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Written Statements

Volume 450: debated on Monday 9 October 2006

Written Ministerial Statements

Monday 9 October 2006


Tax Treatment of Capital Receipts

The Government intend to bring forward legislation in the Finance Bill 2007 to amend an omission which has been identified in the recent trusts modernisation legislation included in the Finance Act 2006.

Certain types of capital receipts received by trustees are treated for tax purposes in their hands as income. This includes where the trustees of a settlement receive a payment made by a company buying back its own shares. In that situation, the original legislation—section 686A of the Income and Corporation Taxes Act 1988—provided that what was taxable was only the distribution element, and excluded the original subscription price received by the company which issued the shares.

Paragraph 3 of schedule 13 of the Finance Act 2006 amended the existing section 686A of the Income and Corporation Taxes Act 1988 so that in addition to its original function it also introduces a common mechanism for the various types of capital receipt which are assessable to income tax in the hands of trustees receiving them to be charged at the special trust rates. There is however an omission in the wording of the new section 686A which has the result, in the situation of buy-back of shares, that the whole of the payment by the company to the trustees including the original subscription price is taxable and not just the element representing the distribution.

This result was not intended and therefore amending legislation will be brought forward, as part of the Finance Bill 2007, to amend section 686A appropriately. This amending legislation will be backdated to 6 April 2006 so that the position will be as it should have been from the start. The amending legislation is being drafted and will be put out to consultation.

ECOFIN (8-9 September 2006)

The Informal Economic and Financial Affairs Council (ECOFIN) took place in Helsinki on 8 and 9 September 2006.

The Informal Council discussed global competition, innovation and productivity, including the role financial markets can play in promoting innovation, productivity and research and development.

Ministers discussed the economic and financial aspects of energy, including both external energy policy and the development of a single market for energy in Europe.

The Informal Council also discussed the working methods of ECOFIN; financial market and stability issues; the present economic situation and prospects for the global economy; and the preparation of the annual meetings of the Bretton Woods Institutions.

The UK was represented by the Economic Secretary to the Treasury.

ECOFIN (10 October)

Items on the agenda are as follows:

Price Stability Criterion—Finance Ministers will be briefed on the application of the price stability criterion used for assessing entry to the euro.

Stability and Growth Pact—Council will receive Commission communications regarding Germany and the UK, and will be invited to adopt an opinion on the updated Convergence Programme for Hungary and a Council Recommendation under Article 104(7).

Energy, Innovation, Financial Stability Arrangements and Working Methods—Finance Ministers will be invited to adopt conclusions taking into account the discussions held at the Informal ECOFIN Council meeting in Helsinki on 8-9 September.

Better Regulations, administrative burdens—Council will be invited to adopt conclusions to support the Commission’s approach to measuring and reducing administrative burdens resulting from EU legislation.

The Quality of Public Finances—Ministers will be invited to adopt conclusions on a report regarding the design of national fiscal rules and institutions in EU member states.

EIB External Lending Mandates—Following an initial debate at the July ECOFIN, Council will continue to discuss issues relating to the renewal of the EIB’s mandate for the lending it carries out outside the EU.

Clearing and Settlement—Ministers will hold an exchange of views on the Commission’s approach to tackling barriers in the clearing and settlement industry.

Single Euro Payments Area—Council will be invited to adopt conclusions on the single euro payments area initiative, which will deliver a common system for cross-border payments in euro.

Communities and Local Government

Local Authority Business Growth Incentives Scheme

The Government announced on 14 September 2006 the details of the second year of the Local Authority Business Growth Incentives scheme (LABGI). LABGI aims to encourage local authorities to increase business growth in their areas. The scheme is set to run for three years (2005-06 to 2007-08) and will allocate up to £l billion to eligible local authorities in England and Wales. The money is genuinely additional and unring-fenced.

In its first year, the scheme awarded £126.6 million to 278 local authorities in England. Changes being introduced for the second year make the scheme simpler and more rewarding for local authorities. The 70 per cent. scaling factor (that applied to revenues above the floor) and the ceiling (that set the maximum revenue that could be kept in the first year), have been removed. The awards for the second year of the scheme will be announced in February 2007. It is for local authorities themselves to decide how to use this additional money.

Constitutional Affairs

Legal Aid (Inquests)

With the agreement of the Lord Chancellor, I am pleased to announce the amendments to the Lord Chancellor’s authorisation on inquest funding and related changes to the Community Legal Service (Financial) Regulations 2000. These amendments came into force on 2 October 2006 and will streamline the process for providing legal aid in those exceptional inquests that require it.

