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Written Statements

Volume 491: debated on Wednesday 22 April 2009

Written Ministerial Statements

Wednesday 22 April 2009


Debt and Reserves Management Report 2009-10

The “Debt and Reserves Management Report 2009-10” is being published today. Copies have been placed in the Library of the House.

Amendment to 1993 Memorandum of Understanding

I am today making changes to the Memorandum of Understanding on Royal Taxation that was agreed in 1993 (as amended in 1996).

The first change is to amend, in line with the changes made to the self-assessment regime, the date by which Her Majesty the Queen and His Royal Highness the Prince of Wales are due to provide a statement of income to Her Majesty’s Revenue and Customs. The date will be amended to 31 October following the end of the year of assessment, in line with the self-assessment deadline for people who do not file their returns electronically.

The second is to recognise that official expenditure incurred by their Royal Highnesses Prince William of Wales and Prince Henry of Wales in the course of official duties and met by His Royal Highness the Prince of Wales’ income from the Duchy of Cornwall, or by Her Majesty the Queen from the Privy Purse, may be deducted in arriving at the amount of income which is charged to income tax. This is subject to the rules set out in the memorandum governing official expenditure. This change is in line with the principles of the memorandum.

In addition, there are several minor amendments to bring references in the memorandum up to date and in line with current legislation and current members of the Royal Family.

The changes take effect in relation to the tax year beginning 6 April 2009 and for subsequent years.

I am depositing copies of the amending Memorandum of Understanding in the Libraries of both Houses.

Finance Bill Measures

As announced in the Budget, the Government are acting to restrict pension tax relief for people on high incomes. Currently, pensions tax relief benefits disproportionately those with the highest incomes. In 2008-09, people with income of over £150,000 represented 1.5 per cent. of pension savers, yet received a quarter of all tax relief on contributions. It has also become increasingly clear that those on highest incomes are benefiting disproportionately from the new tax regime introduced in 2006. With personal tax changes announced at this Budget, pensions tax relief would become even more generous for the highest earners. Pension tax relief needs to be recast to maintain fairness across the tax system. The Government are consulting with industry and pension savers on how best to achieve this.

To introduce the changes before April 2011 would risk administrative disruption for savers, pension schemes and HM Revenue and Customs. But the gap between announcement today and implementation in April 2011 creates real risks that those affected, or believing they would be affected, would attempt to forestall the new rules by making large contributions now to get the benefit of higher rate tax relief that would not be available after April 2011.

The Government assess that, unless they take action, around £2 billion of tax might be at risk over the two years before implementation. So the Government have introduced a set of anti-forestalling rules effective from today, available at: to have effect for the remainder of this tax year and next. These will be legislated in the Finance Bill 2009.

The vast majority of taxpayers will be unaffected by these rules, including all those whose income—this year and in the previous two years—is not over £150,000; and all those who, in the next two years, do not exceed their normal pattern of regular pension contributions or the normal way in which their pension benefits are accrued.

This legislation attempts to strike a balance: preventing individuals from making large increased contributions, or increases in their benefits, to pre-empt the reduced relief available from April 2011; ensuring that those who continue with their normal pattern of pension saving, whether in defined contribution or defined benefit pension schemes, receive higher rate tax relief until the new legislation takes effect from April 2011; and minimising the burdens on pension schemes.

The Government have decided that the fairest way of achieving this is to enable individuals who make regular patterns of contributions to continue to get tax relief at their marginal rate. Normal patterns of contributions are defined as agreements reached prior to 22 April to make contributions at least quarterly, or increases in pension benefits under scheme rules in place at 22 April —so including increased benefits due as a result of normal pay and progression. Where the annual value of total contributions or pension benefits accrued is less than £20,000, individuals will be able to increase the value of their pension savings or benefit accrual up to a new additional limit of £20,000. Contributions or benefits accrued outside normal patterns of contributions above this will attract a tax charge so that relief is restricted to the basic rate. This applies to total pension savings or benefits regardless of whether these are made by the individual, their employer or a third party. The £20,000 special annual allowance permits those individuals who do not have a readily identifiable pension saving pattern to continue to receive higher rate relief within the generous tax rules for pension saving. The Government recognise that those with less regular contribution patterns may be affected and would welcome views on whether there are ways of ensuring the contributions of this group are protected in the same way as those making more regular patterns, while continuing to meet the objectives outlined.

