Written Ministerial Statements
Tuesday 13 January 2009
Business, Enterprise and Regulatory Reform
Employment Agency Standards Inspectorate Annual Report 2007-08
The Department for Business has recently published the Employment Agency Standards (EAS) Inspectorate Annual Report for 2007-08. The report is available on the BERR website at: http://www.berr.gov.uk/files/file49464.pdf. I have today placed copies of this report in the Libraries of both Houses.
The report sets out the main activities of the EAS during the year, including information about agencies prosecuted for breaches of employment agency legislation and prohibitions of individuals unsuitable to be involved in the running of an employment agency. In 2007-08 two agencies were prosecuted successfully and a total of five individuals were prohibited from running agencies.
In addition, the EAS recovered over £26,000 of workers’ wages that had been illegally withheld. In the period since the end of March 2008, the EAS has recovered a further £21,900 for agency workers. The EAS investigated a total of 1,494 agencies during the course of 2007-08.
We have doubled the number of EAS inspectors during 2008. This will enable the EAS to carry out a greater proportion of proactive inspections. Over recent months, we have also started to transform the operations of EAS, through running monthly large-scale, targeted investigations and giving more publicity to the warnings that we issue to non-compliant businesses. And we have launched a significant campaign to raise the profile of EAS, starting with a “Know your Rights” booklet for agency workers (available from the www.direct.gov.uk website).
In addition, changes made in the Employment Act 2008 will—from April this year—enable the most serious criminal offences under the Employment Agencies Act 1973 to be tried in the Crown Court (where the maximum penalty will be an unlimited fine). They will also give EAS inspectors improved investigative powers, including the power to seek financial information about an agency suspected of committing offences from the agency’s bank.
The EAS will use its additional resources and powers to ensure that agency workers are fairly treated and to ensure that the law is obeyed.
The Government have become aware of an artificial and aggressive avoidance scheme that seeks to abuse tax reliefs available for employment-related liabilities incurred by employees and former employees.
This scheme relies on the creation of losses through a series of arrangements connecting the individual and a company that provides services to trusts, some of which may be offshore, which are established for the purposes of the scheme.
A loss is created through an intentional act of maladministration by the individual acting as a trustee in the course of a contrived employment. The maladministration triggers a compensation payment payable by that individual. This compensation creates a loss that the individual can set off against other taxable income.
The Government do not accept that these highly contrived arrangements have the effect that is sought, but will remove any doubt by introducing appropriate legislation in the 2009 Finance Bill to prevent tax deductions being allowed where liabilities relating to an employment are incurred by employees and former employees with a main purpose of the avoidance of tax. This legislation will have effect from 12 January 2009.
The legislation will not affect genuine cases where tax avoidance arrangements are not involved and will have no impact on the treatment of normal insurance premiums paid by employers to indemnify employees against employment-related liabilities.
Details of this action are contained in a technical note published on HMRC's website.
Energy and Climate Change
Russia/Ukraine Gas Dispute
Yesterday I attended the extraordinary EU Energy Council, called to discuss the dispute over gas supplies between Russia and Ukraine. Ministers discussed the impact of the dispute on member states, the importance of resuming gas supplies to Europe swiftly and the longer-term implications of policy for Europe.
In all, across Europe (European Union and wider), eight countries have declared states of emergency. A further 10 European countries, including Germany, Italy and France, have taken emergency measures. It is clear from the Energy Ministers meeting yesterday that all countries in Europe have an interest in an early resolution of this dispute.
Britain gets less than 2 per cent. of its gas supplies from Russia. UK demand has been met by a number of sources, including from the North sea, imports and storage. However, the Government will continue to be vigilant, working with Ofgem and the National Grid, which is closely monitoring impacts in the gas market.
During the dispute, the gas supply situation in continental Europe has resulted in higher energy prices. However, there has not been a significant impact on wholesale prices in the UK as a result. Furthermore, any short-term movements in wholesale prices would be no excuse for energy companies to delay price cuts, insofar as they buy gas in the forward market and do not therefore have to reflect short term wholesale price movements in their charges to consumers.
European Ministers agreed unanimously that it was totally unacceptable that a commercial dispute between two countries had escalated into something which was now affecting the whole of Europe, and indeed affecting the citizens of some countries very severely, particularly in Bulgaria, Slovakia, Serbia and Moldova.
Since last week, the European Commission and presidency had been working to get both parties to sign up to an agreement to enable transit of gas to Europe to resume. I have made clear the Government’s strong support for these efforts.
Both Russia and Ukraine agreed to a solution involving EU monitors to ensure that the levels of gas flowing into and out of Ukraine can be independently verified.
Yesterday, we received assurances from Russian and Ukrainian Ministers present at the meeting that gas would start to flow today. In their interests as well as those of Europe, they need, without further delay, to ensure gas does flow and resolve their differences.