Since 1 November 2001, the Legal Services Commission (LSC) has had the power to grant funding for advocacy to the immediate family of the deceased at certain inquests where the deceased has died in police or prison custody, or in the course of police arrest, search, pursuit or shooting.

From 2 October 2006, the LSC will also be able to grant funding for advocacy in certain inquests where the deceased has died while detained under the Mental Health Act 1983. The LSC will also have the power to waive the financial eligibility limits, and—where appropriate—financial contributions, for legal aid in these inquests. For all other inquests, the Lord Chancellor retains the power to authorise exceptional funding for advocacy, and to waive the financial eligibility limits.

These changes will simplify the current arrangement and help to provide prompt access to legal representation for the families of the deceased in those exceptional inquests where article 2 of the European convention on human rights requires it.

Copies of the amended authorisation and amendment regulations have been laid in the Libraries of both Houses.

Legal Services Bill - Draft

My right hon. and noble Friend the Secretary of State for Constitutional Affairs and Lord Chancellor has made the following written ministerial statement:

“On Monday 25 September the Government published their response to the recommendations made by the Joint Committee on the draft Legal Services Bill in their report of 25 July.

The Government regard pre-legislative scrutiny as a vital step in the consultation process and I would like to thank Lord Hunt of Wirral and the Joint Committee for their swift and thorough deliberation of the draft Bill.

The Government welcome the Joint Committee’s support for the overall framework put forward in the draft Bill. We look forward to introducing legislation, as soon as parliamentary time allows, that reflects the interests of everyone and provides a legal services market where excellence continues to be delivered.”

Freedom of Information Act 2000 (Implementation in Central Government)

My noble Friend the Under-Secretary of State has made the following written ministerial statement:

“Today I have deposited copies of ‘The Freedom of Information Act 2000—Statistics on Implementation in Central Government April to June 2006’ in the Libraries of both Houses. This is the sixth quarterly bulletin produced by the DCA monitoring the performance of central Government and associated bodies under the Freedom of Information Act 2000.

Please note that this report contains some revisions to previously published statistics on disclosure outcomes. A full explanation of the changes is given in the report”.

Further to this statement, I would like to inform the House that as a result of the above revisions, the information contained in my answer to a written parliamentary question from the late previous Member for Blaenau Gwent on 25 January 2006, Official Report, columns 2156-57W, concerning the operation on the Freedom of Information Act during its first year, was inaccurate. The previous answer should read that in the third quarter of 2005, for those bodies whose performance is monitored by DCA, 58 per cent. of resolvable requests resulted in the full disclosure of information, not 67 per cent. as stated originally.


NHS Audited Accounts (2005-06)

My Department has today published the audited figures for the NHS for the financial year 2005-06. These show that the NHS recorded a deficit in 2005-06 of £547 million.

At the time of publication, the final figures for one trust, Whipps Cross Hospital NHS Trust, have not been agreed with auditors. However, London strategic health authority has confirmed to me that it does not expect the final figures from this trust materially to affect the national position.

My Department’s report on NHS finances at quarter one of 2006-07, indicates that the NHS is on track to achieve our aim of net financial balance by the end of the current financial year.

Audited figures by organisation for each strategic health authority have been placed in the Library and will be published today on the Department’s website at Guidance/Publications PolicyAndGuidanceArticle/fs/en?CONTENT_ID=413 9550&a mp;chk=MbVP%2BG

NHS Foundation Trusts

The chairman of Monitor (the statutory name of which is the Independent Regulator of NHS foundation trusts) announced last week that, in accordance with section 6 of the Health and Social Care (Community Health and Standards) Act 2003, Monitor had decided to authorise Chelsea and Westminster Healthcare NHS Trust as an NHS foundation trust from 1 October.

Monitor’s announcement brings the total number of NHS foundation trusts to 49. A copy of Monitor’s press notice has been placed in the Library.

The Government remain committed to offering all NHS acute and mental health trusts the opportunity to apply for foundation status as soon as practicable.

Further waves of NHS foundation trusts are set to follow.

International Development

Palestinian Basic Needs (Further Contribution)

I am gravely concerned about the latest increase in conflict between Fatah and Hamas in the Occupied Palestinian Territories. Such violence further damages the prospects for peace and worsens the humanitarian situation. I call on all parties to end the violence. The UK will work with the international community to do what we can to help the Palestinian people.

I wish to inform the House that the Government intend to make a further £3 million contribution to the temporary international mechanism for Palestinian basic needs. This is in addition to the £3 million for essential health supplies that I announced to the House in August and £3 million that I announced at the Stockholm donors’ conference for operation and maintenance of water, sanitation and electricity.