To protect against avoidance the legislation includes powers to enable HM Revenue and Customs to apply the tax charge to all the contributions made or benefits accrued in excess of £20,000 where avoidance schemes are found and, to prevent income restructuring, this applies to anyone who has income of £150,000 or more in the current or two preceding years.

The Government believe this measure strikes the right balance between the interests of taxpayers, savers and pension schemes.

Environment, Food and Rural Affairs

Marine Areas (Objectives)

On Monday 20 April, the Government, Welsh Assembly Government, Scottish Government and Northern Ireland Executive published their joint high level objectives for the UK marine area. This follows analysis of responses to consultations carried out last year.

The objectives take forward the UK vision of clean, safe, healthy, productive and biologically diverse oceans and seas. They set out the outcomes that the Government and the devolved Administrations are seeking to achieve for the UK marine area and a vision of what success will look like, in order to set the context and strategic direction of future marine policies and activities.

The objectives will steer Administrations and the wider public sector in developing their policies to achieve sustainable development in the marine area and the wider context and help inform and educate the public, business and voluntary sectors.

The objectives are the starting point for the development of the Marine Policy statement provided for in the Marine and Coastal Access Bill, which is currently progressing through the House of Lords. The Government will be working closely with the devolved Administrations to develop a UK wide Marine Policy statement.

Foreign and Commonwealth Office

Sri Lanka

I would like to update the House on the latest developments in the conflict between the Sri Lankan Government and the Liberation Tigers of Tamil Eelam (LTTE), and the actions we have been taking since my last written ministerial statement of 2 April.

The UN estimates that tens of thousands of civilians remain caught in the conflict area in north-eastern Sri Lanka. This now measures less than 18 sq km. The protests and demonstrations by Tamil communities around the world have highlighted their concerns for the civilians in the conflict area. They have seen friends and relatives perish, and their loved ones are still at grave risk from the fighting.

The fate of the civilians in the conflict area is our most pressing concern. It is vital that they are able to move away from danger to safety; that they are able to move under UN oversight; and that the camps of internally displaced persons meet international standards. We have been pressing consistently for this to happen. We have also been calling for unhindered access by humanitarian agencies to those in the conflict area so that they can deliver sufficient assistance to those in need.

I welcomed the announcement of a pause in the fighting by President Rajapakse on 12 April, but I was concerned that the pause should be long enough to give civilians sufficient time to leave the conflict area. I spoke to Foreign Minister Bogollogama on 13 April to urge him to extend the pause beyond the stated 48 hours. In the event there was no extension. Fewer than 300 civilians were able to move to safety and there were credible reports that the LTTE prevented those who wanted to leave from doing so. I was deeply concerned that fighting resumed after the pause.

On 15 April I discussed the situation with the French Foreign Minister Kouchner. We subsequently issued a joint statement calling for a new and longer pause and for the LTTE to let civilians leave.

There are now reports that on 20 April the Sri Lankan Army breached the LTTE’s groundwork defences. While I welcome the reports that significant numbers of civilians may have escaped from the conflict area, I am deeply concerned at reports that civilians were killed in the operation and that others remain at threat from the fighting. We condemn the killings of civilians in the strongest possible terms and urge all parties to take all necessary action to avoid further civilian casualties. Both the Government of Sri Lanka and the LTTE must abide by their obligations under international humanitarian law and ensure the protection of civilians at all times. We have also been very clear with the Sri Lankan Government that democratically elected governments are rightly held to higher account for their actions than terrorist organisations.

It was our concern for civilians that first led my right hon. Friend the Prime Minister to call for a ceasefire on 14 January. He has written to President Rajapakse, most recently on 8 April, to make clear our concerns. He also spoke to the President on 20 April when he called for a new, extended pause. I have repeated the call for a ceasefire in direct contacts with the Sri Lankan Government, including President Rajapakse and Foreign Minister Bogollogama, in public statements and in concert with other partners, including the US and France. We will continue to discuss this with partners, in the EU, Commonwealth and UN. I will speak with Indian Foreign Minister Mukherjee today.