The Energy Council also discussed the longer-term implications of this dispute. Energy security remains primarily a matter for member states and the clear lesson from this situation is that member states need diversity in their supplies of gas and diversity in their energy mix more generally.
It is also clear, and this is reflected in the Council conclusions (attached), that Europe can also play an important role in ensuring the energy security of its member states. This was the rationale for the European Commission’s strategic energy review, published late last year.
It is also a key part of the case for early and rigorous implementation of the third package on the EU’s internal energy market. These measures will make Europe’s gas markets function more effectively and strengthen our resilience to shocks.
As I made clear at the meeting, our priorities in the forthcoming debates will be:
encouraging greater investment in diversification of supply routes, including developing the southern corridor for gas supplies from central Asia;
making urgent progress towards ensuring greater interconnection between countries and;
ensuring improved response mechanisms for situations such as these.
The Council agreed that urgent work would be done on these issues for concrete action to be agreed at the spring European Council.
This dispute reminds us of the geo-political nature of energy supplies and the need for Europe to act strategically, but above all, Ministers agreed it was essential to send a united message to Russia and Ukraine about their responsibilities.
Employment, Social Policy, Health and Consumer Affairs Council
The Employment, Social Policy, Health and Consumer Affairs Council met on 16 and 17 December. The Health and Consumer Affairs part of the Council was taken on 16 December. I represented the UK.
At the meeting, the Council adopted conclusions on the French presidency themes of health security on public health strategies to combat neurodegenerative diseases associated with ageing and in particular Alzheimer’s disease. The United Kingdom supported the adoption of these conclusions.
The presidency provided a progress report on the proposal for a directive on cross-border healthcare, which was followed by a debate between member states on the directive. The UK intervened to highlight broad support for direction of discussions, which had taken place under the French presidency and the need to continue to work closely to address our concerns. There was a presentation by the European Commission on the recently published proposal for a Council recommendation on European actions in the field of rare diseases, followed by a brief discussion. The UK expressed broad support for the recommendation, but noted it was important that the recommendation ensured the right balance between EU action to promote co-operative action between member states and respect for member state competence for the management and organisation of their healthcare systems.
Over lunch, there was a presentation from the Commission on the work of the Council High-level Working Group on Public Health and a discussion on forthcoming elections of the World Health Organisation regional director post.
Under any other business, the presidency and the Commission provided information on a range of issues including the recently published pharmaceutical package and green paper on healthcare professionals. The incoming Czech presidency provided information on their priorities for health, which they intend to take forward under their presidency.
Entry Clearance Refusals
I have today placed in the Library a copy of the report by Mrs. Linda Costelloe Baker, the Independent Monitor for Entry Clearance Refusals with Limited Rights of Appeal, covering the period 1 October 2007 to 31 March 2008. A copy is also being made available on the UKBA website at:
http://www.ukvisas.gov.uk/en/independentmonitor/imparliamentaryreports together with UK Border Agency’s response to the Independent Monitor’s recommendations.
I am most grateful to Mrs. Costelloe Baker for this positive report based on the 860 sample cases which she has reviewed for the period 1 October 2007 to 31 March 2008, and the 445 cases reviewed during her monitoring visits to visa issuing posts during the period April to September 2008.
In the report Mrs. Costelloe Baker comments that of the file sample analysed this year, 85.6 per cent. of the cases were reasonable and had the correct information on appeal rights an improvement on 83.7 per cent. for the previous report covering the period 1 April to 30 September 2007; and that 91.2 per cent. of decisions were reasonable, an improvement on 91 per cent. for the last report.
She notes a big improvement in evidence based decision making “There has been a marked improvement in the way entry clearance officers handle evidence. In this sample, 98 per cent. of the refusal notices contained applicant specific evidence...”
She further notes that “[the] Overall appearance [of Refusal Notices] has improved tremendously. Most Refusal Notices now look neat and tidy and few have typing or spelling errors...I am pleased to report almost no ridiculous reasons [for refusal]...”
Mrs. Costelloe Baker also makes a number of constructive recommendations as to how UK Border Agency can continue to improve the quality of decision-making, guidance to entry clearance staff, and correspondence and complaint handling. UK Border Agency welcomes these comments and is keen to use these recommendations to drive up the quality of its service to customers whilst maintaining a high level of immigration control.
I wish to record our thanks to Mrs. Costelloe Baker for the work and effort she has put into producing this her third report as Independent Monitor for Entry Clearance Refusals with Limited Rights of Appeal. The Independent Monitor’s next report will cover the period 1 April to 30 September 2008 and will be published in the first half of 2009.
I am today laying before the House a White Paper “New Opportunities” which sets out a strategy for investing in Britain’s aspiration and ambition for years to come.