The situation in the Palestinian Territories remains very difficult. In Gaza many households continue to receive just 6 to 8 hours of electricity per day. Intermittent electricity supply is affecting all key services. Water supply and sanitation services remain limited, with severe implications for health. The Department for International Development will therefore provide £3 million through the temporary international mechanism for operation, maintenance and repair work to keep water, sanitation and electricity services running.

DFID will also provide a further £3 million, again through the temporary international mechanism, to contribute towards providing allowances to teachers and others among the poorest Palestinian Authority workers. Many of these people, including many front-line services providers, have not been paid salaries for six months.

The temporary international mechanism was launched on 16 June, following an original proposal by the UK. To date, it has provided over 1.8 million litres of fuel for water, sanitation, hospitals and primary health care centres in Gaza. Using funding from the European Community the temporary international mechanism has made payments to 11,900 health workers. Payments have also been paid to 51,500 of the poorest Government workers and 33,000 social hardship cases.

DFID has made up to £12 million available for assistance through the temporary international mechanism. This new commitment means that £9 million of these funds have been allocated and will shortly be fully spent meeting Palestinian basic needs. The remaining £3 million will be apportioned as needs arise.

The European Commission has established a team in Jerusalem to manage the implementation of the TIM. Along with several EU member states, we have seconded expertise to this team.

Northern Ireland

Oversight Commissioner's Report

I have today laid before this House a copy of the oversight commissioner’s second statutory report for 2006, which was published on 28 September, in accordance with section 68(4)(a) of the Police (Northern Ireland) Act 2000.

This is the eighth report compiled by Al Hutchinson as oversight commissioner and the 17th in the series of oversight reports published since 2001. This is a thematic report concentrating on devolution in policing.

Independent Monitoring Commission

I have received the 11th and 12th reports of the Independent Monitoring Commission (IMC). These reports have been made under article 5 and articles 4 and 7 of the international agreement that established the commission and reports on security normalisation; and levels of paramilitary activity in Northern Ireland respectively. I have considered the content of the reports and I am today bringing them before Parliament. I have placed copies in the Library of the House.

I thank the members of the Independent Monitoring Commission for their 11th report, their second report on security normalisation in Northern Ireland. I am pleased to note that they consider that the Government continue to fulfil their obligations to the people of Northern Ireland by ensuring their safety and security are protected.

I also thank the members of the Independent Monitoring Commission for their 12th report, and acknowledge the painstaking, methodical and objective way in which they have conducted their assessments of paramilitary activity in Northern Ireland during the past three years.

The best commentary on it are the words of the IMC itself and I believe that they should be studied with care. As they note, the situation in Northern Ireland has been transformed from what it was three years ago—particularly in regard to the IRA.

As the report concludes, the IRA is not the same organization it was three years ago. The IMC’s clear conclusion is that the leadership of the IRA does not consider a return to terrorism in any way a viable option; and that it continues to direct its members not to engage in criminal activity. Importantly, the IMC assesses that the IRA has disbanded its structures which were responsible for procurement, engineering and training and has stood down volunteers.

The IMC also concludes that the leadership has maintained a firm stance against the involvement of members in criminality and taken action against members who have continued such activity. We also note that the report says that where individuals have been involved, as individuals, in criminality, that has not been sanctioned, and it should not call into question the leadership’s position.

The IMC concludes that there is convincing evidence of the IRA’s continuing commitment to the political path and believes that it is no longer credible to suggest otherwise. The significance of these statements cannot, and should not, be underestimated.

I also acknowledge and welcome the report’s finding that the work of IRA members, along with that of loyalist paramilitaries, contributed significantly to the most peaceful marching season since the 1960s.

Like the IMC, the Government, however, believe that further progress needs to be made on the issue of policing, though welcoming the report’s conclusion that the IRA leadership has accepted the need for engagement

It is also important to note the report’s conclusion that some members of the UDA and UVF continue to try to move their organizations away from violence and criminality—though, like the IMC, I agree that there is much more to do if the loyalist organizations are to match the profound change brought about by the IRA.

The Government believe that the necessary progress can be made at the upcoming talks in Scotland. But, while we accept that individual parties will, quite rightly, make their own assessment, we believe this report does lay the basis for the final settlement of the conflict in Northern Ireland—and, as such, presents a unique opportunity for this generation to reach that final resolution, an opportunity the Government hope the parties will now seize.

