wide spectrum of ranks. (Paragraph 15)

5. The Government is satisfied that adequate and appropriate action has been taken against those who were found to be at fault by the Fulton Report and notes that the HCDC concurs.

We were told that no action had been taken against individuals, military or civilian, for failings relating to media handling. Given the catalogue of serious mistakes made, we think this is unacceptable. (Paragraph 16)

6. The Committee are clearly concerned that the MOD has not taken formal disciplinary action against the individuals involved in managing the media element of the hostages incident, however given the nature of the conclusion of the Hall Report (which stated that it could not identify any individual or individuals against whom to take such action, but identified the problem rather as "a collective failure of… or abstention from judgement") the Government remains of the view that it would not be appropriate, practical or beneficial to do so.

Whilst security constraints prevent us from making public the exact nature of the weaknesses identified, it is public knowledge that there were weaknesses in intelligence, in communications, in doctrine and in training. There was a lapse in operational focus in the front line, and a widespread failure of situational awareness. (Paragraph 17)

7. The Iran Hostages incident identified a number of shortcomings. The First Sea Lord is on record as saying "bad calls were made and operational awareness was found wanting." The Government's priority since the incident has been to identify and put in place measures to ensure that this incident could not happen again.

We are satisfied that, provided all of the many recommendations are implemented, the MoD will have significantly reduced the likelihood of a recurrence and addressed the weaknesses identified by Fulton. (Paragraph 18)

8. The Government agrees with the committee's findings. As the HCDC report states "the Fulton report recommended a range of remedial actions. The Government immediately drew up an action plan for implementing these recommendations and has made good progress towards discharging the actions."

We accept that a lack of resources was not the direct cause of the events of 23 March. (Paragraph 19)

9. The Government notes and concurs with the view.

We are concerned to ensure that the MoD's current budgetary uncertainty does not impede the implementation of the action plan. (Paragraph 20)

The Government reinforces the assurance already given to the Committee by the Chief of Defence Staff - resources are in place to enable the implementation of the action plan.

It is clear that the decision to allow the Service personnel to sell their stories was a serious mistake and deeply damaging to the reputation of the Royal Navy. The Secretary of State for Defence has accepted responsibility and apologised. This should not absolve others from blame. (Paragraph 22)

10. The Government notes this view. See response to paragraph 6 (above).

While we continue to have concerns about the MoD's media operations, we note the progress made in implementing the Hall recommendations and particularly welcome the decision to increase military involvement in media handling. (Paragraph 23)

11. The Committee's report states that "we continue to have concerns about the MoD's media operations" but it does not indicate what these concerns are - it is therefore impossible for the Government to respond to this comment. Concerning the Hall Review specifically, the MOD provided the Committee with a detailed breakdown of progress against the action plan. This progress report had been endorsed by the Chiefs of Staff and briefed to Mr Tony Hall who had declared himself very content with the direction being taken by the Government.

The Fulton report, and the evidence provided to us in support of it, contain a depth of operational detail which it would be damaging to make public. This makes it difficult for us to demonstrate openly the grounds on which we have reached our conclusions. However, we assure the House of Commons, and public, that we have scrutinised the report thoroughly, and have obtained extensive additional evidence from the MoD. We have written to the Secretary of State for Defence with a number of classified conclusions and recommendations. While the hostage-taking exposed worrying weaknesses, action has been taken to address them. The incident was a national embarrassment, deeply damaging to the reputation of the Royal Navy. It has, however, provided the spur to remedy major weaknesses. (Paragraph 24)

12. The Government is grateful to the Committee for the sensitive and yet thorough manner in which they conducted their inquiry. The Government's response to the hostages incident was to commission two independent reports to identify what happened and to make recommendations to address identified shortcomings. The Government supports the Committee's view that the most important element of the subsequent response has been to ensure that the recommendations from the Fulton Review and the Hall Report are properly implemented. The Committee's inquiry assisted this process and has undoubtedly had a positive impact on operational effectiveness. This is most welcome. The Government also welcomes the Committee's conclusion that the MoD has drawn up appropriate action plans to implement the recommendations of the two Reports and that they are being effectively implemented.