The global economy of the 21st century brings new opportunities and new risks. The way the financial crisis has swept across every economy in just a few months underlines how interconnected our world has become. But beyond today’s global slowdown lies a world of new opportunities for which we must prepare. If we put in place the right foundations now, the price is not just a richer country but also a fairer society.
Alongside real help now for families and businesses, we will therefore invest today in Britain’s future. Over the next two years we will provide record investment in Britain’s public services in families, communities and every stage of a citizen’s life. In this way we will ensure that Britain’s future performance matches our future potential, and that accident of birth and social background do not hold people back. These two elements together, better jobs and fairer chances, will together produce a more upwardly mobile society.
We build on strong foundations. Over the last decade, provision for pre-school children has been transformed with increased resources and free places for all three and four year olds. Nearly 3,000 children centres are in place. Since 1997 school funding per pupil has doubled in real terms, 600,000 children have been lifted out of poverty, the number of apprenticeships has more than tripled, and almost 300,000 more students are benefiting from higher education.
But we believe there is more to do to enable everyone, whatever their background, to fulfil their talents and potential. To prepare our country today for the opportunities of tomorrow, and supported by the record investment of the next two years, the “New Opportunities” White Paper outlines a number of new key measures:
The extension of free childcare to 15 per cent. of the most disadvantaged two-year-olds spread across every local authority in England: This will reach around 23,000 children per year, in addition to existing provision, and cost £57 million in total. They will provide 10 hours of care per week to the most disadvantaged two-year-olds in the best quality settings for at least 38 weeks a year. Once the child turns three, they will then automatically be entitled to 15 hours of care per week.
A back to work entitlement of up to £500: Trial a back to work entitlement of up to £500 for those who have been carers for at least five years, including parents, to reward their contribution and support their return into the labour market.
The introduction of a new £10,000 incentive to encourage more of the most effective teachers to teach in the most challenging schools: The incentive will be payable in return for three years’ service in a single participating school. This package could reach more than 500 schools and up to 6,000 teachers per year. We will work with partners to ensure that this package is taken up by schools, works effectively to attract more of the best teachers, represents good value for money, and to ensure that we set in place the right long-term total reward for teachers who choose to work in the most challenging schools.
The introduction of a guarantee for high potential young people from low-income backgrounds to get the support they need to get into university: We will continue to target existing resources within Aimhigher, Aimhigher Associates and other funds so that more pupils from low-income backgrounds receive a package of structured assistance across their time at secondary school. And to make sure that this targeting is successful, we will guarantee that it ensures that those pupils from low-income backgrounds who are roughly in the top 50 per cent. of performers, wherever they are located, have access to a comprehensive package of assistance to attend university
A support programme for children leaving care: Fund the National Care Advisory Service (NCAS) for the next two years to work with local authorities to develop and test models of support for care leavers into employment. NCAS will work with nine LAs in year one, with a view to extending support to half of all local authorities in year two, as the first phased step of a national roll-out. As part of this policy, the National Apprenticeship Service will work with NCAS to ensure that from September 2009 all suitably qualified care leavers will be offered an apprenticeship place and intend to make this a legal entitlement from 2013.
The creation of 35,000 new apprenticeship places across the public and private sector to help individuals and businesses through the downturn: This will bring the total number of apprentices to well over a quarter of a million for the first time ever. We are expanding apprenticeship places and are legislating so that all suitably qualified young people will have a right to an apprenticeship by 2013. By this stage there will also be an equivalent commitment to a diploma for all learners that want one.
A tripling of professional and career development loans available from 15,000 to 45,000 over the next three years: Career development loans will be renamed professional and career development loans and tripled. As with existing loans they will be offered interest free while people study. We will also make them more attractive by:
Reducing the headline interest rates
By allowing people to apply for greater value loans to study at colleges, universities and private training providers
A fair access to the professions panel: We will establish a high level panel of the major professions which will work closely with the professions to identify barriers to access and propose concrete actions to address them.
A new full-time structured vocational volunteering programme is being created, with places reserved for those not in education, employment or training: We are supporting the charity to deliver volunteering opportunities that offer a clear route to gaining skills and employment. The 33 local authorities that have been selected to deliver this full-time programme will deliver 30 placements.
With the right policies, we can both raise the overall level skills, incomes and the number of good jobs, whilst at the same time building a fair society.
Copies of the “New Opportunities” White Paper have been placed in the Library.
Serious Fraud Office
My right hon. Friend the Attorney-General has made the following written ministerial statement:
“Parliamentary approval for additional resources of £15.45 million will be sought in the spring supplementary estimate for the Serious Fraud Office. Pending that approval, urgent expenditure estimated at £10 million will be met by repayable cash advances from the Contingencies Fund”.