Alternative Policing Approaches to the Management of Conflict

This fifth report marks another milestone in the work carried out by the UK Steering Group, currently chaired by the Northern Ireland Office, formed as a result of Patten to examine alternative policing approaches to the management of conflict.

After consultation with ministerial colleagues in the Home Office and the Ministry of Defence I placed in the Library a copy of the fifth report on 20 September. The UK Steering Group was set up to establish whether an acceptable, effective and less potentially lethal alternative to the baton round is available and to review the public order equipment which is presently available or could be developed in order to expand the range of tactical options available to operational commanders.

Since then the work has continued apace. I am grateful to the Steering Group and to the many contributors to the programme, including those in Government service, the police, academics and other experts, for their sustained commitment.

While initially established to address a specific Northern Ireland issue, the work of the Steering Group has intentionally been developed within the context of policing across the United Kingdom and has provided a vehicle for identifying and selecting less lethal technologies for police use in the wider UK context.

There has been considerable progress from the situation on which the Patten Commission reported, when it stated that the police “had essentially, three options—the baton, the PER or live fire”. In June 2005, the UK Steering Group introduced the new Attenuating Energy Projectile (AEP), a safer replacement for the L21 Al baton round. The introduction of the AEP does not represent the end of the Group’s work, as it continues to progress towards the assessment of the suitability of the new Discriminating Irritant Projectile (DIP).

The work of the Steering Group has necessarily had a strong focus on the science and technology required to produce an effective and less potentially lethal alternative, but has also had a particular emphasis on its systematic approach, where the potential to reduce the lethal nature of weapons is enhanced not only through technological developments but through the development of stringent training and operational guidance and the accountability measures that are in place, designed to maximise the safety of all concerned. Overall this approach is now internationally recognised as a world-leading model of best practice.

The Government will continue to keep all commercial products and technological research under review. It will ensure that those appearing to have real potential are tested and medically evaluated if appropriate.

However, I have not lost sight of the concerns shared by a number of interested groups on the issue of less lethal weapons. For our part, it is the Government’s intention to continue to engage with these groups. As before, I have invited their comments on this report.

Prime Minister

Committee on Standards in Public Life

I am pleased to announce that I have appointed my right hon. Friend, the Member for Cardiff, South and Penarth (Alun Michael) to the Committee on Standards in Public Life.

My right hon. Friend takes up appointment as the Labour party nominee in succession to the right hon. Baroness Jay of Paddington. His appointment was effective from 1 October 2006, and is for three years in the first instance.

I would like to thank Baroness Jay for her significant contribution to the work of the Committee.


Level Crossing Orders

Level crossing orders are made by the Secretary of State under the Level Crossings Act 1983 and specify the protective equipment (lights, barriers, signs, etc) to be provided at a particular crossing. In practice most orders have been considered and made by Her Majesty’s Railways Inspectorate (HMRI) on behalf of the Secretary of State. With the transfer of HMRI to the Office of Rail Regulation (ORR) earlier this year we had intended to enter into an agreement with ORR to make level crossing orders on behalf of the Secretary of State, replacing a similar agreement originally entered into in 1990 when HMRI became part of the Health and Safety Executive (HSE). The Railways Act 2005 (for ORR) and the Health and Safety at Work etc Act 1974 (for HSE) however permit only functions of an administrative nature to be delegated to ORR and HSE, and we have concluded that the making of level crossing orders fails this test because it is a function of a legislative nature. Consequently I have tabled an amendment to the Road Safety Bill which provides for the making of level crossing orders to be delegated to ORR and validates those orders made by HSE since 1990. This will restore the position to what we thought it was, which has worked well over the years.

Work and Pensions

Independent Living Funds

On 3 May 2006 in a written ministerial statement, I announced details of a strategic review of the Independent Living Funds which, it was then planned, to be concluded by the end of December 2006.

The review is currently under way. The joint independent consultants, Melanie Kenwood and Bob Hudson, have developed a consultation strategy to gather evidence to inform the review’s recommendations. As part of the consultation strategy, consultants have requested concise, written submissions from key stakeholders by the end of August 2006. Following several requests from stakeholders, my Department has decided to extend this deadline to the end of September 2006. This extension will result in the review being completed later than originally planned.

The strategic review of the Independent Living Funds will, accordingly, conclude by the end of January 2007, with its report being published in February 2007.

The Independent Living Funds enable thousands of severely disabled people to live independently and the Government need to consider the future direction of the Funds in the light of both our goal of equality for disabled people and the wider context of proposed changes in social care. It is therefore important that we provide sufficient time for our stakeholders’ input to this review.