If the reports of the latest exodus of civilians prove to be accurate, thousands will have managed to leave the conflict area since January. Many of them will have been displaced numerous times over the past 18 months, each time the front line has moved. It is vital that these internally displaced persons (IDPs) are treated in accordance with international humanitarian law. We have been urging the Sri Lankan Government to give international agencies, such as the International Committee of the Red Cross and the UN High Commissioner for Refugees, full visibility of the reception arrangements for civilians when they leave the conflict area. We are also pressing the Government to ensure that civilians are free to move in and out of the camps and that the camps are demilitarised in line with the guiding principles for IDPs in order that agencies can be fully involved in the running of the IDP camps, which should be temporary in nature. We will continue to urge the Sri Lankan Government to abide by its commitment to enable 80 per cent. of IDPs to return to their homes by the end of the year. Within the camps there needs to be better access to medical facilities and transparent registration processes. It is important everyone has full confidence that IDPs are treated fully in accordance with international norms.

As part of our response to the humanitarian crisis we have been working closely with the UN. We have welcomed the personal engagement by the Secretary-General and his statements expressing his concern for civilians affected by the fighting. I discussed the conflict with Ban Ki-moon last week and underlined the UK’s support for the UN’s involvement in responding to the humanitarian crisis. We have welcomed the separate visits to Sri Lanka by the Under-Secretary-General, John Holmes, the UN’s representative for IDPs, Walter Kaelin, and, most recently, the Secretary-General’s Chef de Cabinet, Vijay Nambiar, so that they could see for themselves the conditions on the ground. We have encouraged—in the face of some opposition from others—the briefings given by John Holmes to the Security Council. And we are pushing for further briefings to the Council. This involvement by the UN means that the Government of Sri Lanka can be in no doubt about the concerns felt by the international community over the humanitarian situation.

My right hon. Friend the Prime Minister’s Special Envoy for Sri Lanka, my right hon. Friend the Member for Kilmarnock and Loudoun (Des Browne), was at the UN on Monday. He discussed the situation in Sri Lanka with senior UN officials, representatives of other members of the Security Council and non-governmental organisations with a presence on the ground in Sri Lanka. My right hon. Friend the Member for Kilmarnock and Loudoun made clear that we support the work the UN has been doing to try to arrange a UN-assisted civilian evacuation from the conflict area. He also stressed the need to improve conditions for IDPs once they leave the conflict area. In his discussions with other permanent representatives it was clear that some permanent members of the Security Council continue to oppose further action within the Council.

The Department for International Development continues to offer practical support to those agencies on the ground responding to the humanitarian crisis. It has so far allocated £5 million, the majority of which is being used to support the work of the agencies providing protection and assistance work for the IDPs. Some money is being kept in reserve so that we can continue to respond immediately to further needs as they arise. The Department will continue to follow the humanitarian situation and the needs of IDPs closely.

The overriding need is for an immediate end to the tragic humanitarian crisis. We want to see an urgent end to this conflict, now in its 26th year, which has cost well over 70,000 lives. We have always been very clear that there can be no military solution. Lasting peace in Sri Lanka can only come about through a fully inclusive political process that takes into account the legitimate aspirations of all Sri Lanka’s communities—Sinhalese, Tamils and Muslims. The Sri Lankan Government must make a concerted drive to achieve a political solution. The Government will continue to press for urgent progress in all of these areas.

Foreign Compensation Commission

The Annual Report of the Foreign Compensation Commission for 2007-08 has been laid before Parliament. This is the 53rd such report.

Copies have been placed in the Vote Office. A copy will also be available on the Foreign Compensation Commission’s website at:

The report provides an account of the Commission’s activities during the financial year 2007-08 and includes a statement of account for that period. The Commission was not engaged in any active distribution programmes during the period in question and operates on a care and maintenance basis.